Analyze effects of automation on Eastern European job market
Popularized during the 1960s and 1970s, sci-fi movies, television and literature such as the Star Wars trilogy, Star Trek and the Jetsons inspired visions of a fully automated, sleek and leisurely futuristic utopia. Impossibly advanced technology envisioned in pop culture is becoming possible, necessitating a serious debate surrounding the benefits and consequences of implementing unprecedented technology in everyday life. Globally, technology has supplemented jobs in goods and services sectors, enhancing efficiency and output while driving many jobs to near-obsolescence and making once-prosperous industries close their doors. Effects of this can be seen in rising youth unemployment rates, especially in Southern Europe. Much of Europe’s economic activity is centered around manufacturing and can be used as a case study to examine the effects of automation.
The economic debate about automation centers around whether it supplements or replaces labor. In Europe, the automation of goods sector jobs is replacing labor, demonstrated by rising youth unemployment and resistance toward accepting migrant workers. Low labor mobility leaves current laborers at risk of being replaced by machines, reducing opportunities for young people and displaced migrants in Europe. Industries and governments benefit from the reduction in labor costs and increase in production efficiency yet refuse to remedy the residual effects, such as displaced workers and high youth unemployment.
Despite having a robust economy, many jobs are left unfilled throughout the Czech Republic due to a shortage of labor. Per a , the unemployment rate in the Czech Republic stands at 2.4 percent while the Czech labor force participation rate is 75.4 percent. A shortage of workers limits the ability of Czech businesses to take advantage of their rapidly growing economy. When the economy turns sour in the future, the machines will keep whirring along, while humans will find themselves swiftly out of a job. Unemployed and migrant populations, already suffering from unemployment before a hypothetical downturn, would be less likely to obtain jobs when the economy begins to expand again as automation replaces potential jobs. Before such a reality comes to pass, all stakeholders in the economic performance of Europe must realize labor is increasingly being replaced by machines and that new industries are not utilizing human labor.
For most industries in nations with low labor mobility, automation is necessary to remain competitive in the world market. Staunch anti-immigration politicians have assumed power in Central and Eastern Europe, such as Czech President Miloš Zeman and Hungarian Prime Minister Viktor Orbán. Their governments limit the number of work visas provided to permanent low-skilled migrant work, preferring to incentivize high-skilled migrations through use of the EU Blue Card directive. Furthermore, many Central and Eastern European countries are not accepting displaced refugees fleeing conflicts in the Middle East. These countries are omitting a source of labor that would benefit both manufacturers and workers. Thus, the youngest generations struggling to find steady work in the labor market that ensured that their parents would to lead sustainable and prosperous lives during the second half of the 20th century.
Low labor mobility has been an impediment to gross domestic product and productivity growth, according to Horst Siebert, a professor of economics at the University of Kiel. In the paper , published in the Journal of Economic Perspectives, Siebert described measures taken by European countries during that time period. According to Siebert, “Layoff restraints were made more strict and severance pay in the case of closings was increased, both by acts of legislation and by the judicial system.” Europe is automating its labor force because these restrictions on labor mobility implemented 30 years ago have made local industries less competitive relative to the United States. Furthermore, Siebert argues that the labor market in the United States reacts to changes in wages within one year of the change. However in Europe, the average period needed to adjust to adjust wages is two years. This delay makes it less likely for the private sector in Europe to increase employment of workers migrating from other countries or seeking refugee status, since labor costs would be comparatively higher that in the United States. Automating labor fit for foreign or youth workers avoids the cost disadvantage incurred by private firms in Europe.
Limited migration is a consequence of the rigid structure of labor regulations in Europe. Low-skilled workers coming from areas outside of Europe, primarily as refugees, are not accepted into the countries that could use their skill set. Since 2016, the Czech Republic has accepted 7224 document refugees, while GDP has grown at an average of almost 4 percent over the same period. Latvia, Lithuania and Estonia take in fewer than 1500 refugees per year; the latter two of which are suffering a labor shortage as well, according to a In a to Lithuania addressing the labor shortage, the country was advised to offer more work permits to foreign workers from third countries and extend the length of temporary residence in the country. Even Scandinavian countries, known for their robust social welfare programs and economic equality, accept few migrants compared to Germany, which accepts a large numberfare of the foreign migrants entering Europe.
Rising youth unemployment demonstrates the replacement of low-skilled labor. The European Union has a youth unemployment rate of around 21 percent as of 2016, according to the . Southern European countries disproportionately suffer from high total youth unemployment. As a percentage of the total labor force, 15-24 year-old individuals are unemployed at a rate of 39.4 percent, 23 percent, 36.9 percent and 42.8 percent in Spain, Portugal, Italy and Greece, respectively, according to a Germany, on the other hand, has a 6.4 percent youth unemployment rate. A strong technical apprenticeship program in the country facilitates youth employment. Adopting a social program of this color would be difficult in Southern European countries but would allow these unemployed youths to find positions in other countries, such as in Central and Eastern Europe.
As the trend toward automated labor increases and its effects become prevalent worldwide, actions must be taken to ensure displaced human labor is reoriented to participate in the economy. Migratory workers and the European youth, low-skilled labor, are negatively impacted by rigid labor mobility and automation. Relaxing labor regulations to facilitate movement of workers within Europe, accepting migrants displaced from elsewhere in the world and ensuring that they are welcome and remain in Europe will facilitate a more equitable distribution of the benefits of the growing economy in places such as the Czech Republic.
In the short run, the regulations currently in place limit the mobility of European labor and should be relaxed to allow workers within Europe to seize opportunities otherwise unavailable. Legislation to protect workers and unions in counties receiving a net increase on foreign workers should ensure that the workers and families are able to live in the country comfortably, without fear of being relieved of their position and forced to reshuffle their lives to return to their former economic situations. That said, completely dismantling Europe’s tradition of protecting its workers is not a viable answer. Ensuring job security for families from every class stratum and allowing them to enjoy their lives without the existential pressure of labor instability, is paramount in the long run.