The robots are coming! 12 million jobs lost to automation in Europe by 2040 – analyst

Ageing populations, competition, cost-cutting and COVID-19 driving increased adoption

Across Europe, 12 million jobs will be lost by 2040 through automation technologies, according to analyst firm Forrester Research.

With the pandemic increasing the adoption of digital technologies in business, the region is forecast to embrace automation to address its demographic challenges, the analyst said in a new report. By 2050, the five leading economies in Europe – France, Germany, Italy, Spain, and the UK – are expected to have 30 million fewer people of working age.

The report also mentioned that investments in automation will become key to how European governments look at their competitiveness.

Forrester points out healthcare and pensions will still need to be paid at a higher rate. Infrastructure and other services would need continued funding too, with potentially lower tax receipts.

One part the report did not highlight is the irony inherent in the idea that automation would then become part of Europe's response to losing not only the taxes due from those from those who simply won't exist because of the upcoming demographic crunch, but also lost taxes from low-end jobs (that would have been paid by the workers who've been usurped by machines).

The researchers said that by 2035, about one in four people will be 65 or older, up from one in 13 in 1950; by 2060, this will rise to one in three.

Green energy and digital technologies could help offset the jobs lost to automation, Forrester added.

Mid-skill labour jobs that consist of simple, routine tasks in retail, food services, leisure, and hospitality are most at risk from automation.

According to Forrester, "workers with little bargaining power are most at risk of displacement, especially in countries where many are subject to casual employment contracts, including zero-hour contracts in the UK, which require no guaranteed working hours, or part-time jobs with low wages, such as 'mini-jobs' in Germany."

Routine jobs make up 38 per cent of the workforce in Germany, 34 per cent in France, and 31 per cent in the UK, the study said.

Michael O'Grady, principal forecast analyst at Forrester, argued that the fall in productivity due to COVID-19 would force organisations to automate manual processes and improve remote work.

"The pandemic is just one factor that will shape the future of work in Europe over the next two decades, however. European organisations are also in a particularly strong position to embrace automation because of Europe's declining working-age population and the high number of routine low-skilled jobs that can be easily automated.

"Automation will subsequently become integral to how European governments and employers look at their competitiveness and manage their older demographic," he said.

Forrester said that robotic process automation (RPA) – using software to automate screen-based office tasks – was taking a lead role and growing rapidly. The RPA market was valued at $17bn in 2019, it said, while 21 per cent of European leaders said their organisation would use RPA in 2021.

Investors are certainly seeing the appeal of automation technologies. RPA specialist UiPath was valued at around $35.8bn at its IPO last year. UK RPA specialist Blue Prism agreed to a £1.243bn cash bid by Bolt Bidco, the subsidiary of tech holdings SS&C that trumped a £1.1bn offer from Vista Equity Partners in December last year.

Meanwhile, established application vendors have been conducting something of a me-too mission with regard to automation. Application big-hitters Oracle and SAP are among the software companies to launch RPA-like features in the last couple of years.

In a separate report, Forrester has said there will be only one eventual winner among application vendors in the RPA race – and that would be Microsoft. ®

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