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The design and research based on office automation system
Zhihao Li 1 , Weihong Guo 1 and Wenlong Wang 2
Published under licence by IOP Publishing Ltd Journal of Physics: Conference Series , Volume 1345 , Issue 6 Citation Zhihao Li et al 2019 J. Phys.: Conf. Ser. 1345 062027 DOI 10.1088/1742-6596/1345/6/062027
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1 Shandong Management University & School of Humanities
2 kashi University & School of Marxism
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This article focuses on the objective trend of the development of office automation system design technology starting from the requirements of office automation system and functional module design through the analysis and comparison methods of a large number of references, contrast method of office automation system and function modules design are the database used in the system implementation of office automation system and hope to provide an effective reference for office automation system developers. Firstly, this paper is designs for the three dimensional aspect of office automation system function module, office automation system authority design and office automation system interface design. This introduces the requirement of office automation system and function module design. Secondly, from the two aspects of database conceptual design and logic, the paper can be analyze as the design of the database used in the office automation system. Finally, from the two aspects of documental organization structure, office automation system operation interface and code, the paper is studied to be the office automation system realization, hoping that this research will lay a certain theoretical foundation for the design of office automation system.
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Office Automation: A Review of the Literature
Relations Industrielles/Industrial Relations, Vol. 44, No. 3, 1989, pp. 654-679
University of Alberta School of Business Research Paper No. 2013-567
28 Pages Posted: 10 Jun 2013
Karen Hughes
University of Alberta - Department of Strategic Management and Organization
Date Written: Sep 1, 1988
The impact of new technologies on clerical workers has been intensely debated. This paper assesses current research on the key issues of employment, skill, and quality of working life; drawing implications for Canadian clerical workers. The author argues that a reliance on deterministic research models has produced unduly pessimistic forecasts about the impact of new office technologies. Research which is sensitive to the mediated nature of automation is necessary for improving forecasts for the Canadian office. So too is the consideration of employer, union, and state activity in influencing automation outcomes.
Suggested Citation: Suggested Citation
Karen Hughes (Contact Author)
University of alberta - department of strategic management and organization ( email ).
Edmonton, Alberta T6G 2R6 Canada
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Research Article
Automation, workers’ skills and job satisfaction
Roles Conceptualization, Data curation, Formal analysis, Methodology
Affiliation TIK Centre, University of Oslo, Oslo, Norway
Roles Conceptualization, Funding acquisition, Investigation, Methodology
* E-mail: [email protected]
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- Henrik Schwabe,
- Fulvio Castellacci
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- Published: November 30, 2020
- https://doi.org/10.1371/journal.pone.0242929
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When industrial robots are adopted by firms in a local labor market, some workers are displaced and become unemployed. Other workers that are not directly affected by automation may however fear that these new technologies might replace their working tasks in the future. This fear of a possible future replacement is important because it negatively affects workers’ job satisfaction at present. This paper studies the extent to which automation affects workers’ job satisfaction, and whether this effect differs for high- versus low-skilled workers. The empirical analysis uses microdata for several thousand workers in Norway from the Working Life Barometer survey for the period 2016–2019, combined with information on the introduction of industrial robots in Norway from the International Federation of Robotics. Our identification strategy exploits variation in the pace of introduction of industrial robots in Norwegian regions and industries since 2007 to instrument workers’ fear of replacement. The results indicate that automation in industrial firms in recent years have induced 40% of the workers that are currently in employment to fear that their work might be replaced by a smart machine in the future. Such fear of future replacement does negatively affect workers’ job satisfaction at present. This negative effect is driven by low-skilled workers, which are those carrying out routine-based tasks, and who are therefore more exposed to the risks of automation.
Citation: Schwabe H, Castellacci F (2020) Automation, workers’ skills and job satisfaction. PLoS ONE 15(11): e0242929. https://doi.org/10.1371/journal.pone.0242929
Editor: Petri Böckerman, University of Jyvaskyla, FINLAND
Received: May 1, 2020; Accepted: November 3, 2020; Published: November 30, 2020
Copyright: © 2020 Schwabe, Castellacci. This is an open access article distributed under the terms of the Creative Commons Attribution License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
Data Availability: The main dataset used to produce the results presented in the study are third-party data available from the Working Life Barometer survey (Arbeidslivsbarometer).The survey is provided by the Confederation of Vocational Unions (YS), a politically independent umbrella organization for labor unions, and organized by the Work Research Institute in Norway. URL: https://ys.no/ys-jobber-med/ys-arbeidslivsbarometer/ Data are available from the YS for researchers who meet the criteria for access to confidential data. To get access, users have to create a user account at YS. The authors had no special access privileges to the data. For further information about the access to this dataset, users can contact YS by e-mail: [email protected]
Funding: - Initials of authors: FC & HS - Grant number: 247921 - Funder: Research Council of Norway - URL: https://www.forskningsradet.no/ - The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.
Competing interests: The authors have declared that no competing interests exist.
1. Introduction
Industrial robotics and artificial intelligence (AI) have in the last few years increasingly been used in production activities. This has led to the automation of many tasks that were previously carried out by workers, and that can now be performed by smart machines. The fear that these technological advances may have dramatic consequences on the future of labor has fostered the recent development of new economics research studying the effects of automation on employment [ 1 , 2 ]. Recent models and empirical evidence on this topic show that automation can have negative effects on employment demand and wages, and particularly so for workers that perform routine-based tasks that can more easily be displaced [ 3 , 4 ]. On the other hand, however, these new technologies may also have positive effects by increasing productivity [ 5 ].
This recent research has so far focused on the effects of automation, industrial robots and artificial intelligence on labor demand and wages. However, while employment and wages are two central dimensions shaping individual workers’ well-being, it is also important to point out that other non-pecuniary aspects do contribute to shape workers’ well-being, and that automation may potentially have important impacts on these [ 6 ]. Specifically, if workers fear that their occupation might be replaced by a smart machine in the future, such prospect and uncertainty about future working conditions may arguably affect their job satisfaction at present [ 7 , 8 ].
Why should we care about the impacts of automation on workers’ job satisfaction? The reason is twofold. First, since individuals spend a substantial part of their life at work, job satisfaction experienced in working life does indeed represent an important component of individuals’ overall subjective well-being [ 9 ]. Second, workers that are not happy and experience dissatisfaction with their job have typically lower motivation and efforts [ 10 ], and higher turnover rates. Therefore, if a large number of workers in the economy fear to be replaced by smart machines in the future, this fear may lead to mental stress and anxiety at present, as well as hamper productivity and innovation in the economy.
In spite of the relevance of this topic, to the best of our knowledge only two papers have recently explored the relationship between automation and workers’ well-being. Abeliansky and Beulmann [ 11 ] focuses on workers’ mental health in Germany; and Schwabe [ 12 ] studies workers’ life satisfaction in a sample of European countries. Neither of these studies, though, investigates explicitly the impacts of automation on job satisfaction.
Further, these recent works do not study the role of workers’ skills, and how these may affect the relationship between automation and well-being. The literature on automation and employment clearly shows that the effects of the introduction of industrial robots largely differ for high-skilled and low-skilled workers. It is therefore paramount to investigate whether the effects of automation on job satisfaction can have different effects on workers’ well-being depending on their skill levels. In short, the question investigated in the present paper is the following: Does automation affect workers’ job satisfaction–and how does this effect differ for high- versus low-skilled workers ?
To study this question, it is useful to distinguish two related dimensions. The first side of the link between automation and job satisfaction is that the introduction of industrial robots in local labor markets will affect workers’ expectations about their future jobs, i.e. it will lead some workers to fear that part of their working tasks might be replaced by a smart machine in the future. The second dimension is that these expectations about the future, and particularly the anticipated fear of replacement, will negatively affect workers’ subjective well-being at present.
Empirically, we operationalize this idea by making use of a two-stage econometric model, in which fear of replacement and job satisfaction are the dependent variables of the first and the second stage, respectively. The empirical analysis uses microdata for several thousand workers in Norway from the Working Life Barometer survey ( Arbeidslivsbarometer ) (four annual surveys for the period 2016–2019), combined with information on the introduction of industrial robots in Norway from the International Federation of Robotics (IFR) dataset. Our identification strategy exploits variation in the pace of introduction of industrial robots in Norwegian regions and industries between 2007 and t (i.e. the time at which each of the four surveys was carried out).
The results indicate that automation in industrial firms in recent years has induced workers that are currently in employment to fear that their work might be replaced by a smart machine in the future, and that this effect is stronger for low-skilled workers. Further, our findings show that fear of future replacement does negatively affect workers’ job satisfaction at present, and that such negative effect is in particular significant for low-skilled workers, which are those carrying out routine-based tasks, and who are therefore more exposed to the risks of automation.
On the whole, these results contribute to, and extend, the recent literature on automation and employment by shifting the focus to important nonpecuniary impacts that are reflected in workers’ expectations, fears and job satisfaction, and showing that workers’ skills is an important variable moderating the effects of automation on subjective well-being.
The paper is organized as followed. Section 2 reviews the literature on automation and employment. Section 3 points out the conceptual mechanisms that are relevant to explain the effects of automation on job satisfaction. Section 4 presents the data and indicators. Section 5 discusses the empirical methods. Section 6 presents the results. Section 7 concludes and discusses the main contributions and implications.
2. Literature
Effects of automation on employment and wages.
Automation, industrial robotics and artificial intelligence have in the last few years experienced substantial advances and found an increasing number of applications in production activities. Artificial intelligence and robotics have developed as two distinct scientific and technological fields for a long time, and only recently they have converged and cross-fertilized [ 13 ]. Frank et al. [ 2 ] presents relevant illustrations of this recent convergence, and it discusses challenges for research on the economic effects of AI and automation. This has spurred the recent development of a strand of scholarly research studying the effects of these new technologies on employment.
A starting point of this literature is the canonical model of skilled bias [ 14 ], according to which new skilled-bias technologies lead to polarization and increasing differences in employment opportunities and wages between skilled and unskilled workers. Sachs and Kotlikoff [ 15 ] present a simple framework in which smart machines substitute directly for young unskilled labor, whereas they are complementary to older skilled workers. Young unskilled workers experience lower wages, which in turn lead to lower saving and investments in human and physical capital–thus perpetuating and strengthening the gap between young unskilled and older skilled workers over time.
Such pessimistic prediction on the future of employment is however not shared by other works in this field. Taking a long-run historical perspective, Autor [ 16 ] and Mokyr et al. [ 1 ] argue that, as in other times in history, technological progress will lead to major structural changes in the quantity and content of work, but it will arguably not lead to a complete substitution of capital for labor. Houseman [ 17 ] provides empirical evidence that, although manufacturing employment in the US has declined since early 2000s, this is mainly explained by international trade and global competition effects, and there is weak support in the data for the argument that such decrease in employment is due to automation. More recently, McGuinness et al. [ 18 ] and Klenert et al. [ 19 ] present empirical studies that indicate that automation technologies and industrial robots have actually positive effects on employment. On the one hand, automation leads to a creative destruction process that may on the whole increase the overall demand for labor. On the other hand, it may contribute to reduce routine-based working tasks, which are typically monotonous and physically straining, thus improving the quality of work.
A more nuanced perspective that considers both negative and positive effects of automation on employment is presented by studies of the job polarization hypothesis. In short, the main idea of this research is that automation technologies complement highly skilled labor, explaining its expansion and wage growth in recent years in most advanced countries. On the other hand, middle-skilled workers are those more negatively affected by routine-biased technical change, because their tasks are relatively easier to automate. As for low-skilled workers, and particularly those employed in personal services occupations, these often perform manual and personal communication tasks that are not that easy to automate yet. Hence, the resulting pattern is that middle-skilled workers have in recent years shifted towards low-skilled employment occupations, which have consequently grown and experienced higher wages. All in all, this explains the observed increasing polarization in the job market, with the growth of employment and wages for high- and low-skilled workers, and a corresponding decline for middle-skilled occupations [ 3 , 4 , 16 , 20 ]. Beaudry et al. [ 21 ] argue however that the demand for high-skilled workers has declined after 2000 due to decreasing returns to investments in information and communication technologies (ICTs), and that high-skilled have then begun to compete for lower-skilled jobs. This study, though, is based on empirical evidence on ICT investments in general, and it does not focus specifically on the effects of AI and automation.
Acemoglu and Restrepo [ 22 ] present a theoretical framework that is useful to study both negative and positive effects of industrial robots on employment and wages. The model points out two contrasting effects of industrial automation: a displacement effect that negatively affects the demand for employment and the wages of workers that perform routine-based tasks; and a productivity effect that creates benefits for workers that perform non-routine tasks (in the automated sector as well as in other sectors and occupations of the economy). This study also presents empirical evidence that corroborates the model’s predictions on the effects of industrial robots on employment and wages in US manufacturing industries between 1990 and 2007. In line with evidence presented by other recent works [ 5 , 23 , 24 ], their results show that overall the displacement (negative) effect of the introduction of industrial robots has until now been stronger than the productivity (positive) effect.
Effects of automation on job satisfaction
This recent strand of research has so far focused on the effects of automation, industrial robots and artificial intelligence on aggregate patterns of labor demand and wages for different countries and industries. However, research has not investigated yet the impacts that these new technologies may have on individual workers’ subjective well-being. Do workers fear that their occupation might be replaced by a smart machine in the future, and if so how does that prospect affect their current job satisfaction?.
Job satisfaction is the subjective well-being of workers (i.e. their own assessment of the well-being they experience at work). This is an obviously crucial dimension for economic analysis and policy. First, since individuals spend a substantial part of their life at work, job satisfaction experienced in working life represents an important component of individuals’ overall subjective well-being. Second, workers that are not happy and experience dissatisfaction with their job have typically lower motivation and efforts, and higher turnover rates. This, in turn, weakens productivity and innovation in the economy.
The literature on job satisfaction is wide-ranging, and it has extensively investigated a variety of factors that explain why some individuals report higher subjective well-being than others [ 7 , 8 ]. However, only a few studies have so far explicitly investigated the relationships between the widespread diffusion and application of digital technologies and job satisfaction [ 25 ]. Kaplan and Schulhofer-Wohl [ 6 ], using data from the American Time Use survey, discusses the nonpecuniary implications of changes in the occupational structure in the US in recent decades, i.e. the effects of these structural changes on different aspects of job satisfaction such as reported happiness, stress and meaning at work. The work indicates that the changing occupational structure has not only led to polarization in terms of skills and wages, but it has also determined substantial changes in workers’ feelings about the job they have and the tasks they perform.
Two recent papers explore the relationship between automation and workers’ well-being. Abeliansky and Beulmann [ 11 ] present an empirical study on the impact of automation on the mental health of workers (which is one important dimension reflecting stress and weak job satisfaction). The analysis uses individual-level data from the German Socioeconomic Panel for the period 2002–2014 linked to industry-level data on use of industrial robots in 21 manufacturing sectors in Germany. The results indicate that automation negatively affects workers’ mental health, and this effect is related to the fear of having lower wages and worse economic conditions in the future.
Schwabe [ 12 ] makes use of worker-level data from the Eurobarometer survey for European countries (period 2012–2017) to investigate the relationships between fear of replacement and workers’ subjective well-being (measured by life satisfaction, which is as well-known an evaluative dimension of individuals’ well-being). The results of this study find that fear of replacement affects life satisfaction, but the direction of this effect does largely depend on age. In line with models of skill-bias and job polarization (see section 2.1), younger workers regard replacement as a possible threat to their job opportunities in the future, whereas older workers look at it as a positive technological development that is not likely to affect them directly, and that will arguably enhance well-being and prosperity in the society.
These two studies provide an important starting point for the present work. None of them, though, investigates explicitly the role of workers’ skills, which is however a key dimension in the literature on the employment effects of automation briefly reviewed in section 2.1. In the job satisfaction literature too, education and skill levels represent one of the central factors affecting the job satisfaction of workers [ 26 ].
Two contrasting mechanisms link education and job satisfaction. On the one hand, a higher skill level increases the chances that an employee will have a higher wage level and a more interesting and rewarding job, which enhance job satisfaction. On the other hand, however, various empirical studies have found that–after controlling for income earnings–the correlation between education level and subjective well-being at work is negative [ 8 , 27 , 28 ]. This can be explained in the light of prospect theory [ 29 ]. When an individual invests more time in education and human capital formation, her expectations about the desired job will also be higher, and it will therefore be more likely that the worker will feel more critical and less satisfied with her actual working conditions if these high expectations are unmet. In particular, empirical research indicates that overqualified workers report significant lower levels of job satisfaction than others [ 26 , 30 ].
3. Question and propositions
The question investigated in the present paper is the following: Does automation affect workers’ job satisfaction–and how does this effect differ for high- versus low-skilled workers ? The first part of the question refers to the main impact of automation on job satisfaction, which as noted above has not been analyzed in previous research yet. The second part of the question suggests that fear of replacement can have different effects on workers’ well-being depending on their skill levels, and it seeks to investigate these moderation effects.
Conceptually, the link between automation and job satisfaction can be analyzed in two steps. The first is that the introduction of industrial robots in local labor markets will arguably affect workers’ expectations about their future jobs, which means that some workers will fear that some of their tasks, or even their whole job, might be replaced by a smart machine in the future. The second step is that these expectations about the future, and particularly the anticipated fear of replacement, will affect workers’ job satisfaction at present.
Our empirical analysis will consider both of these conceptual steps in a two-stage empirical model, and investigate whether the related impacts are stronger for high-skilled or for low-skilled workers. We point out below here the main effects that we expect to find in the empirical analysis, and how these can be explained in the light of the literature reviewed in this section. As noted below, some of the effects of interest are stronger for high-skilled workers, whereas others are more relevant for low-skilled workers, so that the overall net moderation effect cannot be pointed out ex-ante , but it will have to be established based on the empirical evidence.
I. Fear of replacement
The introduction of industrial robots in the local labor market increases the likelihood that some workers will be replaced by smart machines in the future. These technological changes and their applications in firms in local labor markets will therefore induce some workers that are currently employed to fear that they might be replaced in the future (or at least that some of their tasks might be).
Moderation effects.
The introduction of industrial robots will arguably have different impacts for high- versus low-skilled workers. We envisage two contrasting effects.
Fear of replacement is stronger for the low-skilled . These workers are more exposed to the risks of displacement from automation because they typically carry out routine tasks that can more easily be automated (see literature in section 2.1).
Fear of replacement is stronger for the high-skilled . High-skilled workers are typically also more educated individuals who read more and follow media debates on robots, automation and their negative consequences for employment. Hence, high skilled workers are arguably more exposed to peer effects, which may translate in a greater fear about the future of employment. Contrary to this argument, we may however posit that workers of higher education typically have a better ability to understand and anticipate that these new technologies will also have positive effects for their future tasks and wages, as well as for the overall productivity of the economy–i.e. they are arguably be more forward-looking [ 31 ].
Proposition 1: The introduction of industrial robots in the local labor market will negatively affect low-skilled workers more than high-skilled workers if the former effect is stronger than the latter.
II. Job satisfaction
The second aspect of our conceptual analysis refers to the impacts that fear of replacement will have for workers’ subjective well-being. The main expectation is that fear of replacement in the future will negatively affect job satisfaction at present. The main reason is that the prospect to become unemployed, or to be taken away some of the current working tasks, will negatively affect wage and financial conditions expected for the future, thus creating uncertainty about future job prospects and personal finance, and hence lower job satisfaction.
Fear of replacement will arguably have different impacts on job satisfaction for high- versus low-skilled workers. We posit the following contrasting effects.
The negative effects on job satisfaction will be stronger for the low-skilled . If replaced, these workers will on average have fewer possibilities to find another occupation in the labor market. Acemoglu and Restrepo [ 22 ] and Blanas et al. [ 20 ] document in fact that displacement effects of industrial robots on employment and wages are stronger and more significant for low-education workers. On the other hand, as noted in section 2.1, extant research suggests that automation technologies can have more positive effects on high-skilled workers, increasing the demand for labor, wages and the complexity and interest of their tasks [ 18 ].
The negative effects on job satisfaction will be stronger for the high-skilled . According to prospect theory [ 29 ], individuals that invest more time in education and human capital formation will also have higher expectations about the working conditions that they desire and expect to have in the future, and be less satisfied with their job if this does not match the high expectations the individual has. Hence, highly educated workers, when facing the prospect of changing jobs and tasks in the future, may be those that have more to lose from automation, precisely because they are the individuals who have invested more in their human capital formation, and they have therefore higher expectations about the working conditions that they feel they deserve.
Proposition 2: Fear of replacement will negatively affect the job satisfaction of low-skilled workers more than that of high-skilled workers if the former effect is stronger than the latter.
Individual-level data
We use the Working Life Barometer survey ( Arbeidslivsbarometer ), which provides annual microdata for several thousand Norwegian workers. The survey is provided by the Confederation of Vocational Unions (YS), a politically independent umbrella organization for labor unions, and organized by the Work Research Institute in Norway. TNS Gallup collects the data targeting a large random sample of Norwegian workers aged 18–67 years. Our analysis makes use of the four surveys carried out in the years 2016 to 2019, which include information on the main variables of interest for this study, and particularly workers’ subjective assessments of the threats of automation, and their job satisfaction.
The main target variable in the study is job satisfaction, which is measured by means of responses to the survey question: “ How satisfied are you with your job ? ” . Respondents indicate their satisfaction level on a 1–5 scale (“Very dissatisfied”; “Pretty dissatisfied”; “Neither satisfied nor dissatisfied”; “Pretty satisfied”; “Very satisfied”). The main explanatory variable is fear of replacement. This is measured by means of responses to the following survey question: “ Do you think some of your current tasks could be done by machine instead ?”. Fear of replacement is a dummy variable: respondents who answer yes to this question take value 1, whereas workers who do not think that their tasks could be replaced by a machine take value 0. It is important to observe that this survey question measures workers’ assessment of the possibility that their tasks could be replaced by machines (cognitive reaction), and not directly the fear to lose their job as a consequence of automation (emotional reaction). However, as we will show later in the results section, this survey question is closely related to other survey questions that measure workers’ fear of losing their job, and it is therefore reasonable to use it as a proxy measure of fear of replacement. It is also worthwhile to note that only workers who are currently employed are asked to answer the question on fear of replacement, whereas unemployed individuals must skip this part of the questionnaire. Hence, our analysis focuses on the beliefs of workers who are potentially exposed to automation, but it does not consider those individuals that have already been laid off due to automation.
Next, another important variable in our study is the skill-level of workers, which is measured by their education level, distinguishing workers with a completed University degree versus those without tertiary education. In terms of control variables, the Working Life Barometer survey also provides employee-level demographic and socio-economic information such as age, gender, income, union membership, and occupation type. In total, we analyze responses from 10,051 workers aged 19–68 years. Table 1 presents a list of the variables used in the analysis, and Table 2 reports some descriptive statistics.
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To measure the introduction of industrial robots in local labor markets in Norway, we make use of a dataset provided by the International Federation of Robotics (IFR), which contains information on robot stock and deliveries in Norwegian industrial firms since 1993. The IFR defines an industrial robot as an “ automatically controlled , reprogrammable multipurpose [stationary or mobile machine] ” [ 32 ]. Following this definition, industrial robots are autonomous machines capable of operating without human intervention and that could potentially substitute or complement human labor. The IFR provides detailed data on robot stock and deliveries for the period 1993–2017, which can be broken down by application or industry. Robot stock for years 2018 and 2019 are extrapolated assuming a 9 percent annual growth in operational stock as projected by IFR [ 33 ]. IFR data have recently been used to analyze the impact of automation on employment and wages [ 22 , 34 , 35 ], as well as on workers’ well-being [ 11 , 12 ].
Regional-level control variables
We use the Eurostat’s Labor Force Survey to obtain regional-level variables on GDP per capita, population share with tertiary education, and population size. From Statistics Norway, we retrieve data on firms by size for each region. Further, we collect data on unemployment benefit recipients as a share of total population from the Norwegian Labour and Welfare Administration (NAV), for each region and each year of our dataset.
To avoid omitting the possible conflating influence of ICTs when analyzing automation, previous studies have included ICT capital or investment as an additional control variable [ 34 , 37 ]. However, others argue that more specific measures of ICT utilization are necessary for micro-level studies [ 38 ]. Unlike existing studies that have analyzed the impact of high-speed broadband developments in Norway [ 39 , 40 ], we use as additional control variable the broadband internet availability in office buildings instead of households in each region. Data on office buildings with at least 8/8 Mbit/s speeds are provided by the Norwegian Communications Authority (Nkom), and matched against individuals through regional identifiers.
5. Empirical methods
The econometric analysis sets out to study the relationship between fear of replacement and job satisfaction. Fear of replacement is the subjective assessment that each worker does on the possibility that her working tasks will be replaced by a smart machine in the future. Such subjective assessment may arguably depend on unobserved and idiosyncratic factors such as e.g. ability, attitude towards risk, and technological/digital competencies. Therefore, unobserved individual factors might possibly influence both the outcome variable (job satisfaction) and the main explanatory variable (fear of replacement).
To address endogeneity concerns, we follow recent research and use the lagged introduction of robots in local labor markets (industry-regions) as an instrument for individual workers’ fear of replacement [ 11 , 12 ]. Existing studies on robot implications for labor markets where robot adoption is the main explanatory variable address endogeneity issues by incorporating spillover effects from robot adoption across industries in other countries as an instrument in a 2SLS setup [ 22 , 34 , 36 ]. Unlike these studies, we approach subjective responses to structural inroads of robot technology in local labor markets to identify learning effects from past automation. Specifically, our instrumental variable is the one defined in (1) above, i.e. the change in the adoption of industrial robots by Norwegian firms in each local labor market (industry-region) between 2008 and year t (i.e. one of the survey years 2016–2019). This variable measures the extent to which workers in each of the 16 industry-regions considered in this study have been exposed to rising automation in recent years. We thus exploit (lagged) variation in robot adoption over time and across industry-regions in Norway to instrument for individual fear of replacement at time t . The underlying idea of this identification strategy is that workers that are employed in local labor markets that have more rapidly been exposed to automation (i.e. in industry-regions where firms have increasingly used industrial robots) will be more likely to consider automation as a possible threat, and therefore fear that some of their working tasks could be replaced by a machine in the future. In other words, we posit that workers learn from past robot adoption in their local labor markets, because they are subject to peer effects [ 41 ]. Although it is reasonable to posit that these peer effects work through changes in robot adoption over time, we cannot exclude the possibility that the same mechanism may also work through the absolute levels of robot adoption (i.e. workers may fear replacement when they experience a high intensity of industrial robots in the industry-region where they work). To consider this possibility, we have also calculated our instrumental variable in levels rather than as changes over time, and reported additional regressions in the online appendix (see Table A5 in S1 File , whose results are in line with the main results presented in the paper).
Norwegian firms have invested in sophisticated robotics and automation technologies to keep pace with the Digital Single Market strategy [ 42 ], and our empirical analysis exploits this exogenous source of tempo-spatial variations to identify the effects of automation on workers’ job satisfaction. Fig 1 illustrates the dynamics of industrial robots adoption in Norway in the last decades, showing a much faster pace since 2014. Table 3 shows that most robots have so far been used by firms within manufacturing, and less so in other branches such as agriculture, construction and services. However, Table 3 also shows that the introduction of robots by service firms has been quite rapid in the last decade. Fig 2 illustrates the trend in robot adoption since 2010, indicating a rising trend in all 16 industry-regions considered in this study, and particularly so in manufacturing and services.
https://doi.org/10.1371/journal.pone.0242929.g001
https://doi.org/10.1371/journal.pone.0242929.g002
https://doi.org/10.1371/journal.pone.0242929.t003
To get a further overview of the diffusion and use of industrial robots in Norway, it is also useful to get some descriptive figures from Eurostat’ survey on “ICT usage and e-commerce in enterprises (2018)” (see Tables A1 to A4 in S1 File ). Large firms are the main adopters of both industrial and service robot technologies, and capital-intensive firms appear to invest in and integrate both technologies in their operations. Operating machines represent about 60% of all industrial robots in Norwegian firms in 2017. Whereas large firms use service robots for mostly logistics and transportation purposes, small and medium enterprises (SMEs) deploy robots in more product-related purposes, such as inspection, assembly or construction works.
Although our paper focuses on industrial automation, workers in knowledge-intensive service occupations may rather fear competition from new artificial intelligence technologies. Table A4 in S1 File presents some descriptives on Norwegian firms’ use of Big Data in their business operations. Large firms are more likely to use Big Data than SMEs. Large firms use smart sensors (e.g. Internet of Things) and geo-data to a greater extent than SMEs. On the other hand, SMEs more actively collect data from social media for marketing purposes. In sum, smart machines are swiftly making inroads in the Norwegian economy, and this pace has accelerated in the last five years.
Fig 3 shows the time trend of the variable machine replacement for each of the 16 industry-regions in the more recent period 2016–2019 to which our survey data refers. Although this is a relatively short span (which does not make it possible to assess long run trends), Fig 3 indicates that fear of replacement due to automation has increased steadily in most of the industry-regions considered in this study, and that there is by and large a correspondence between the time trends reported in Fig 2 (robot adoption) and Fig 3 (machine replacement).
https://doi.org/10.1371/journal.pone.0242929.g003
For model identification, the vector x in Eqs ( 2 ) and ( 3 ) does also include detailed demographic and socio-economic characteristics expected to correlate with job satisfaction and anticipated replacement, such as age, gender, income, union membership, and industry employment. According to previous studies, these factors are relevant to explain variation in job satisfaction, labor dynamics and technological automation diffusion [ 8 , 22 , 31 , 34 , 37 , 43 – 45 ]. Finally, both equations also include a full set of regional dummies and time dummies that control for unobservable determinants of job satisfaction within each region over time.
It is important to note that our identification strategy is based on the assumption that robot exposure in each industry-region will affect workers’ job satisfaction only through its effects on fear of replacement, and we therefore exclude a direct impact of robot exposure on job satisfaction. Conceptually, we cannot exclude that robot adoption in a given firm may potentially affect employees’ job satisfaction directly, and not only indirectly through fear of replacement. However, we think that this conceptual argument is not a particular reason of concern in our empirical study. The reason for this is that robot adoption in Norway, although it has increased rapidly during the last few years, it is still relatively low in absolute levels (around 6%, see Table 2 ). This means that our dataset and estimations do not refer to workers who already use robots in their current job, but for the great majority they refer to workers that are exposed to (i.e. observe) automation being introduced in other firms in the industry-region where they work, and that due to these peer effects fear that machines could replace some of their working tasks in the future.
The econometric model is estimated as a two-stage bivariate recursive ordered probit maximum likelihood setup, which accommodates the ordinal character of the outcome and main explanatory variable [ 46 , 47 ]. This model estimates response probabilities of two variables, one ordered and one dichotomous, and the exogenous variable robot exposure is included in the first stage [ 48 , 49 ]. Estimations are performed with Roodman’s [ 50 ] conditional mixed process (CMP) program. Because the instrument is measured at the industry-region level, estimations are likely to contain grouped structures, and we therefore cluster standard errors in all regressions [ 41 , 51 , 52 ].
First stage results
Table 4 presents the estimation results of the first stage ( Eq 3 ), in which the dependent variable is machine replacement (i.e. workers’ self-reported assessment of the possibility that some of their working tasks will be replaced by a smart machine in the future). Table 4 reports estimation results for both the model without control variables and the one including the full set of controls, in order to assess whether the inclusion of controls affect the results [ 53 , 54 ]. The results for the two models are however very close to each other. We begin by briefly looking at the results for the set of control variables, before turning attention to the main variables of our interest. Among the controls, Table 4 shows that fear of replacement is stronger for younger workers. These have a longer time horizon remaining in their working life, and they are therefore more likely to expect that automation will replace some of their working tasks in the future [ 12 ]. Employees that belong to a trade union are less likely to fear replacement, arguably because their employment and working conditions are partly protected by the trade union membership (we elaborate further on this in section 6 below). Regarding wage levels, fear of replacement is stronger for workers that have higher income. A possible interpretation of this finding is that, after controlling for education and skill levels (that are correlated with wages and that also affect fear of replacement), workers with higher income have more to lose vis-à-vis workers with lower income, since automation of tasks may lead, in absolute terms, to a stronger wage decrease for them. Further, we control for gender and sector of occupation (industry employment), which are two standard control variables in studies of workers’ subjective well-being.
Dependent variable: Machine replacement.
https://doi.org/10.1371/journal.pone.0242929.t004
Shifting the focus to the main variables of interest for this study, the instrumental variable (changes in robot adoption in local labor markets between 2008 and year t ) is as expected positively correlated with the dependent variable (workers’ fear of replacement). As explained in section 5, the underlying idea is that when individuals work in industry-regions in which firms have increasingly been using robots in the last few years, they are more exposed to automation (e.g. because some of their peers or acquaintances in the same region have lost their job due to automation). These peer effects translate into fear of replacement even for workers that are still employed and not directly touched by automation technologies yet. Table A6 in S1 File corroborates this interpretation by presenting first stage regressions in which we use two additional control variables that measure fear of job loss : (1) job loss worry (“To what extent are you worried about losing your job?”); (2) unemployed in five years (“Do you expect to be unemployed within the next five years?”). Both of these control variables are positive and significant in the regressions, indicating that fear of job loss (emotional reaction) and machine replacement (cognitive reaction) are closely related dimensions. Further, the inclusion of these additional control variables does not affect the size and significance of the estimated effect of the instrumental variable robot adoption on machine replacement.
What is the economic significance of these results? According to our OLS estimates (see column 2 in Table 4 ), a one standard deviation increase in robot exposure increases the probability that a worker expresses fear of machine replacement by 2.6 percent (we thank an anonymous reviewer for suggesting to point this out). It is hard to say whether this estimated effect is economically sizeable. However, considering that robot adoption in Norway has more than doubled during the time span considered in this study, we may think that the overall effect of automation on fear of replacement has arguably been important during this period. It is also interesting to assess this figure in the light of the effects of robot adoption on employment found in other recent studies (although none of these present estimates of the effects of robot adoption on subjective fear of replacement). [ 34 ] find that one additional robot per thousand workers reduces the employment rate by 0.16–0.20 percentage points across European regions. In their study of the U.S. labor market, [ 22 ] find that one robot reduces employment by three workers. Further, [ 36 ] suggest that the corresponding number for German manufacturing workers is about two jobs. However, the overall effect on German employment is unchanged as the job reduction in manufacturing is offset by gains in the service sector.
Next, we look at the results for the other important variable considered in this study: workers’ skills. Table 4 shows that individuals with tertiary education have on average a greater fear that some of their working tasks could be replaced by a machine in the future. As discussed in section 3, this might be explained by the fact that high-skilled workers are typically more educated individuals who read more and follow societal debates on the media about robots, AI and automation, and their negative consequences for employment. Hence, high skilled workers are arguably more exposed to peer effects, which may translate in a greater fear about the future of employment.
Relatedly, how do workers’ skills affect the positive relationship between automation and fear of replacement? To test this moderation effect, Table 5 reports estimation results of the first stage equation by workers’ skill level. While the estimated coefficient of the robot adoption variable is positive and significant for both workers with tertiary education and those without a college degree, the size of this effect is larger for the latter group. This moderation effect is in line with the recent literature on the effects of automation on employment, which shows that low-skilled workers are more exposed to the risks of displacement from automation because they typically carry out routine tasks that can more easily be automated [ 3 , 4 , 16 , 20 ].
https://doi.org/10.1371/journal.pone.0242929.t005
Second stage results
Table 6 reports estimation results for the second stage of the model ( Eq 2 ), in which job satisfaction is the dependent variable. The table reports first the results for the model without control variables and then those for the model including the full set of controls. The results for the two models are very close to each other, indicating that the inclusion of controls does not affect the results on the main explanatory variables [ 53 , 54 ]. The control variables that we use are commonly used in the job satisfaction literature. Income is positively correlated with job satisfaction, in line with extant literature showing that wage is one of the factors that enhance workers’ subjective well-being [ 7 , 8 ]. Female workers report on average higher job satisfaction than males; and individuals employed in manufacturing (industry) have lower satisfaction than average, a finding that is explained in the subjective well-being literature by the fact that factory workers typically carry out routine and monotonous working tasks and have a lower degree of autonomy and creativity [ 25 ].
Dependent variable: Job satisfaction.
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The main variable of interest in Table 6 is machine replacement. The estimated coefficient for this variable is as expected negative and significant. This means that workers that report higher fear of replacement from smart machines have on average lower job satisfaction. As noted in section 3, the reason for this is that for workers that are currently employed, the prospect that smart machines could replace some of their current working tasks in the future, or even the whole job, does create uncertainty about future job prospects and personal finance, thus lowering job satisfaction. The marginal effects for each category of the job satisfaction variable (not reported in Table 6 ) indicate that a change in the fear of replacement dummy variable (i.e. from “no fear” to “fear of replacement”) decreases the job satisfaction of the “very satisfied” workers by around 30%, and of the “very or pretty dissatisfied” workers by around 6–11%.
Table A7 in S1 File reports second stage regressions that also include two additional control variables that measure fear of job loss : (job loss worry; unemployed in five years; see definition of these two survey questions in section 6 above). The additional control variables are positive and significant in the regressions, and their inclusion in the model does not affect the size and significance of the estimated effect of machine replacement on job satisfaction, indicating that fear of replacement due to automation is important for workers’ subjective well-being even after controlling for the more general construct fear of job loss.
How is this relationship moderated by workers’ skill level? Table 7 investigates this question by reporting marginal effects of the machine replacement variable for workers that have tertiary education versus those that do not have a college degree. The table shows that the marginal effect for the workers without a college degree is negative and significant, indicating that fear of replacement increases the probability that low-educated workers will report high job satisfaction by nearly 50%. On the other hand, the corresponding marginal effect for the workers with a University degree is not statistically significant. Abeliansky and Beulmann [ 11 ] also carried out some regressions to study the relationships between automation and mental health for different educational groups (tertiary vs secondary education), but they did not find any significant difference among these groups of workers in Germany. As discussed in section 3, the interpretation of our finding is that low-skilled workers, if replaced, will on average have fewer possibilities to find another occupation in the labor market. This is in line with recent literature that provides evidence that displacement effects of industrial robots on employment and wages are stronger and more significant for low-education workers [ 20 , 22 ]. On the other hand, automation technologies can have more positive effects on high-skilled workers, increasing the demand for labor, wages and the complexity and interest of their tasks [ 18 ]. In short, we posit that workers are at least to some extent aware of the distinct impacts that automation can have for different types of occupations, and this explains why fear of replacement turns out to be a concern for low-skilled employees.
https://doi.org/10.1371/journal.pone.0242929.t007
It may be argued that the education level dummy variables that we have used in these regressions only reflect formal education acquired through the school and University system, and disregards other skills that workers acquire during the working life through training, apprenticeships and learning by doing. Ideally, if we had information about each worker’s occupation, we could construct a proxy measure for skills by using the three-level job complexity schema developed by Hunter et. al. [ 55 ], which creates a correspondence between job types and corresponding skill content. However, our dataset does not have information about workers’ occupation type, and we are therefore not able to follow this route. Hence, in the absence of a more specific variable measuring workers’ skills, we carry out two additional exercises. First, we use age as an additional proxy of workers’ skills and abilities to perform their job. Table 8 reports marginal effects of machine replacement on job satisfaction for workers of different education levels and for different age groups. The results confirm the main finding noted above. The marginal effect of anticipated machine replacement on present job satisfaction of the workers without a college degree is negative and significant for all sub-groups (except those younger than 30), and it is not significant for workers with a University degree. This corroborates the main finding of our analysis that machine replacement has a negative effect on job satisfaction, and that this effect is particularly relevant for low-skilled workers.
https://doi.org/10.1371/journal.pone.0242929.t008
Second, it may be argued that the education variable does not only measure workers’ skills, but it is also a proxy for employability , since workers with higher education levels can more easily find a new job. If so, employability, rather than skills, could be the latent variable moderating the effect of fear of replacement on job satisfaction. To address this possibility, we make use of two additional variables measuring employability: (1) Difficult to find a new job (“How difficult or easy do you think it would be for you to find a job that is at least as good as the one you have now?”); (2) Insufficient skills in current job (“How often do you experience insufficient competence to perform your tasks?”). Then we include these two variables as additional controls in our first and second stage regressions, and report the results of these robustness tests in tables A8 to A10 in S1 File . First stage results (Tables A8 and A9 in S1 File ) show that the inclusion of the additional controls for employability does not affect the main result about the effect of robot adoption on machine replacement, and that this effect is still stronger for workers with lower education level. Second stage results (Table A10 in S1 File ) are also in line with our baseline estimations: in the extended model specification that controls for employability, the effect of machine replacement on job satisfaction is still negative and significantfor workers of lower education level (across age groups). In short, these additional exercises show that, even when we control for employability, workers’ education level moderates the effect of fear of replacement on job satisfaction, and it may thus be considered as a reasonable proxy measure of latent workers’ skills.
Robustness tests
Our identification strategy rests on the assumption that the (lagged) introduction of robots in local labor markets in Norway affects current job satisfaction only through its effects on workers’ fear of replacement. Although our regressions control for a set of relevant employee-level characteristics and include region- and time fixed effects, it is also useful to carry out some additional robustness exercises to test the potential confounding effects of omitted variables that may in principle affect both fear of replacement and the error term of the outcome equation.
Tables A11 and A12 in S1 File report estimation results of first and second stage regressions that include some additional region-level control variables in the model. The first two columns add region’s GDP and tertiary education level, which may be thought to be general relevant factors that may drive both the introduction of industrial robots and job satisfaction patterns. Though, the estimated coefficients of the instrumental variable robot adoption (Table A11 in S1 File ) and of the machine replacement variable (Table A12 in S1 File ) are still significant and stable after the introduction of these two possible confounding factors. Regressions in column 3 add a variable measuring business building broadband infrastructure in each region. The reason for including this variable is that ICT diffusion may be a potentially conflating factor that can disturb the effect of robots adoption on employment [ 3 , 37 ]. By controlling for broadband internet access in office buildings we address this concern, reasonably assuming that the development of broadband infrastructure is driven by policies and investments that are exogenous to the individual worker. Again, the inclusion of this additional control does not affect the estimated coefficient of the robot variable in Table A11 in S1 File , and of the machine replacement variable in Table A12 in S1 File . These coefficients still have the same signs and significance levels, and their estimated size is slightly larger than in baseline regressions. Finally, columns 4, 5 and 6 also add three other region-level controls: unemployment benefit recipients (share of population in each region), share of large companies in each region, and population size (log). The unemployment benefit variable controls for the possible confounding effect of different unemployment rates across regions. The share of large companies takes into account the fact that large firms do on average have a higher rate of introduction and use of industrial robots (see Tables A1 and A4 in S1 File ), so that employees in regions with a high share of large firms are potentially more exposed to the effects of automation. Finally, the population variable is a standard control for the size and density of the region, which may be related to the extent and intensity of peer effects that affect workers’ fear of replacement. However, the inclusion of these additional variables does not affect the main results for the explanatory variables of our interest.
As a further robustness test, Table A13 in S1 File reports the results of a placebo test that adds a lead variable–robust exposure at year t+1 –to the set of regressors in the first stage equation (including also the three additional region-level control variables noted in the previous paragraph). In these placebo regressions, the future robot adoption variable is not significant, and its inclusion does not affect the sign and size of the estimated coefficient of the instrumental variable (lagged pace of robot adoption). This further rules out the possibility that our results are driven by some omitted variables that are related to both job satisfaction and robot adoption.
Next, it is interesting to consider the question on whether our instrumental variable (pace of robot adoption in industry-regions) should be regarded as a peer effect or rather a neighbor effect . Table A14 (in S1 File ) considers this question by including two additional control variables in the first stage regressions. The first additional control is robot adoption in the other three industries in the same region; and the second one is robot adoption in the same industry in all other regions in Norway. In other words, these two additional controls are proxies for inter-industry and inter-regional neighboring effects, respectively. Table A14 in S1 File shows that none of these variables are significantly correlated with fear of replacement, and their inclusion does not affect the precision of the instrumental variable (robot adoption in a given industry-region). These robustness exercises provide further evidence that our instrumental variable catches peer effects that are specific to each industry-region, and that hold even after controlling for neighbor effects related to robot adoption in surrounding regions and industries in Norway.
Finally, it is relevant to comment further on the role of one of the control variables in the model: union membership. As noted in relation to Table 4 (and other first stage results reported in the online appendix), workers that belong to a trade union do on average report lower fear of machine replacement. This may suggest that workers in trade unions feel they are more protected from the impacts of industrial robots. However, this pattern is in contrast with Acemoglu and Restrepo [ 44 ], which find a positive association between industrial robot adoption and unionization rates across countries, arguing that this is due to the fact that unionization may raise labor costs. Yet, skill-biased technical change also creates a stronger incentive for deunionization because the outside employment and wage options of skilled workers have improved [ 56 ]. To investigate this further, we run additional regressions in which we interact our two main explanatory variables (robot adoption in the first stage, and machine replacement in the second stage) with the union membership variable. The idea is to test directly whether Norwegian workers that belong to a trade union do on average think that they are less likely to be affected by automation. However, the results of these regressions (reported in Table A14 in S1 File ) show that the two additional interaction variables are not statistically significant. We think that the role of union membership as a factor moderating the effects of industrial automation is an interesting topic for future research.
7. Conclusions
The swift pace of introduction of industrial robots, AI and smart machines in production activities in recent years represents a new major process of Schumpeterian creative destruction. This process will in the near future lead to dramatic consequences for employment in many sectors and regions, and it will at the same time create new unprecedented opportunities for productivity growth, wealth and well-being. As for other major transformations in the past, this structural change and the related transition and adjustment process will arguably not be smooth and swift: it will unfold over a period of several years, and it will lead to important negative impacts in the short-run before the long-run economic and societal benefits will eventually emerge.
Studying the effects of automation on employment, extant research has so far mostly focused on aggregate impacts that industrial robots and AI have on employment demand and wages for different industries and countries. The present paper has argued that it is important to shift the focus to the micro-level of analysis and study the impacts of automation technologies on individual workers’ well-being. Specifically, we have put forward the idea that the relevant impacts that it is important to study are not only pecuniary (i.e. related to workers’ employment conditions and wages) but also nonpecuniary (i.e. related to workers’ expectations and future job prospects). Ceteris paribus , workers that fear that their working tasks might be replaced by a smart machine in the future may have a lower job satisfaction at present than workers who have more secure job prospects and less uncertainty about the future.
We have investigated this idea by considering a large sample of workers in Norway for the period 2016–2019, and studying the extent to which the introduction of industrial robots in local labor markets affect workers’ fear of being replaced in the future, and in this way hamper their subjective well-being. Our data and results provide a quite striking picture. 40% of Norwegian workers in our sample think their working tasks might be replaced by a machine, and our analysis shows that this fear of replacement significantly lowers their job satisfaction at present. We also find that this transmission mechanism is driven by low-skilled workers, which are those carrying out routine-based tasks, and who are therefore aware to be more exposed to the risks of automation. On the whole, we think that our empirical findings are not only relevant for Norway (the country to which our dataset refers), but they can in principle have more general lessons for other countries too. Automation is by now an important trend that is rapidly diffusing worldwide, and its effect on workers’ health and well-being is therefore a topic of high societal relevance. Schwabe (2019) provides related evidence using a different dataset for a larger sample of European countries. The present work calls therefore for further research that may investigate and extend this research topic in a variety of different countries and continents.
A first important policy implication of our results is that the current process of structural change and creative destruction will in the short-run likely lead to stronger fear of replacement and uncertainty about the future for low-skilled workers carrying out routine work in factories, thus possibly leading to further polarization not only in terms of employment and wages, but also in terms of subjective well-being. To mitigate these negative consequences, which are already visible at present, national authorities should actively support training and re-training policies in such a way that workers that are exposed to future replacement may build up new competencies that can increase their ability to work with smart machines, as well as increase their qualifications and the likelihood to find a new job if this will become necessary in the future. If fear of replacement triggers workers to participate in such training is an interesting question for future studies. In other words, by giving better future prospects to more vulnerable workers, training policies will also contribute to enhance their subjective well-being at present.
Our results also suggest a second reflection and possible policy implication. As noted above, 40% of Norwegian workers in our sample think that their working tasks might be replaced by a machine. According to the Eurobarometer survey, the extent of fear of replacement is roughly the same for workers in other European countries [ 12 ]. This number is quite high indeed. Is it reasonable that so many workers fear competition from smart machines, and why is it so?
Extant research on automation and employment has not yet reached a consensus on the direction and size of these effects, and it still presents a vivid debate between those that emphasize negative consequences and those that point out positive economic and societal effects. Hence, there is no clear scientific evidence and consensus at present that could provide the basis for individual workers to form rational and well-informed assessments and expectations about their job prospects in the future. It is therefore reasonable to ask whether the generalized fear of competition from smart machines is actually exaggerated and not based on extant research and established knowledge. The concrete risk is that–in the current phase of rapid and disruptive technological change–societal debates in the media on robots, automation and AI may tend to exaggerate risks and depict gloomy future scenarios, while often neglecting possible long-run benefits for the economy and the society, which are indeed even hard to imagine at the moment [ 1 ].
Since media debates on this topic are often biased and tend to overemphasize the negative impacts of automation (which are arguably more “catchy” and attractive for the uninformed audience), this may contribute to explain why so many workers report to fear future machine replacement. However, our paper has shown that such subjective individual assessments about the future may indeed hamper job satisfaction at present. This can also lead to anxiety, mental stress and low motivation at work, which may in turn depress creativity, productivity and innovation in the workplace.
In short, we should not disregard the possibility that a biased and uninformed presentation of this topic in the media may indeed have concrete negative consequences on workers’ subjective well-being by affecting their beliefs about future job prospects. The policy implications of this are certainly not easy to draw. A major point, though, is to stress the importance of having better informed societal debates in the media, and particularly in State-owned channels, that take a more balanced view of the negative and positive consequences of automation, and that avoid spreading fears and gloomy scenarios that are not based on solid evidence and arguments.
Supporting information
S1 file. online appendix: additional information and robustness tests..
Containing Tables A.1 to A.15.
https://doi.org/10.1371/journal.pone.0242929.s001
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- DOI: 10.6007/IJARBSS/V4-I8/1105
- Corpus ID: 178221695
Investigating the Effect of Office Automation on Organizational Excellence
- N. Yaghoubi , Abbas Ali Sargazi
- Published 20 August 2014
- The International Journal of Academic Research in Business and Social Sciences
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The effectiveness of the administrative automation system from point of view the employees (automation of the green organization formation platform), influence of technological innovation on performance of small and medium enterprises in nanyuki town, laikipia county, kenya, non-store retailing and customer satisfaction in asaba metropolis, delta state, nigeria, pharmacy stores profitability and sustainability in bulawayo, zimbabwe, design and implementation of an automated office environment system using embedded sensors, research and development of an unmanned aerial vehicle to automate monitoring of wireless access points, the effectiveness dimensions of intelligent secretariat in tehran university of medical sciences, 11 references, the impact of office automation on the organization: some implications for research and practice, the balanced scorecard: a foundation for the strategic management of information systems, a framework for the life cycle management of information technology projects: projectit, management information systems, bsc and benchmark development for an e‐commerce sme, office automation systems, related papers.
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Workers are using AI in the office - but where are the rules?
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Measurable benefits from deploying generative artificial intelligence are already achievable, say technology and automation experts, but organisations must get serious about planning. The warning comes as new research finds over half of Australian workers are using generative AI without proper rules or guidance.
Research conducted by automation specialist technology firm UiPath, speaking to more than 1100 Australian knowledge workers across government, healthcare, professional services, finance, real estate, and education sectors, found almost half, or 44 per cent are using generative AI at work.
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The economic potential of generative AI: The next productivity frontier
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AI has permeated our lives incrementally, through everything from the tech powering our smartphones to autonomous-driving features on cars to the tools retailers use to surprise and delight consumers. As a result, its progress has been almost imperceptible. Clear milestones, such as when AlphaGo, an AI-based program developed by DeepMind, defeated a world champion Go player in 2016, were celebrated but then quickly faded from the public’s consciousness.
Generative AI applications such as ChatGPT, GitHub Copilot, Stable Diffusion, and others have captured the imagination of people around the world in a way AlphaGo did not, thanks to their broad utility—almost anyone can use them to communicate and create—and preternatural ability to have a conversation with a user. The latest generative AI applications can perform a range of routine tasks, such as the reorganization and classification of data. But it is their ability to write text, compose music, and create digital art that has garnered headlines and persuaded consumers and households to experiment on their own. As a result, a broader set of stakeholders are grappling with generative AI’s impact on business and society but without much context to help them make sense of it.
About the authors
This article is a collaborative effort by Michael Chui , Eric Hazan , Roger Roberts , Alex Singla , Kate Smaje , Alex Sukharevsky , Lareina Yee , and Rodney Zemmel , representing views from QuantumBlack, AI by McKinsey; McKinsey Digital; the McKinsey Technology Council; the McKinsey Global Institute; and McKinsey’s Growth, Marketing & Sales Practice.
The speed at which generative AI technology is developing isn’t making this task any easier. ChatGPT was released in November 2022. Four months later, OpenAI released a new large language model, or LLM, called GPT-4 with markedly improved capabilities. 1 “Introducing ChatGPT,” OpenAI, November 30, 2022; “GPT-4 is OpenAI’s most advanced system, producing safer and more useful responses,” OpenAI, accessed June 1, 2023. Similarly, by May 2023, Anthropic’s generative AI, Claude, was able to process 100,000 tokens of text, equal to about 75,000 words in a minute—the length of the average novel—compared with roughly 9,000 tokens when it was introduced in March 2023. 2 “Introducing Claude,” Anthropic PBC, March 14, 2023; “Introducing 100K Context Windows,” Anthropic PBC, May 11, 2023. And in May 2023, Google announced several new features powered by generative AI, including Search Generative Experience and a new LLM called PaLM 2 that will power its Bard chatbot, among other Google products. 3 Emma Roth, “The nine biggest announcements from Google I/O 2023,” The Verge , May 10, 2023.
To grasp what lies ahead requires an understanding of the breakthroughs that have enabled the rise of generative AI, which were decades in the making. For the purposes of this report, we define generative AI as applications typically built using foundation models. These models contain expansive artificial neural networks inspired by the billions of neurons connected in the human brain. Foundation models are part of what is called deep learning, a term that alludes to the many deep layers within neural networks. Deep learning has powered many of the recent advances in AI, but the foundation models powering generative AI applications are a step-change evolution within deep learning. Unlike previous deep learning models, they can process extremely large and varied sets of unstructured data and perform more than one task.
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Future frontiers: Navigating the next wave of tech innovations
Join Lareina Yee and Roger Roberts on Tuesday, July 30, at 12:30 p.m. EDT/6:30 p.m. CET as they discuss the future of these technological trends, the factors that will fuel their growth, and strategies for investing in them through 2024 and beyond.
Foundation models have enabled new capabilities and vastly improved existing ones across a broad range of modalities, including images, video, audio, and computer code. AI trained on these models can perform several functions; it can classify, edit, summarize, answer questions, and draft new content, among other tasks.
All of us are at the beginning of a journey to understand generative AI’s power, reach, and capabilities. This research is the latest in our efforts to assess the impact of this new era of AI. It suggests that generative AI is poised to transform roles and boost performance across functions such as sales and marketing, customer operations, and software development. In the process, it could unlock trillions of dollars in value across sectors from banking to life sciences. The following sections share our initial findings.
For the full version of this report, download the PDF .
Key insights
Generative AI’s impact on productivity could add trillions of dollars in value to the global economy. Our latest research estimates that generative AI could add the equivalent of $2.6 trillion to $4.4 trillion annually across the 63 use cases we analyzed—by comparison, the United Kingdom’s entire GDP in 2021 was $3.1 trillion. This would increase the impact of all artificial intelligence by 15 to 40 percent. This estimate would roughly double if we include the impact of embedding generative AI into software that is currently used for other tasks beyond those use cases.
About 75 percent of the value that generative AI use cases could deliver falls across four areas: Customer operations, marketing and sales, software engineering, and R&D. Across 16 business functions, we examined 63 use cases in which the technology can address specific business challenges in ways that produce one or more measurable outcomes. Examples include generative AI’s ability to support interactions with customers, generate creative content for marketing and sales, and draft computer code based on natural-language prompts, among many other tasks.
Generative AI will have a significant impact across all industry sectors. Banking, high tech, and life sciences are among the industries that could see the biggest impact as a percentage of their revenues from generative AI. Across the banking industry, for example, the technology could deliver value equal to an additional $200 billion to $340 billion annually if the use cases were fully implemented. In retail and consumer packaged goods, the potential impact is also significant at $400 billion to $660 billion a year.
Generative AI has the potential to change the anatomy of work, augmenting the capabilities of individual workers by automating some of their individual activities. Current generative AI and other technologies have the potential to automate work activities that absorb 60 to 70 percent of employees’ time today. In contrast, we previously estimated that technology has the potential to automate half of the time employees spend working. 4 “ Harnessing automation for a future that works ,” McKinsey Global Institute, January 12, 2017. The acceleration in the potential for technical automation is largely due to generative AI’s increased ability to understand natural language, which is required for work activities that account for 25 percent of total work time. Thus, generative AI has more impact on knowledge work associated with occupations that have higher wages and educational requirements than on other types of work.
The pace of workforce transformation is likely to accelerate, given increases in the potential for technical automation. Our updated adoption scenarios, including technology development, economic feasibility, and diffusion timelines, lead to estimates that half of today’s work activities could be automated between 2030 and 2060, with a midpoint in 2045, or roughly a decade earlier than in our previous estimates.
Generative AI can substantially increase labor productivity across the economy, but that will require investments to support workers as they shift work activities or change jobs. Generative AI could enable labor productivity growth of 0.1 to 0.6 percent annually through 2040, depending on the rate of technology adoption and redeployment of worker time into other activities. Combining generative AI with all other technologies, work automation could add 0.5 to 3.4 percentage points annually to productivity growth. However, workers will need support in learning new skills, and some will change occupations. If worker transitions and other risks can be managed, generative AI could contribute substantively to economic growth and support a more sustainable, inclusive world.
The era of generative AI is just beginning. Excitement over this technology is palpable, and early pilots are compelling. But a full realization of the technology’s benefits will take time, and leaders in business and society still have considerable challenges to address. These include managing the risks inherent in generative AI, determining what new skills and capabilities the workforce will need, and rethinking core business processes such as retraining and developing new skills.
Where business value lies
Generative AI is a step change in the evolution of artificial intelligence. As companies rush to adapt and implement it, understanding the technology’s potential to deliver value to the economy and society at large will help shape critical decisions. We have used two complementary lenses to determine where generative AI, with its current capabilities, could deliver the biggest value and how big that value could be (Exhibit 1).
The first lens scans use cases for generative AI that organizations could adopt. We define a “use case” as a targeted application of generative AI to a specific business challenge, resulting in one or more measurable outcomes. For example, a use case in marketing is the application of generative AI to generate creative content such as personalized emails, the measurable outcomes of which potentially include reductions in the cost of generating such content and increases in revenue from the enhanced effectiveness of higher-quality content at scale. We identified 63 generative AI use cases spanning 16 business functions that could deliver total value in the range of $2.6 trillion to $4.4 trillion in economic benefits annually when applied across industries.
That would add 15 to 40 percent to the $11 trillion to $17.7 trillion of economic value that we now estimate nongenerative artificial intelligence and analytics could unlock. (Our previous estimate from 2017 was that AI could deliver $9.5 trillion to $15.4 trillion in economic value.)
Our second lens complements the first by analyzing generative AI’s potential impact on the work activities required in some 850 occupations. We modeled scenarios to estimate when generative AI could perform each of more than 2,100 “detailed work activities”—such as “communicating with others about operational plans or activities”—that make up those occupations across the world economy. This enables us to estimate how the current capabilities of generative AI could affect labor productivity across all work currently done by the global workforce.
Some of this impact will overlap with cost reductions in the use case analysis described above, which we assume are the result of improved labor productivity. Netting out this overlap, the total economic benefits of generative AI —including the major use cases we explored and the myriad increases in productivity that are likely to materialize when the technology is applied across knowledge workers’ activities—amounts to $6.1 trillion to $7.9 trillion annually (Exhibit 2).
How we estimated the value potential of generative AI use cases
To assess the potential value of generative AI, we updated a proprietary McKinsey database of potential AI use cases and drew on the experience of more than 100 experts in industries and their business functions. 1 ” Notes from the AI frontier: Applications and value of deep learning ,” McKinsey Global Institute, April 17, 2018.
Our updates examined use cases of generative AI—specifically, how generative AI techniques (primarily transformer-based neural networks) can be used to solve problems not well addressed by previous technologies.
We analyzed only use cases for which generative AI could deliver a significant improvement in the outputs that drive key value. In particular, our estimates of the primary value the technology could unlock do not include use cases for which the sole benefit would be its ability to use natural language. For example, natural-language capabilities would be the key driver of value in a customer service use case but not in a use case optimizing a logistics network, where value primarily arises from quantitative analysis.
We then estimated the potential annual value of these generative AI use cases if they were adopted across the entire economy. For use cases aimed at increasing revenue, such as some of those in sales and marketing, we estimated the economy-wide value generative AI could deliver by increasing the productivity of sales and marketing expenditures.
Our estimates are based on the structure of the global economy in 2022 and do not consider the value generative AI could create if it produced entirely new product or service categories.
While generative AI is an exciting and rapidly advancing technology, the other applications of AI discussed in our previous report continue to account for the majority of the overall potential value of AI. Traditional advanced-analytics and machine learning algorithms are highly effective at performing numerical and optimization tasks such as predictive modeling, and they continue to find new applications in a wide range of industries. However, as generative AI continues to develop and mature, it has the potential to open wholly new frontiers in creativity and innovation. It has already expanded the possibilities of what AI overall can achieve (see sidebar “How we estimated the value potential of generative AI use cases”).
In this section, we highlight the value potential of generative AI across business functions.
Generative AI could have an impact on most business functions; however, a few stand out when measured by the technology’s impact as a share of functional cost (Exhibit 3). Our analysis of 16 business functions identified just four—customer operations, marketing and sales, software engineering, and research and development—that could account for approximately 75 percent of the total annual value from generative AI use cases.
Notably, the potential value of using generative AI for several functions that were prominent in our previous sizing of AI use cases, including manufacturing and supply chain functions, is now much lower. 5 Pitchbook. This is largely explained by the nature of generative AI use cases, which exclude most of the numerical and optimization applications that were the main value drivers for previous applications of AI.
In addition to the potential value generative AI can deliver in function-specific use cases, the technology could drive value across an entire organization by revolutionizing internal knowledge management systems. Generative AI’s impressive command of natural-language processing can help employees retrieve stored internal knowledge by formulating queries in the same way they might ask a human a question and engage in continuing dialogue. This could empower teams to quickly access relevant information, enabling them to rapidly make better-informed decisions and develop effective strategies.
In 2012, the McKinsey Global Institute (MGI) estimated that knowledge workers spent about a fifth of their time, or one day each work week, searching for and gathering information. If generative AI could take on such tasks, increasing the efficiency and effectiveness of the workers doing them, the benefits would be huge. Such virtual expertise could rapidly “read” vast libraries of corporate information stored in natural language and quickly scan source material in dialogue with a human who helps fine-tune and tailor its research, a more scalable solution than hiring a team of human experts for the task.
In other cases, generative AI can drive value by working in partnership with workers, augmenting their work in ways that accelerate their productivity. Its ability to rapidly digest mountains of data and draw conclusions from it enables the technology to offer insights and options that can dramatically enhance knowledge work. This can significantly speed up the process of developing a product and allow employees to devote more time to higher-impact tasks.
Following are four examples of how generative AI could produce operational benefits in a handful of use cases across the business functions that could deliver a majority of the potential value we identified in our analysis of 63 generative AI use cases. In the first two examples, it serves as a virtual expert, while in the following two, it lends a hand as a virtual collaborator.
Customer operations: Improving customer and agent experiences
Generative AI has the potential to revolutionize the entire customer operations function, improving the customer experience and agent productivity through digital self-service and enhancing and augmenting agent skills. The technology has already gained traction in customer service because of its ability to automate interactions with customers using natural language. Research found that at one company with 5,000 customer service agents, the application of generative AI increased issue resolution by 14 percent an hour and reduced the time spent handling an issue by 9 percent. 1 Erik Brynjolfsson, Danielle Li, and Lindsey R. Raymond, Generative AI at work , National Bureau of Economic Research working paper number 31161, April 2023. It also reduced agent attrition and requests to speak to a manager by 25 percent. Crucially, productivity and quality of service improved most among less-experienced agents, while the AI assistant did not increase—and sometimes decreased—the productivity and quality metrics of more highly skilled agents. This is because AI assistance helped less-experienced agents communicate using techniques similar to those of their higher-skilled counterparts.
The following are examples of the operational improvements generative AI can have for specific use cases:
- Customer self-service. Generative AI–fueled chatbots can give immediate and personalized responses to complex customer inquiries regardless of the language or location of the customer. By improving the quality and effectiveness of interactions via automated channels, generative AI could automate responses to a higher percentage of customer inquiries, enabling customer care teams to take on inquiries that can only be resolved by a human agent. Our research found that roughly half of customer contacts made by banking, telecommunications, and utilities companies in North America are already handled by machines, including but not exclusively AI. We estimate that generative AI could further reduce the volume of human-serviced contacts by up to 50 percent, depending on a company’s existing level of automation.
- Resolution during initial contact. Generative AI can instantly retrieve data a company has on a specific customer, which can help a human customer service representative more successfully answer questions and resolve issues during an initial interaction.
- Reduced response time. Generative AI can cut the time a human sales representative spends responding to a customer by providing assistance in real time and recommending next steps.
- Increased sales. Because of its ability to rapidly process data on customers and their browsing histories, the technology can identify product suggestions and deals tailored to customer preferences. Additionally, generative AI can enhance quality assurance and coaching by gathering insights from customer conversations, determining what could be done better, and coaching agents.
We estimate that applying generative AI to customer care functions could increase productivity at a value ranging from 30 to 45 percent of current function costs.
Our analysis captures only the direct impact generative AI might have on the productivity of customer operations. It does not account for potential knock-on effects the technology may have on customer satisfaction and retention arising from an improved experience, including better understanding of the customer’s context that can assist human agents in providing more personalized help and recommendations.
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Marketing and sales: Boosting personalization, content creation, and sales productivity
Generative AI has taken hold rapidly in marketing and sales functions, in which text-based communications and personalization at scale are driving forces. The technology can create personalized messages tailored to individual customer interests, preferences, and behaviors, as well as do tasks such as producing first drafts of brand advertising, headlines, slogans, social media posts, and product descriptions.
Introducing generative AI to marketing functions requires careful consideration. For one thing, mathematical models trained on publicly available data without sufficient safeguards against plagiarism, copyright violations, and branding recognition risks infringing on intellectual property rights. A virtual try-on application may produce biased representations of certain demographics because of limited or biased training data. Thus, significant human oversight is required for conceptual and strategic thinking specific to each company’s needs.
Potential operational benefits from using generative AI for marketing include the following:
- Efficient and effective content creation. Generative AI could significantly reduce the time required for ideation and content drafting, saving valuable time and effort. It can also facilitate consistency across different pieces of content, ensuring a uniform brand voice, writing style, and format. Team members can collaborate via generative AI, which can integrate their ideas into a single cohesive piece. This would allow teams to significantly enhance personalization of marketing messages aimed at different customer segments, geographies, and demographics. Mass email campaigns can be instantly translated into as many languages as needed, with different imagery and messaging depending on the audience. Generative AI’s ability to produce content with varying specifications could increase customer value, attraction, conversion, and retention over a lifetime and at a scale beyond what is currently possible through traditional techniques.
- Enhanced use of data. Generative AI could help marketing functions overcome the challenges of unstructured, inconsistent, and disconnected data—for example, from different databases—by interpreting abstract data sources such as text, image, and varying structures. It can help marketers better use data such as territory performance, synthesized customer feedback, and customer behavior to generate data-informed marketing strategies such as targeted customer profiles and channel recommendations. Such tools could identify and synthesize trends, key drivers, and market and product opportunities from unstructured data such as social media, news, academic research, and customer feedback.
- SEO optimization. Generative AI can help marketers achieve higher conversion and lower cost through search engine optimization (SEO) for marketing and sales technical components such as page titles, image tags, and URLs. It can synthesize key SEO tokens, support specialists in SEO digital content creation, and distribute targeted content to customers.
- Product discovery and search personalization. With generative AI, product discovery and search can be personalized with multimodal inputs from text, images, and speech, and a deep understanding of customer profiles. For example, technology can leverage individual user preferences, behavior, and purchase history to help customers discover the most relevant products and generate personalized product descriptions. This would allow CPG, travel, and retail companies to improve their e-commerce sales by achieving higher website conversion rates.
We estimate that generative AI could increase the productivity of the marketing function with a value between 5 and 15 percent of total marketing spending.
Our analysis of the potential use of generative AI in marketing doesn’t account for knock-on effects beyond the direct impacts on productivity. Generative AI–enabled synthesis could provide higher-quality data insights, leading to new ideas for marketing campaigns and better-targeted customer segments. Marketing functions could shift resources to producing higher-quality content for owned channels, potentially reducing spending on external channels and agencies.
Generative AI could also change the way both B2B and B2C companies approach sales. The following are two use cases for sales:
- Increase probability of sale. Generative AI could identify and prioritize sales leads by creating comprehensive consumer profiles from structured and unstructured data and suggesting actions to staff to improve client engagement at every point of contact. For example, generative AI could provide better information about client preferences, potentially improving close rates.
- Improve lead development. Generative AI could help sales representatives nurture leads by synthesizing relevant product sales information and customer profiles and creating discussion scripts to facilitate customer conversation, including up- and cross-selling talking points. It could also automate sales follow-ups and passively nurture leads until clients are ready for direct interaction with a human sales agent.
Our analysis suggests that implementing generative AI could increase sales productivity by approximately 3 to 5 percent of current global sales expenditures.
This analysis may not fully account for additional revenue that generative AI could bring to sales functions. For instance, generative AI’s ability to identify leads and follow-up capabilities could uncover new leads and facilitate more effective outreach that would bring in additional revenue. Also, the time saved by sales representatives due to generative AI’s capabilities could be invested in higher-quality customer interactions, resulting in increased sales success.
Software engineering: Speeding developer work as a coding assistant
Treating computer languages as just another language opens new possibilities for software engineering. Software engineers can use generative AI in pair programming and to do augmented coding and train LLMs to develop applications that generate code when given a natural-language prompt describing what that code should do.
Software engineering is a significant function in most companies, and it continues to grow as all large companies, not just tech titans, embed software in a wide array of products and services. For example, much of the value of new vehicles comes from digital features such as adaptive cruise control, parking assistance, and IoT connectivity.
According to our analysis, the direct impact of AI on the productivity of software engineering could range from 20 to 45 percent of current annual spending on the function. This value would arise primarily from reducing time spent on certain activities, such as generating initial code drafts, code correction and refactoring, root-cause analysis, and generating new system designs. By accelerating the coding process, generative AI could push the skill sets and capabilities needed in software engineering toward code and architecture design. One study found that software developers using Microsoft’s GitHub Copilot completed tasks 56 percent faster than those not using the tool. 1 Peter Cihon et al., The impact of AI on developer productivity: Evidence from GitHub Copilot , Cornell University arXiv software engineering working paper, arXiv:2302.06590, February 13, 2023. An internal McKinsey empirical study of software engineering teams found those who were trained to use generative AI tools rapidly reduced the time needed to generate and refactor code—and engineers also reported a better work experience, citing improvements in happiness, flow, and fulfillment.
Our analysis did not account for the increase in application quality and the resulting boost in productivity that generative AI could bring by improving code or enhancing IT architecture—which can improve productivity across the IT value chain. However, the quality of IT architecture still largely depends on software architects, rather than on initial drafts that generative AI’s current capabilities allow it to produce.
Large technology companies are already selling generative AI for software engineering, including GitHub Copilot, which is now integrated with OpenAI’s GPT-4, and Replit, used by more than 20 million coders. 2 Michael Nuñez, “Google and Replit join forces to challenge Microsoft in coding tools,” VentureBeat, March 28, 2023.
Product R&D: Reducing research and design time, improving simulation and testing
Generative AI’s potential in R&D is perhaps less well recognized than its potential in other business functions. Still, our research indicates the technology could deliver productivity with a value ranging from 10 to 15 percent of overall R&D costs.
For example, the life sciences and chemical industries have begun using generative AI foundation models in their R&D for what is known as generative design. Foundation models can generate candidate molecules, accelerating the process of developing new drugs and materials. Entos, a biotech pharmaceutical company, has paired generative AI with automated synthetic development tools to design small-molecule therapeutics. But the same principles can be applied to the design of many other products, including larger-scale physical products and electrical circuits, among others.
While other generative design techniques have already unlocked some of the potential to apply AI in R&D, their cost and data requirements, such as the use of “traditional” machine learning, can limit their application. Pretrained foundation models that underpin generative AI, or models that have been enhanced with fine-tuning, have much broader areas of application than models optimized for a single task. They can therefore accelerate time to market and broaden the types of products to which generative design can be applied. For now, however, foundation models lack the capabilities to help design products across all industries.
In addition to the productivity gains that result from being able to quickly produce candidate designs, generative design can also enable improvements in the designs themselves, as in the following examples of the operational improvements generative AI could bring:
- Enhanced design. Generative AI can help product designers reduce costs by selecting and using materials more efficiently. It can also optimize designs for manufacturing, which can lead to cost reductions in logistics and production.
- Improved product testing and quality. Using generative AI in generative design can produce a higher-quality product, resulting in increased attractiveness and market appeal. Generative AI can help to reduce testing time of complex systems and accelerate trial phases involving customer testing through its ability to draft scenarios and profile testing candidates.
We also identified a new R&D use case for nongenerative AI: deep learning surrogates, the use of which has grown since our earlier research, can be paired with generative AI to produce even greater benefits. To be sure, integration will require the development of specific solutions, but the value could be significant because deep learning surrogates have the potential to accelerate the testing of designs proposed by generative AI.
While we have estimated the potential direct impacts of generative AI on the R&D function, we did not attempt to estimate the technology’s potential to create entirely novel product categories. These are the types of innovations that can produce step changes not only in the performance of individual companies but in economic growth overall.
Industry impacts
Across the 63 use cases we analyzed, generative AI has the potential to generate $2.6 trillion to $4.4 trillion in value across industries. Its precise impact will depend on a variety of factors, such as the mix and importance of different functions, as well as the scale of an industry’s revenue (Exhibit 4).
For example, our analysis estimates generative AI could contribute roughly $310 billion in additional value for the retail industry (including auto dealerships) by boosting performance in functions such as marketing and customer interactions. By comparison, the bulk of potential value in high tech comes from generative AI’s ability to increase the speed and efficiency of software development (Exhibit 5).
In the banking industry, generative AI has the potential to improve on efficiencies already delivered by artificial intelligence by taking on lower-value tasks in risk management, such as required reporting, monitoring regulatory developments, and collecting data. In the life sciences industry, generative AI is poised to make significant contributions to drug discovery and development.
We share our detailed analysis of these industries below.
Generative AI supports key value drivers in retail and consumer packaged goods
The technology could generate value for the retail and consumer packaged goods (CPG) industry by increasing productivity by 1.2 to 2.0 percent of annual revenues, or an additional $400 billion to $660 billion. 1 Vehicular retail is included as part of our overall retail analysis. To streamline processes, generative AI could automate key functions such as customer service, marketing and sales, and inventory and supply chain management. Technology has played an essential role in the retail and CPG industries for decades. Traditional AI and advanced analytics solutions have helped companies manage vast pools of data across large numbers of SKUs, expansive supply chain and warehousing networks, and complex product categories such as consumables. In addition, the industries are heavily customer facing, which offers opportunities for generative AI to complement previously existing artificial intelligence. For example, generative AI’s ability to personalize offerings could optimize marketing and sales activities already handled by existing AI solutions. Similarly, generative AI tools excel at data management and could support existing AI-driven pricing tools. Applying generative AI to such activities could be a step toward integrating applications across a full enterprise.
Generative AI at work in retail and CPG
Reinvention of the customer interaction pattern.
Consumers increasingly seek customization in everything from clothing and cosmetics to curated shopping experiences, personalized outreach, and food—and generative AI can improve that experience. Generative AI can aggregate market data to test concepts, ideas, and models. Stitch Fix, which uses algorithms to suggest style choices to its customers, has experimented with DALL·E to visualize products based on customer preferences regarding color, fabric, and style. Using text-to-image generation, the company’s stylists can visualize an article of clothing based on a consumer’s preferences and then identify a similar article among Stitch Fix’s inventory.
Retailers can create applications that give shoppers a next-generation experience, creating a significant competitive advantage in an era when customers expect to have a single natural-language interface help them select products. For example, generative AI can improve the process of choosing and ordering ingredients for a meal or preparing food—imagine a chatbot that could pull up the most popular tips from the comments attached to a recipe. There is also a big opportunity to enhance customer value management by delivering personalized marketing campaigns through a chatbot. Such applications can have human-like conversations about products in ways that can increase customer satisfaction, traffic, and brand loyalty. Generative AI offers retailers and CPG companies many opportunities to cross-sell and upsell, collect insights to improve product offerings, and increase their customer base, revenue opportunities, and overall marketing ROI.
Accelerating the creation of value in key areas
Generative AI tools can facilitate copy writing for marketing and sales, help brainstorm creative marketing ideas, expedite consumer research, and accelerate content analysis and creation. The potential improvement in writing and visuals can increase awareness and improve sales conversion rates.
Rapid resolution and enhanced insights in customer care
The growth of e-commerce also elevates the importance of effective consumer interactions. Retailers can combine existing AI tools with generative AI to enhance the capabilities of chatbots, enabling them to better mimic the interaction style of human agents—for example, by responding directly to a customer’s query, tracking or canceling an order, offering discounts, and upselling. Automating repetitive tasks allows human agents to devote more time to handling complicated customer problems and obtaining contextual information.
Disruptive and creative innovation
Generative AI tools can enhance the process of developing new versions of products by digitally creating new designs rapidly. A designer can generate packaging designs from scratch or generate variations on an existing design. This technology is developing rapidly and has the potential to add text-to-video generation.
Factors for retail and CPG organizations to consider
As retail and CPG executives explore how to integrate generative AI in their operations, they should keep in mind several factors that could affect their ability to capture value from the technology:
- External inference. Generative AI has increased the need to understand whether generated content is based on fact or inference, requiring a new level of quality control.
- Adversarial attacks. Foundation models are a prime target for attack by hackers and other bad actors, increasing the variety of potential security vulnerabilities and privacy risks.
To address these concerns, retail and CPG companies will need to strategically keep humans in the loop and ensure security and privacy are top considerations for any implementation. Companies will need to institute new quality checks for processes previously handled by humans, such as emails written by customer reps, and perform more-detailed quality checks on AI-assisted processes such as product design.
Why banks could realize significant value
Generative AI could have a significant impact on the banking industry , generating value from increased productivity of 2.8 to 4.7 percent of the industry’s annual revenues, or an additional $200 billion to $340 billion. On top of that impact, the use of generative AI tools could also enhance customer satisfaction, improve decision making and employee experience, and decrease risks through better monitoring of fraud and risk.
Banking, a knowledge and technology-enabled industry, has already benefited significantly from previously existing applications of artificial intelligence in areas such as marketing and customer operations. 1 “ Building the AI bank of the future ,” McKinsey, May 2021. Generative AI applications could deliver additional benefits, especially because text modalities are prevalent in areas such as regulations and programming language, and the industry is customer facing, with many B2C and small-business customers. 2 McKinsey’s Global Banking Annual Review , December 1, 2022.
Several characteristics position the industry for the integration of generative AI applications:
- Sustained digitization efforts along with legacy IT systems. Banks have been investing in technology for decades, accumulating a significant amount of technical debt along with a siloed and complex IT architecture. 3 Akhil Babbar, Raghavan Janardhanan, Remy Paternoster, and Henning Soller, “ Why most digital banking transformations fail—and how to flip the odds ,” McKinsey, April 11, 2023.
- Large customer-facing workforces. Banking relies on a large number of service representatives such as call-center agents and wealth management financial advisers.
- A stringent regulatory environment. As a heavily regulated industry, banking has a substantial number of risk, compliance, and legal needs.
- White-collar industry. Generative AI’s impact could span the organization, assisting all employees in writing emails, creating business presentations, and other tasks.
Generative AI at work in banking
Banks have started to grasp the potential of generative AI in their front lines and in their software activities. Early adopters are harnessing solutions such as ChatGPT as well as industry-specific solutions, primarily for software and knowledge applications. Three uses demonstrate its value potential to the industry.
A virtual expert to augment employee performance
A generative AI bot trained on proprietary knowledge such as policies, research, and customer interaction could provide always-on, deep technical support. Today, frontline spending is dedicated mostly to validating offers and interacting with clients, but giving frontline workers access to data as well could improve the customer experience. The technology could also monitor industries and clients and send alerts on semantic queries from public sources. For example, Morgan Stanley is building an AI assistant using GPT-4, with the aim of helping tens of thousands of wealth managers quickly find and synthesize answers from a massive internal knowledge base. 4 Hugh Son, “Morgan Stanley is testing an OpenAI-powered chatbot for its 16,000 financial advisors,” CNBC, March 14, 2023. The model combines search and content creation so wealth managers can find and tailor information for any client at any moment.
One European bank has leveraged generative AI to develop an environmental, social, and governance (ESG) virtual expert by synthesizing and extracting from long documents with unstructured information. The model answers complex questions based on a prompt, identifying the source of each answer and extracting information from pictures and tables.
Generative AI could reduce the significant costs associated with back-office operations. Such customer-facing chatbots could assess user requests and select the best service expert to address them based on characteristics such as topic, level of difficulty, and type of customer. Through generative AI assistants, service professionals could rapidly access all relevant information such as product guides and policies to instantaneously address customer requests.
Code acceleration to reduce tech debt and deliver software faster
Generative AI tools are useful for software development in four broad categories. First, they can draft code based on context via input code or natural language, helping developers code more quickly and with reduced friction while enabling automatic translations and no- and low-code tools. Second, such tools can automatically generate, prioritize, run, and review different code tests, accelerating testing and increasing coverage and effectiveness. Third, generative AI’s natural-language translation capabilities can optimize the integration and migration of legacy frameworks. Last, the tools can review code to identify defects and inefficiencies in computing. The result is more robust, effective code.
Production of tailored content at scale
Generative AI tools can draw on existing documents and data sets to substantially streamline content generation. These tools can create personalized marketing and sales content tailored to specific client profiles and histories as well as a multitude of alternatives for A/B testing. In addition, generative AI could automatically produce model documentation, identify missing documentation, and scan relevant regulatory updates to create alerts for relevant shifts.
Factors for banks to consider
When exploring how to integrate generative AI into operations, banks can be mindful of a number of factors:
- The level of regulation for different processes. These vary from unregulated processes such as customer service to heavily regulated processes such as credit risk scoring.
- Type of end user. End users vary widely in their expectations and familiarity with generative AI—for example, employees compared with high-net-worth clients.
- Intended level of work automation. AI agents integrated through APIs could act nearly autonomously or as copilots, giving real-time suggestions to agents during customer interactions.
- Data constraints. While public data such as annual reports could be made widely available, there would need to be limits on identifiable details for customers and other internal data.
Pharmaceuticals and medical products could see benefits across the entire value chain
Our analysis finds that generative AI could have a significant impact on the pharmaceutical and medical-product industries—from 2.6 to 4.5 percent of annual revenues across the pharmaceutical and medical-product industries, or $60 billion to $110 billion annually. This big potential reflects the resource-intensive process of discovering new drug compounds. Pharma companies typically spend approximately 20 percent of revenues on R&D, 1 Research and development in the pharmaceutical industry , Congressional Budget Office, April 2021. and the development of a new drug takes an average of ten to 15 years. With this level of spending and timeline, improving the speed and quality of R&D can generate substantial value. For example, lead identification—a step in the drug discovery process in which researchers identify a molecule that would best address the target for a potential new drug—can take several months even with “traditional” deep learning techniques. Foundation models and generative AI can enable organizations to complete this step in a matter of weeks.
Generative AI at work in pharmaceuticals and medical products
Drug discovery involves narrowing the universe of possible compounds to those that could effectively treat specific conditions. Generative AI’s ability to process massive amounts of data and model options can accelerate output across several use cases:
Improve automation of preliminary screening
In the lead identification stage of drug development, scientists can use foundation models to automate the preliminary screening of chemicals in the search for those that will produce specific effects on drug targets. To start, thousands of cell cultures are tested and paired with images of the corresponding experiment. Using an off-the-shelf foundation model, researchers can cluster similar images more precisely than they can with traditional models, enabling them to select the most promising chemicals for further analysis during lead optimization.
Enhance indication finding
An important phase of drug discovery involves the identification and prioritization of new indications—that is, diseases, symptoms, or circumstances that justify the use of a specific medication or other treatment, such as a test, procedure, or surgery. Possible indications for a given drug are based on a patient group’s clinical history and medical records, and they are then prioritized based on their similarities to established and evidence-backed indications.
Researchers start by mapping the patient cohort’s clinical events and medical histories—including potential diagnoses, prescribed medications, and performed procedures—from real-world data. Using foundation models, researchers can quantify clinical events, establish relationships, and measure the similarity between the patient cohort and evidence-backed indications. The result is a short list of indications that have a better probability of success in clinical trials because they can be more accurately matched to appropriate patient groups.
Pharma companies that have used this approach have reported high success rates in clinical trials for the top five indications recommended by a foundation model for a tested drug. This success has allowed these drugs to progress smoothly into Phase 3 trials, significantly accelerating the drug development process.
Factors for pharmaceuticals and medical products organizations to consider
Before integrating generative AI into operations, pharma executives should be aware of some factors that could limit their ability to capture its benefits:
- The need for a human in the loop. Companies may need to implement new quality checks on processes that shift from humans to generative AI, such as representative-generated emails, or more detailed quality checks on AI-assisted processes, such as drug discovery. The increasing need to verify whether generated content is based on fact or inference elevates the need for a new level of quality control.
- Explainability. A lack of transparency into the origins of generated content and traceability of root data could make it difficult to update models and scan them for potential risks; for instance, a generative AI solution for synthesizing scientific literature may not be able to point to the specific articles or quotes that led it to infer that a new treatment is very popular among physicians. The technology can also “hallucinate,” or generate responses that are obviously incorrect or inappropriate for the context. Systems need to be designed to point to specific articles or data sources, and then do human-in-the-loop checking.
- Privacy considerations. Generative AI’s use of clinical images and medical records could increase the risk that protected health information will leak, potentially violating regulations that require pharma companies to protect patient privacy.
Work and productivity implications
Technology has been changing the anatomy of work for decades. Over the years, machines have given human workers various “superpowers”; for instance, industrial-age machines enabled workers to accomplish physical tasks beyond the capabilities of their own bodies. More recently, computers have enabled knowledge workers to perform calculations that would have taken years to do manually.
These examples illustrate how technology can augment work through the automation of individual activities that workers would have otherwise had to do themselves. At a conceptual level, the application of generative AI may follow the same pattern in the modern workplace, although as we show later in this chapter, the types of activities that generative AI could affect, and the types of occupations with activities that could change, will likely be different as a result of this technology than for older technologies.
The McKinsey Global Institute began analyzing the impact of technological automation of work activities and modeling scenarios of adoption in 2017. At that time, we estimated that workers spent half of their time on activities that had the potential to be automated by adapting technology that existed at that time, or what we call technical automation potential. We also modeled a range of potential scenarios for the pace at which these technologies could be adopted and affect work activities throughout the global economy.
Technology adoption at scale does not occur overnight. The potential of technological capabilities in a lab does not necessarily mean they can be immediately integrated into a solution that automates a specific work activity—developing such solutions takes time. Even when such a solution is developed, it might not be economically feasible to use if its costs exceed those of human labor. Additionally, even if economic incentives for deployment exist, it takes time for adoption to spread across the global economy. Hence, our adoption scenarios, which consider these factors together with the technical automation potential, provide a sense of the pace and scale at which workers’ activities could shift over time.
About the research
This analysis builds on the methodology we established in 2017. We began by examining the US Bureau of Labor Statistics O*Net breakdown of about 850 occupations into roughly 2,100 detailed work activities. For each of these activities, we scored the level of capability necessary to successfully perform the activity against a set of 18 capabilities that have the potential for automation.
We also surveyed experts in the automation of each of these capabilities to estimate automation technologies’ current performance level against each of these capabilities, as well as how the technology’s performance might advance over time. Specifically, this year, we updated our assessments of technology’s performance in cognitive, language, and social and emotional capabilities based on a survey of generative AI experts.
Based on these assessments of the technical automation potential of each detailed work activity at each point in time, we modeled potential scenarios for the adoption of work automation around the world. First, we estimated a range of time to implement a solution that could automate each specific detailed work activity, once all the capability requirements were met by the state of technology development. Second, we estimated a range of potential costs for this technology when it is first introduced, and then declining over time, based on historical precedents. We modeled the beginning of adoption for a specific detailed work activity in a particular occupation in a country (for 47 countries, accounting for more than 80 percent of the global workforce) when the cost of the automation technology reaches parity with the cost of human labor in that occupation.
Based on a historical analysis of various technologies, we modeled a range of adoption timelines from eight to 27 years between the beginning of adoption and its plateau, using sigmoidal curves (S-curves). This range implicitly accounts for the many factors that could affect the pace at which adoption occurs, including regulation, levels of investment, and management decision making within firms.
The modeled scenarios create a time range for the potential pace of automating current work activities. The “earliest” scenario flexes all parameters to the extremes of plausible assumptions, resulting in faster automation development and adoption, and the “latest” scenario flexes all parameters in the opposite direction. The reality is likely to fall somewhere between the two.
The analyses in this paper incorporate the potential impact of generative AI on today’s work activities. The new capabilities of generative AI, combined with previous technologies and integrated into corporate operations around the world, could accelerate the potential for technical automation of individual activities and the adoption of technologies that augment the capabilities of the workforce. They could also have an impact on knowledge workers whose activities were not expected to shift as a result of these technologies until later in the future (see sidebar “About the research”).
Automation potential has accelerated, but adoption to lag
Based on developments in generative AI, technology performance is now expected to match median human performance and reach top-quartile human performance earlier than previously estimated across a wide range of capabilities (Exhibit 6). For example, MGI previously identified 2027 as the earliest year when median human performance for natural-language understanding might be achieved in technology, but in this new analysis, the corresponding point is 2023.
As a result of these reassessments of technology capabilities due to generative AI, the total percentage of hours that could theoretically be automated by integrating technologies that exist today has increased from about 50 percent to 60–70 percent. The technical potential curve is quite steep because of the acceleration in generative AI’s natural-language capabilities.
Interestingly, the range of times between the early and late scenarios has compressed compared with the expert assessments in 2017, reflecting a greater confidence that higher levels of technological capabilities will arrive by certain time periods (Exhibit 7).
Our analysis of adoption scenarios accounts for the time required to integrate technological capabilities into solutions that can automate individual work activities; the cost of these technologies compared with that of human labor in different occupations and countries around the world; and the time it has taken for technologies to diffuse across the economy. With the acceleration in technical automation potential that generative AI enables, our scenarios for automation adoption have correspondingly accelerated. These scenarios encompass a wide range of outcomes, given that the pace at which solutions will be developed and adopted will vary based on decisions that will be made on investments, deployment, and regulation, among other factors. But they give an indication of the degree to which the activities that workers do each day may shift (Exhibit 8).
As an example of how this might play out in a specific occupation, consider postsecondary English language and literature teachers, whose detailed work activities include preparing tests and evaluating student work. With generative AI’s enhanced natural-language capabilities, more of these activities could be done by machines, perhaps initially to create a first draft that is edited by teachers but perhaps eventually with far less human editing required. This could free up time for these teachers to spend more time on other work activities, such as guiding class discussions or tutoring students who need extra assistance.
Our previously modeled adoption scenarios suggested that 50 percent of time spent on 2016 work activities would be automated sometime between 2035 and 2070, with a midpoint scenario around 2053. Our updated adoption scenarios, which account for developments in generative AI, models the time spent on 2023 work activities reaching 50 percent automation between 2030 and 2060, with a midpoint of 2045—an acceleration of roughly a decade compared with the previous estimate. 6 The comparison is not exact because the composition of work activities between 2016 and 2023 has changed; for example, some automation has occurred during that time period.
Adoption is also likely to be faster in developed countries, where wages are higher and thus the economic feasibility of adopting automation occurs earlier. Even if the potential for technology to automate a particular work activity is high, the costs required to do so have to be compared with the cost of human wages. In countries such as China, India, and Mexico, where wage rates are lower, automation adoption is modeled to arrive more slowly than in higher-wage countries (Exhibit 9).
Generative AI’s potential impact on knowledge work
Previous generations of automation technology were particularly effective at automating data management tasks related to collecting and processing data. Generative AI’s natural-language capabilities increase the automation potential of these types of activities somewhat. But its impact on more physical work activities shifted much less, which isn’t surprising because its capabilities are fundamentally engineered to do cognitive tasks.
As a result, generative AI is likely to have the biggest impact on knowledge work, particularly activities involving decision making and collaboration, which previously had the lowest potential for automation (Exhibit 10). Our estimate of the technical potential to automate the application of expertise jumped 34 percentage points, while the potential to automate management and develop talent increased from 16 percent in 2017 to 49 percent in 2023.
Generative AI’s ability to understand and use natural language for a variety of activities and tasks largely explains why automation potential has risen so steeply. Some 40 percent of the activities that workers perform in the economy require at least a median level of human understanding of natural language.
As a result, many of the work activities that involve communication, supervision, documentation, and interacting with people in general have the potential to be automated by generative AI, accelerating the transformation of work in occupations such as education and technology, for which automation potential was previously expected to emerge later (Exhibit 11).
Labor economists have often noted that the deployment of automation technologies tends to have the most impact on workers with the lowest skill levels, as measured by educational attainment, or what is called skill biased. We find that generative AI has the opposite pattern—it is likely to have the most incremental impact through automating some of the activities of more-educated workers (Exhibit 12).
Another way to interpret this result is that generative AI will challenge the attainment of multiyear degree credentials as an indicator of skills, and others have advocated for taking a more skills-based approach to workforce development in order to create more equitable, efficient workforce training and matching systems. 7 A more skills-based approach to workforce development predates the emergence of generative AI. Generative AI could still be described as skill-biased technological change, but with a different, perhaps more granular, description of skills that are more likely to be replaced than complemented by the activities that machines can do.
Previous generations of automation technology often had the most impact on occupations with wages falling in the middle of the income distribution. For lower-wage occupations, making a case for work automation is more difficult because the potential benefits of automation compete against a lower cost of human labor. Additionally, some of the tasks performed in lower-wage occupations are technically difficult to automate—for example, manipulating fabric or picking delicate fruits. Some labor economists have observed a “hollowing out of the middle,” and our previous models have suggested that work automation would likely have the biggest midterm impact on lower-middle-income quintiles.
However, generative AI’s impact is likely to most transform the work of higher-wage knowledge workers because of advances in the technical automation potential of their activities, which were previously considered to be relatively immune from automation (Exhibit 13).
Generative AI could propel higher productivity growth
Global economic growth was slower from 2012 to 2022 than in the two preceding decades. 8 Global economic prospects , World Bank, January 2023. Although the COVID-19 pandemic was a significant factor, long-term structural challenges—including declining birth rates and aging populations—are ongoing obstacles to growth.
Declining employment is among those obstacles. Compound annual growth in the total number of workers worldwide slowed from 2.5 percent in 1972–82 to just 0.8 percent in 2012–22, largely because of aging. In many large countries, the size of the workforce is already declining. 9 Yaron Shamir, “Three factors contributing to fewer people in the workforce,” Forbes , April 7, 2022. Productivity, which measures output relative to input, or the value of goods and services produced divided by the amount of labor, capital, and other resources required to produce them, was the main engine of economic growth in the three decades from 1992 to 2022 (Exhibit 14). However, since then, productivity growth has slowed in tandem with slowing employment growth, confounding economists and policy makers. 10 “The U.S. productivity slowdown: an economy-wide and industry-level analysis,” Monthly Labor Review, US Bureau of Labor Statistics, April 2021; Kweilin Ellingrud, “ Turning around the productivity slowdown ,” McKinsey Global Institute, September 13, 2022.
The deployment of generative AI and other technologies could help accelerate productivity growth, partially compensating for declining employment growth and enabling overall economic growth. Based on our estimates, the automation of individual work activities enabled by these technologies could provide the global economy with an annual productivity boost of 0.5 to 3.4 percent from 2023 to 2040, depending on the rate of automation adoption—with generative AI contributing 0.1 to 0.6 percentage points of that growth—but only if individuals affected by the technology were to shift to other work activities that at least match their 2022 productivity levels (Exhibit 15). In some cases, workers will stay in the same occupations, but their mix of activities will shift; in others, workers will need to shift occupations.
Considerations for business and society
History has shown that new technologies have the potential to reshape societies. Artificial intelligence has already changed the way we live and work—for example, it can help our phones (mostly) understand what we say, or draft emails. Mostly, however, AI has remained behind the scenes, optimizing business processes or making recommendations about the next product to buy. The rapid development of generative AI is likely to significantly augment the impact of AI overall, generating trillions of dollars of additional value each year and transforming the nature of work.
But the technology could also deliver new and significant challenges. Stakeholders must act—and quickly, given the pace at which generative AI could be adopted—to prepare to address both the opportunities and the risks. Risks have already surfaced, including concerns about the content that generative AI systems produce: Will they infringe upon intellectual property due to “plagiarism” in the training data used to create foundation models? Will the answers that LLMs produce when questioned be accurate, and can they be explained? Will the content generative AI creates be fair or biased in ways that users do not want by, say, producing content that reflects harmful stereotypes?
Using generative AI responsibly
Generative AI poses a variety of risks. Stakeholders will want to address these risks from the start.
Fairness: Models may generate algorithmic bias due to imperfect training data or decisions made by the engineers developing the models.
Intellectual property (IP): Training data and model outputs can generate significant IP risks, including infringing on copyrighted, trademarked, patented, or otherwise legally protected materials. Even when using a provider’s generative AI tool, organizations will need to understand what data went into training and how it’s used in tool outputs.
Privacy: Privacy concerns could arise if users input information that later ends up in model outputs in a form that makes individuals identifiable. Generative AI could also be used to create and disseminate malicious content such as disinformation, deepfakes, and hate speech.
Security: Generative AI may be used by bad actors to accelerate the sophistication and speed of cyberattacks. It also can be manipulated to provide malicious outputs. For example, through a technique called prompt injection, a third party gives a model new instructions that trick the model into delivering an output unintended by the model producer and end user.
Explainability: Generative AI relies on neural networks with billions of parameters, challenging our ability to explain how any given answer is produced.
Reliability: Models can produce different answers to the same prompts, impeding the user’s ability to assess the accuracy and reliability of outputs.
Organizational impact: Generative AI may significantly affect the workforce, and the impact on specific groups and local communities could be disproportionately negative.
Social and environmental impact: The development and training of foundation models may lead to detrimental social and environmental consequences, including an increase in carbon emissions (for example, training one large language model can emit about 315 tons of carbon dioxide). 1 Ananya Ganesh, Andrew McCallum, and Emma Strubell, “Energy and policy considerations for deep learning in NLP,” Proceedings of the 57th Annual Meeting of the Association for Computational Linguistics , June 5, 2019.
There are economic challenges too: the scale and the scope of the workforce transitions described in this report are considerable. In the midpoint adoption scenario, about a quarter to a third of work activities could change in the coming decade. The task before us is to manage the potential positives and negatives of the technology simultaneously (see sidebar “Using generative AI responsibly”). Here are some of the critical questions we will need to address while balancing our enthusiasm for the potential benefits of the technology with the new challenges it can introduce.
Companies and business leaders
How can companies move quickly to capture the potential value at stake highlighted in this report, while managing the risks that generative AI presents?
How will the mix of occupations and skills needed across a company’s workforce be transformed by generative AI and other artificial intelligence over the coming years? How will a company enable these transitions in its hiring plans, retraining programs, and other aspects of human resources?
Do companies have a role to play in ensuring the technology is not deployed in “negative use cases” that could harm society?
How can businesses transparently share their experiences with scaling the use of generative AI within and across industries—and also with governments and society?
Policy makers
What will the future of work look like at the level of an economy in terms of occupations and skills? What does this mean for workforce planning?
How can workers be supported as their activities shift over time? What retraining programs can be put in place? What incentives are needed to support private companies as they invest in human capital? Are there earn-while-you-learn programs such as apprenticeships that could enable people to retrain while continuing to support themselves and their families?
What steps can policy makers take to prevent generative AI from being used in ways that harm society or vulnerable populations?
Can new policies be developed and existing policies amended to ensure human-centric AI development and deployment that includes human oversight and diverse perspectives and accounts for societal values?
Individuals as workers, consumers, and citizens
How concerned should individuals be about the advent of generative AI? While companies can assess how the technology will affect their bottom lines, where can citizens turn for accurate, unbiased information about how it will affect their lives and livelihoods?
How can individuals as workers and consumers balance the conveniences generative AI delivers with its impact in their workplaces?
Can citizens have a voice in the decisions that will shape the deployment and integration of generative AI into the fabric of their lives?
Technological innovation can inspire equal parts awe and concern. When that innovation seems to materialize fully formed and becomes widespread seemingly overnight, both responses can be amplified. The arrival of generative AI in the fall of 2022 was the most recent example of this phenomenon, due to its unexpectedly rapid adoption as well as the ensuing scramble among companies and consumers to deploy, integrate, and play with it.
All of us are at the beginning of a journey to understand this technology’s power, reach, and capabilities. If the past eight months are any guide, the next several years will take us on a roller-coaster ride featuring fast-paced innovation and technological breakthroughs that force us to recalibrate our understanding of AI’s impact on our work and our lives. It is important to properly understand this phenomenon and anticipate its impact. Given the speed of generative AI’s deployment so far, the need to accelerate digital transformation and reskill labor forces is great.
These tools have the potential to create enormous value for the global economy at a time when it is pondering the huge costs of adapting and mitigating climate change. At the same time, they also have the potential to be more destabilizing than previous generations of artificial intelligence. They are capable of that most human of abilities, language, which is a fundamental requirement of most work activities linked to expertise and knowledge as well as a skill that can be used to hurt feelings, create misunderstandings, obscure truth, and incite violence and even wars.
We hope this research has contributed to a better understanding of generative AI’s capacity to add value to company operations and fuel economic growth and prosperity as well as its potential to dramatically transform how we work and our purpose in society. Companies, policy makers, consumers, and citizens can work together to ensure that generative AI delivers on its promise to create significant value while limiting its potential to upset lives and livelihoods. The time to act is now. 11 The research, analysis, and writing in this report was entirely done by humans.
Michael Chui is a partner in McKinsey’s Bay Area office, where Roger Roberts is a partner and Lareina Yee is a senior partner; Eric Hazan is a senior partner in McKinsey’s Paris office; Alex Singla is a senior partner in the Chicago office; Kate Smaje and Alex Sukharevsky are senior partners in the London office; and Rodney Zemmel is a senior partner in the New York office.
The authors wish to thank Pedro Abreu, Rohit Agarwal, Steven Aronowitz, Arun Arora, Charles Atkins, Elia Berteletti, Onno Boer, Albert Bollard, Xavier Bosquet, Benjamin Braverman, Charles Carcenac, Sebastien Chaigne, Peter Crispeels, Santiago Comella-Dorda, Eleonore Depardon, Kweilin Ellingrud, Thierry Ethevenin, Dmitry Gafarov, Neel Gandhi, Eric Goldberg, Liz Grennan, Shivani Gupta, Vinay Gupta, Dan Hababou, Bryan Hancock, Lisa Harkness, Leila Harouchi, Jake Hart, Heiko Heimes, Jeff Jacobs, Begum Karaci Deniz, Tarun Khurana, Malgorzata Kmicinska, Jan-Christoph Köstring, Andreas Kremer, Kathryn Kuhn, Jessica Lamb, Maxim Lampe, John Larson, Swan Leroi, Damian Lewandowski, Richard Li, Sonja Lindberg, Kerin Lo, Guillaume Lurenbaum, Matej Macak, Dana Maor, Julien Mauhourat, Marco Piccitto, Carolyn Pierce, Olivier Plantefeve, Alexandre Pons, Kathryn Rathje, Emily Reasor, Werner Rehm, Steve Reis, Kelsey Robinson, Martin Rosendahl, Christoph Sandler, Saurab Sanghvi, Boudhayan Sen, Joanna Si, Alok Singh, Gurneet Singh Dandona, François Soubien, Eli Stein, Stephanie Strom, Michele Tam, Robert Tas, Maribel Tejada, Wilbur Wang, Georg Winkler, Jane Wong, and Romain Zilahi for their contributions to this report.
For the full list of acknowledgments, see the downloadable PDF .
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Working papers, global banks and natural disasters.
By Francisco E. Ilabaca, Robert Mann, and Philip Mulder
Published: July 23, 2024
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![research papers on office automation Banks tend to lower their lending to countries that they were not heavily invested it prior to the natural disaster occurring, and actually increase their lending to countries where they were more heavily invested before disasters.](https://www.financialresearch.gov/working-papers/thumbs/OFRwp_2024-05_thumb.png)
This paper shows that when natural disasters hit low-income countries, banks that operate in those countries reduce their cross-border lending. The authors estimate this effect using confidential data on international bank loan exposures. The change in lending is driven by banks with low investment levels in those affected countries and whose parent country does less trade with the countries (Working Paper 24-05).
Natural disasters can generate large economic losses and disruptions for global financial institutions, raising the concern that these disasters may increase financial systemic risk. We use detailed data on the foreign claims and liabilities of large U.S. regulated banks to study how multinational lenders reallocate capital following large natural disasters. We find little evidence that international banks increase lending to countries after destructive disasters, which should increase the demand for funds. Instead, difference-in-differences estimates suggest that natural disasters lower cross-border lending to affected countries by 9% two years after large natural disasters. We hypothesize that damaging natural disasters exacerbate cross-border information frictions. To test this mechanism, we exploit within-country heterogeneity in monitoring costs between banks. Consistent with this mechanism, our results show that declines in aggregate lending are driven by banks with weaker economic connections to the affected countries. These findings suggest that information frictions both dampen the transmission of natural disasters and reduce the reallocation of capital through the international financial system.
Keywords : International Lending, Global Banks, Climate Finance, Natural Disasters, Information Frictions
JEL Classifications: G15, F34, G14, G32, Q54
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Optimization of Office Automation System in University and College Based on VSM
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International Journal of Computer Applications
saniya ansari
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International Journal Of Engineering And Computer Science
Priya Surana
Automation plays very important role in our lives. It makes the work easier and simpler so for simplified and easy living. Government of India has proposed Digital India campaign. Making this campaign successful involves reducing conventional methods used by small scale industry. Contributing to this campaign we are proposing a solution for business industry to reduce their paper work. The proposed system will provide database management for employee details. Along with this other modules of the system includes prediction algorithm for predicting site details depending on customer needs. The concept of Office Automation system provides advantage of no data duplication, data prediction and easy data backup with a user friendly interface. Overall project is divided into four modules and these modules can be accessed by admin and supervisor. Admin is authorized to log in and add details worker, client, vendor and also allowed to view the database and update the worker details.
Applied Journal of Physical Science
This research work aimed at the design, development and performance of Office Automation System, using the Internet of Things (IoT) based and Voice Recognition Command. The data is stored in personal computer (PC) or android smartphone. Arduino IDE was the framework used in the development of the system, while C++ was the programming language used for programming the system. Similarly, a voice control was built using the This Then That (IFTTT) platform. The system developed was capable of enabling users to control office appliances like printer, air conditioner, light, fan, etc. with voice command using the Google home mini device. Results obtained from the laboratory test proved that the system had a very high (about 98%) performance rating. This system had shown that office automation system can use voice command to preform its task.
JOURNAL ASRO
amri rahmatullah
The use of electricity in offices has been considered too wasteful. This is caused by human negligence in controlling their use. For this reason, this research was carried out as an effort to find the right method to reduce the high electricity consumption in offices. This research was conducted in the STTAL classroom, Bumimoro, Surabaya. From the results of the calculation, the total heat load in the classroom is 32,048.3 BTU or ± 4 PK. Total installed AC capacity is only 2 PK. This automation tool is a system that works automatically to regulate the use of electrical equipment based on parameters that have been determined in a program such as the presence or absence of humans, the level of light intensity and room temperature. Data collection is carried out for 6 days in the classroom, 3 days without tools and 3 days using the automation tool. Furthermore, the data is compared to the graph and the savings are calculated. The result, on day 1 is 56.11%, days 2 and 3 are 10.26% and ...
International Journal of Reconfigurable and Embedded Systems (IJRES)
Sanket S Dessai
Office automation is the process using machines with the help of embedded computing perform the office activities and its tools and applications. The office automated using computer-aided processing stored, visual and audio data to simplify, improve, and automate the power saving and time management of the organization. A very important component of office automation concerns the automation of employee centred activities such as authentication, automatic alerting of appointments and automatic powering on/off personal computer. The employee image is captured using Java media framework, attendance records for all employees is gathered and processed automatically, and they can be accessed from the database on a monthly or weekly basis. The various software and hardware components of the system were developed and integrated to form the Exypnos Office System and validated on real life scenarios. Java proved to be a versatile platform for implementing a project of this nature with diverse...
IJIRST - International Journal for Innovative Research in Science and Technology
This paper is aimed at developing College Automation System which will manage the working of college management activity using single platform. This system has easy interface and powerful data management. We have used bootstrap which increases the responsiveness of the system. The main objective of this system is to reduce the paperwork and manual processing.
IRJET Journal
Yogesh Shinde
Our project entitled Automation for Management System is given by our college to develop. It is total end to end solution for all engineering colleges for maintaining the records of students & staff in their institute. In effect, we maintain an updated database of all details like all branches, all subjects, all students information, subject wise attendance conducted examination such as internal, practical etc. Also it will maintain all the database of staff and their work load. Its purpose is to automate and centralise whole system of department. We are attempting to improve our existing system that runs on pen and paper. It is basically we design this for reduction of workload of all our staff and head of the department who act as a central user or administrator of this project. We try to offer a range of facilities in a software that will maintain the all student records and staff details in a much more efficient way with much less hassle.
Juha Katajisto
Abstract- Automation systems offer many possibilities when developing safety and energy efficiency related to resident housing. Automation has been most widely used in public buildings but the use of these systems is constantly generalizing in residential housing. Teaching of building automation is not very common today. In HAMK University of Applied Sciences the degree program in automation and research center AutoMaint are specialized in process- and material handling automation as well as in remote control- and diagnostics applications related to industrial business service. With the increase in the use of building automation more is invested also into developing teaching of building automation. A learning environment for building automation has been created, which can also be used as a web-based learning environment. Key Words- Automation, building, remote laboratory, softPLC..
4th ASSIST National …
Dr. K.R.Mulla
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The current trends and advancements in IoT have resulted in interactive, innovative and automated implementations of smart systems. The paper proposes a smart office automation system that creates an employee friendly atmosphere with the help of IoT, interconnected sensor networks and efficient database system. At the entrance, employees don't have to manually mark their presence in the ...
Firstly, this paper is designs for the three dimensional aspect of office automation system function module, office automation system authority design and office automation system interface design. This introduces the requirement of office automation system and function module design. Secondly, from the two aspects of database conceptual design ...
Thus, this paper aims to inform researchers of the current state (state of the art) of research relating to the application of Intelligent Automation for knowledge and service work. To assist the IS research community in navigating this complex domain, this paper provides a scoping review of existing academic literature ( Paré et al., 2015 ).
Various research papers related to office automation and . ... p> Office automation is the process using machines with the help of embedded computing perform the office activities and its tools ...
The need for further researchexamining the potential effects of office automation isemphasized. Keywords: Experimentation, Management, Theory, Human Factors, office automation, automated office systems, ... New York University Stern School of Business Research Paper Series. Subscribe to this free journal for more curated articles on this topic ...
the office automation system, detail are as fol lows. (1) The concept of database design. The first step in the design of the database used in the of fice automation system is the concept design ...
In this paper a more narrow view of office automation has been taken, concentrating on the administrative component of an organization's functioning. ... Impfications for Research on Office Automation The descriptive model and research propositions discussed here are meant to provide a meaningful basis for research into the behavioral and ...
Published research on office automation's impact, outside of clerical ranks, is limited either to people who are already committed to the technology or to a narrow range of potential users.
This paper assesses current research on the key issues of employment, skill, and quality of working life; drawing implications for Canadian clerical workers. The author argues that a reliance on deterministic research models has produced unduly pessimistic forecasts about the impact of new office technologies.
Abstract: In this paper, three open-source frameworks Struts, Spring and Hibernate are reasonably integrated together to build a general J2EE office automation system with the advantages of short development cycle, low development cost, loose coupling, easy to expand and migrate. This paper gives the corresponding solutions and ideas to the technical problems such as how to control the ...
office automation and offer direction for future research. This paper pro • HUGHES, K.D., Professor, Department of Sociology, University of Alberta, Edmonton, Alberta. *• This is a revised version of a paper presented at the Western Association of Sociology and Anthropology Annual Meetings, Edmonton, February 1988. I am grateful to Graham
Document image classification is an important step in Office Automation, Digital Libraries, and other document image analysis applications. There is great diversity in document image classifiers: they differ in the problems they solve, in the use of training data to construct class models, and in the choice of document features and classification algorithms.
The study adopted an ex-post facto research design as the population of the study comprised the items of the instructional facilities, while a standard checklist was constructed to determine the availability of these instructional facilities. This checklist was validated by expert in office technology management and measurement.
This paper studies the extent to which automation affects workers' job satisfaction, and whether this effect differs for high- versus low-skilled workers. ... Data on office buildings with at least 8/8 Mbit/s speeds are provided by the Norwegian Communications Authority (Nkom), and matched against individuals through regional identifiers ...
A systematic lit-. erature review serves as a valuable tool to g ain a deeper understanding of the histori-. cal context of automation and to explore previous findings in this field. This s tudy ...
This study aimed to evaluate the effect of office automation on organizational excellence in Zahedan University of Medical Sciences. Descriptive-survey has been used in this research. Research population includes 212 employees in studied case and sample size was estimated 135 persons. The data collection tool was a researcher-made questionnaire with 50 questions which had two columns of before ...
IOSR Journal of Research & Method in Education (IOSR-JRME) ... Office Automation And Information Technology On The Effectiveness Of Secretarial Administration DOI: 10.9790/7388-0703044952 www.iosrjournals.org 50 | Page information.Also, the secretary serves as the brain and memory of the office. ...
Academia.edu is a platform for academics to share research papers. The Impact of Office Automation on Worker's Productivity at all Organizational Levels at King Abdul-Aziz University Library: A case study ... Office automation remains a prominent factor that has contributed immensely and positively to the complete information processing ...
This paper is based on a series of interviews carried out in public sector organizations participating in the Department of Industry office automation pilot projects.
Research conducted by automation specialist technology firm UiPath, speaking to more than 1100 Australian knowledge workers across government, healthcare, professional services, finance, real ...
A CASE STUDY Lack of research in this area and based on previous research on the factors affecting workers productivity and its relation to office automation (Biehl, M., 2007), we decided to use a case study to investigate the effects of office automation on productivity of library employees.
Research found that at one company with 5,000 customer service agents, the application of generative AI increased issue resolution by 14 percent an hour and reduced the time spent handling an issue by 9 percent. 1 Erik Brynjolfsson, Danielle Li, and Lindsey R. Raymond, Generative AI at work, National Bureau of Economic Research working paper ...
Automation is the act or process of con verting. the controlling or widget of a machine or device to a. more automatic system, such as computer or electron ic. controls [13]- [18]. Al so office ...
This paper shows that when natural disasters hit low-income countries, banks operating in those countries reduce their cross-border lending (Working Paper no. 24-05). ... OFFICE OF FINANCIAL RESEARCH U.S. Department of the Treasury 717 14th Street, NW Washington, DC 20220 Contact us; Accessibility; Careers; FOIA; Legal Notices; No FEAR Act;
Office automation is the use of self-regulating machines to execute office tasks formerly done manually or through semi-mechanical means.Office automation has changed the secretarialduties from the manual method to purely mechanized process.According to Olsgaard (1989), office automation involves the application of integrated information ...
The improved system is shown in figure 2. The letterA~C stand for each sub-system in office automation system, the number 1~5 stand for system 1~5. Fig.2 Improvement of office automation system based on VSM The responsibility of five sub-systems must be explicit. System 5 pays attention to development strategy of focus system.