Robots change the face of labour

PUBLISHED : Sunday, 12 April, 2015, 7:29am
UPDATED : Sunday, 12 April, 2015, 7:29am

Now that China's so-called demographic dividend of abundant cheap labour has been exhausted amid an ageing population, it is more dependent on innovation and technology to remain competitive. That poses the challenge of how to improve the quality of a declining workforce to meet long-term goals of structural reforms to sustain economic growth. In the short term, the invasion of robots on Pearl River Delta production lines are helping combat the rising cost and increasing shortage of labour. Longer term they add urgency to the issue of workforce education and retraining.

According to the National Bureau of Statistics, the mainland's working-age population, between 16 and 59, continued to fall last year - by 3.7 million to 915.8 million out of a total of 1.37 billion. While the shrinking labour pool is helping to prevent a rise in unemployment, it is also driving up labour costs and eroding competitiveness. This means labour will contribute less to growth than in the past two decades.

Experts expect investment in robotics to hit record levels following Guangdong's announcement that it would spend 943 billion yuan (HK$1.2 trillion) on replacing humans with robots in the next three years. But while this may overcome labour shortages and spur innovation to counter an economic slowdown, they warn that many robot manufacturers remain dependent on government subsidies. Premature withdrawal of support, due to begin next year, could hurt the delta.

Guangdong Deputy Governor Xu Shaohua hopes the province can encourage more research institutes to develop intelligent robots, as well as production plants, to drive innovation. Guangzhou has set the goal of automating more than 80 per cent of manufacturing production by 2020.

Because Chinese robot manufacturers rely heavily on imported materials and technology, many can be expected to seek to speed up their development by acquiring overseas companies and their patents. The industry is still in its infancy and its capacity is absorbed by sales. The scope for expansion is limitless, given the potential for hiring robots out once it matures. This has implications for the quality and structure of China's labour force and raises the question of what will happen to migrant labourers bound for the cities sooner or later under China's urbanisation strategy. Vocational training and retraining is shaping up as a national priority.