Fact of the Week: In Germany, Manufacturing Jobs Lost Through Automation From 1994 to 2014 Were Fully Offset by New Service Sector Jobs

John Wu February 20, 2018
February 20, 2018

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Manufacturing industries have raised productivity by gradually adopting more industrial robots on their production lines. But this has raised public concerns that these robots are displacing workers and will give rise to waves of unemployment. That simply isn’t true.

A recent German study analyzed employment and automation data over a 20-year span from 1994 to 2014. The authors find that although automation in the manufacturing sector decreased employment by 23 percent—approximately a quarter million jobs—the job losses were fully offset by new job opportunities in the service sector. In other words, increased automation did not give rise to unemployment; it was associated with occupational expansion in other areas of the economy.

The authors of this study also found that the decrease in employment in the manufacturing sector over the 20 years they studied was not due to robots displacing current manufacturing workers at the time, but to reductions in new job openings within the sector.