India, China top automatable job potential: McKinsey report

The automation employment potential is concentrated in China, India, Japan, the US and the largest European Union nations, says a latest McKinsey report

New Delhi: India and China together account for the largest technically automatable employment potential— more than 700 million full-time equivalents between them—because of the sheer size of their labour forces. This is a key finding of McKinsey Global Institute’s (MGI) report titled A future that works: Automation, employment, and productivity.

According to the report, the automation potential is concentrated in China, India, Japan, the US and the largest European Union nations. More than half the wages and almost two-thirds of the total number of workers associated with technically automatable activities are in just four countries—China, India, Japan, and the US. These four together account for about $9 trillion of the wages and 700 million employees of the global total potentially affected.

The largest amount of employment associated with technically automatable activities is in China and India because of the relative sizes of their labour forces. Technically automatable activities make up the equivalent of more than 600 million full-time workers in the two countries together. In terms of wages associated with technically automatable activities, however, the US is close to China’s level ($2.7 trillion in the United States vs.$4.1 trillion in China) because of higher wage levels.

According to the report, 49% of the activities people are paid to do in the global economy have the potential to be automated by adapting currently demonstrated technology. That amounts to almost $16 trillion in wages. While less than 5% of occupations can be fully automated, about 60% have at least 30% of activities that can technically be automated. This means many more occupations will change as business processes are transformed than will be automated in entirety.

The largest impact on workers could be felt in labour-intensive sectors in China and India, whereas in other countries it will be felt across multiple sectors. Both China and India have very large farming sectors, with about 230 million people out of a working population of 450 million in India alone working in agriculture. In China, more than 200 million work on the land out of a total workforce exceeding 770 million. Given the employment size of this sector, even a relatively low rate of automation adoption of about 10% could have significant employment consequences in both countries. In Europe, Japan, and the US, the employment impact will likely be spread across multiple sectors, especially in the event that large-scale automation begins relatively soon.

MGI’s scenarios suggest that half of today’s work activities could be automated by 2055, but this could happen up to 20 years earlier or later depending on the various factors, in addition to other wider economic conditions.

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