Wednesday, May 24, 2017 / Perth Australia / By Niekie Jooste
In this edition of "The WelderDestiny Compass":
A few days back I read an interesting article on LinkedIn by Neil Le Quesne. The article is entitled: "The Coming Workforce Crisis in Welding". You can check it out by clicking on this link...
This got me thinking about the mixed messages we are receiving regarding the future of jobs and the effects of automation.
On the one hand we are told that machines are coming to take away our jobs, and most of us will end up being slaves to machines or starving, while on the other hand we are being told that there is a skills shortage. What gives?
Today we will try to wrap our heads around this question.
If you would like to add your ideas to this week’s discussion, then please send me an e-mail with your ideas, (Send your e-mails to: email@example.com) or complete the comment form on the page below.
Now let's get stuck into this week’s topics...
"Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it. Compound interest is the most powerful force in the universe." - Albert Einstein
The quote may seem out of place, but the principle being described is exactly the same as population growth. To illustrate, let us look at the current human population of 7.5 billion people on earth. If we assume a population growth rate of 5% per annum, (it is currently much lower at 1.1%, but for illustrative purposes we will use a higher growth rate) then the world's population will double every 14 years or so.
In 2027 there will be 15 billion people, in 2037 there will be 30 billion people, in 2047 there will be 60 billion people, in 2057 there will be 120 billion people... I am sure you get the picture.
Mathematically this compound growth must eventually end at some point in time. If we project this time out far enough, then there will eventually be more people on earth that there are atoms in the universe. Clearly not a possibility. Clearly we will also run out of resources here on earth long before we get to any such number of people on earth.
Well, in many advanced economies, the population growth rate has basically come to a standstill. In fact, in many countries the population growth is negative. In those countries where population growth is still positive, this too will eventually reach a zero growth, or even a negative growth rate. This is not some far sighted prediction, it is merely a matter of mathematics.
In other words, what can't sustainably continue, will eventually stop happening. Populations clearly cannot continue growing forever, so eventually this growth will cease!
The economic model on which most economies have been based for the last 50 years or so, has been based on economic growth. This economic growth was largely based on population growth and credit growth. Neither of these can continue indefinitely.
When populations start to shrink, then the number of economically active people compared to the "retired" people start to fall. In other words, we get an ageing population. Japan has been trapped in this demographic trend for decades, and their economy has basically "stalled". While it is possible to compensate for this by exporting products to nations that are still growing, clearly this strategy itself has a shelf life.
Retired people do not buy new houses. Retired people do not spend a lot of money on education for their kids, or anything else for their kids for that matter. Retired people do not take out big loans to start up businesses. In short, as the population shrinks and ages, there is a lower demand for many products. The economy in general slows down. The only sector of the economy that increases is the aged care sector, which would include healthcare. Obviously we all, including all old folks, also need to eat!
At the same time, there are fewer economically active people to do the work that needs doing. A lot of the work that is done will be in the aged care and associated services sectors.
So, while there is a lower demand for products, the economically active population will start being "stretched" due to the demand to support an ever increasing aged population. A point is reached where there seems to be a shortage of workers to do everything that needs doing.
Not enough people for all the jobs??
Another argument that is often raised, is that with automation, the higher paying manufacturing jobs are taken away, and the lower paying service jobs remain. These lower paying service jobs are typically jobs like serving in restaurants or other retail environments.
While this argument is not incorrect, it is rather simplistic. As we have mentioned often, there are many jobs that are just not economically viable for machines to do. These jobs are currently done by humans, and with increased productivity will continue to be done by humans. These jobs typically have one or more of the following characteristics:
Human workers are not replaced just because they can. Human workers are replaced where it is more cost effective to use machines.
We also need to understand that not all workers are created equal. Within a field such as welding, there is a lot of skill involved. Just like not everyone can become a great singer or athlete, so not everyone can become a great welder. As with any other field, there is a "talent factor". Some people will never become great welders, regardless of the amount of practicing they do.
Also, where skills are involved, practise and experience are definitely deciding factors. If you have been welding for 10 to 20 years, you will in all probability have a higher skill level than somebody that has been at it for less than a year.
While inexperienced welders may be struggling to find work, those with many years of experience will generally find it much easier to walk into a new job. When employers are looking for people for a particular "project", they will look for people that have relevant training and experience, because that reduces their overall cost. This trend will not go away, it will become ever more pronounced in the automation age. You may want to read the "nichetopia" newsletter if you want to explore this line of thinking further...
In short, jobs where humans are employed will need to be highly productive, to make it unattractive to spend the money on the machines. Typically high productivity is associated with highly skilled and experienced workers, not with newbies.
People's inability to find work may have more to do with them not being able to successfully exploit appropriate niches rather than a lack of work per se.
Neil quotes a statistic that there will be a shortage of 400 000 welders in the USA by 2024. Obviously this number is based on a whole lot of assumptions which may or may not play out. None-the-less, the principle is sound. It is not possible to grasp experienced welders out of thin air.
Neil's answer is higher productivity and automation. In particular Neil is drawing attention to the great gains possible with K-TIG welding, but the principle is universal. There are many ways to improve productivity.
I agree that these will be the answers to any manpower shortage, but they will naturally flow from the economic realities. Supply and demand dynamics will ensure that Welder pay rates will increase if there is a shortage of Welders. With the increase in Welder rates, more jobs will "qualify" for automation.
These are dynamic economic forces that will largely balance each other out:
It is not possible for anybody to give a clear timeline for how these things will play out. Despite this uncertainty, what is clear is that if you as a Welder can gain the skills, knowledge and experience that increases your productivity and ability to fit into many different niches, you will be at the top of the list when work is being handed out.
In this regard, there is a critical question to ask yourself: Do I have 10 years' experience, or 1 year's experience ten times over?
What are you doing to make sure that you are at the top of that list?
Yours in welding
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