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Economy

Killer robots: Labor-saving tech may bust Japan's jobs boom

Robots, IT solutions could mean record unemployment rate in 2025

A Nidec carrier robot zips across a factory floor.

TOKYO -- Corporate Japan's scramble to cope with an acute worker shortage by employing robots and other labor-saving innovations could prove a double-edged sword that produces a record-high jobless rate in the next decade.

Japan is enjoying a state of virtual full employment. An economic recovery has combined with a declining population to drive the unemployment rate below 3% in June. An overall rate of 1.51 job openings for every applicant masks differences in demand for workers  -- the rate falls to 0.31 for general office work. But for job categories unable to attract enough workers, many employers are turning to robots and other technological solutions.

This demand has created a gold mine for companies that can satisfy it. Precision motor maker Nidec is moving into factory automation systems. "If in the future 30 billion robots work the same way as humans do, it would create an industry of astronomical proportions," says Shigenobu Nagamori, the Kyoto-based company's chairman and CEO, with characteristic ambition.

Japanese machinery manufacturers received 171.7 billion yen ($1.57 billion) worth of orders for industrial robots in the second calendar quarter, government data shows, a towering 49% gain from a year earlier. Order books stood at 384.3 billion yen at the end of June, up 32% from the same point last year, with many producers unable to keep pace with a surge in demand.

Spending on information technology also is brisk. Big corporations expect to increase IT investments 28% this fiscal year to 558.2 billion yen, a Development Bank of Japan survey found. The sum amounts to 8.2% of all capital expenditures.

The so-called internet of things, or networks of information-sharing devices, has potential to make tasks more efficient and cope with labor shortages -- by removing the human element. Electronics maker Kyocera and mobile carrier KDDI, for example, are readying to start remote monitoring of water meters on the sparsely inhabited Ieshima islands, west of Kobe.

Losing out to a robotic workforce

A virtuous cycle where higher corporate earnings go hand in hand with greater capital spending is taking root. But the lack of workers could prove a limiting factor for operational scale and maintaining services.

In that light, it seems a foregone conclusion that companies will rely more on robotics and artificial intelligence. But doing so would risk generating a growing surplus of workers in the long run.

Robots could perform 30% of roughly 2,000 unique job activities humans are paid to do, joint research by The Nikkei and the Financial Times shows. In Japan, that share tops 50%.

Recruit Works Institute, part of Tokyo-based Recruit Holdings, estimates that the rapid automation could raise the jobless rate as high as 5.8% in 2025, hitting a record.

Employed but unneeded

Concerns also exist that companies will be stuck with workers rendered virtually redundant by advances in technology with which their employers have been slow to keep pace. Such excess employees could number as many as 4.97 million in 2025, according to Recruit Works, up from 4.01 million in 2015.

"AI is advancing so quickly that there will be a plethora of surplus, mainly white-collar workers without new jobs to fill, leading to a rise in the unemployment rate," said Yasunari Ueno at Mizuho Securities.

Members of the business community share this worry. "There is a risk that technological innovation associated with an all-out pursuit of efficiency will produce redundant employees," said Fumiya Kokubu, president of trading house Marubeni.

"Companies that successfully raise efficiency using AI and other means will demand a higher level of aptitude of their workers," predicts Toshihiro Nagahama of the Dai-ichi Life Research Institute. "The jobless numbers will increase, but corporate perceptions of a labor shortage will not ease."

(Nikkei)

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