Automation or immigration the cure for an aging population?

By Leith van Onselen

For years the growth lobby has argued that Australia needs to run high levels of immigration in order to alleviate so-called skills shortages and to mitigate an ageing population, despite the Department of Employment showing that Australia’s skills shortage “remains low by historical standards” and Australia’s labour underutilisation rate tracking at high levels:

One factor the mass immigration supporters continually ignore is the risk that the rise of robotics and artificial intelligence could replace many of today’s jobs, leading to an even larger pool of underemployed and underutilised workers.

Earlier this year, Seek’s chief executive, Andrew Bassat, warned of an “employment crisis” whereby not enough jobs will be created to replace those expected to be lost through the rising use of robotics, especially in areas like mining, hospitality, accommodation and transport.

A similar theme was picked up over at The ABC.

Already, Australia’s construction sector is gearing-up, with FastBrick’s Hadrian X bricklaying machine capable of laying up to 1,000 bricks an hour.

Clearly, the rise of robotics and automation debunks the claim that Australia needs to import large swathes of skilled workers to overcome an ageing population.

The reality is likely to be the opposite: too many workers chasing too few jobs as robots and artificial intelligence take over. So why, then, is Australia running one of the highest immigration programs in the world, especially given the extreme pressure that it is placing on infrastructure, housing, schools, hospitals and overall livability?

Another potential problem arising from automation is that nations with large youth bulges also risk rising political volatility. From Global Risk Insights:

Automation is on track to disrupt the status quo everywhere, but nations with a youth bulge will be more affected than others. A large youth population whose employment and future is threatened by automation could drive political instability and violence…

[Automation] has the potential to boost economies and improve quality of life, but for many it will mean an uncertain future and fewer opportunities. Governments must find ways to occupy or support those who lose their jobs to automation or else face diminishing legitimacy in the best-case scenario and politically motivated violence in the worst.

The risks of political violence will be higher in countries with a youth bulge (a relatively large youth population). Fewer employment opportunities and heightened competition could drive young people towards alternative institutions that channel their rage and anxiety…

The problem arises when a large youth population cannot be absorbed by the economy, leaving masses of youth disillusioned with the current political system and broader status quo. Automation will contribute to this problem, making it harder for economies to absorb new workers and large youth populations by replacing their jobs with machines…

The more sensible policy option is to restrict immigration and instead better utilise the existing workforce and use automation to overcome any loss of workers as the population ages – as has been utilised in Japan (where unemployment is around 3%).

In fact, economists at MIT recently found that there is absolutely no relationship between population ageing and economic decline. To the contrary, population ageing seems to have been associated with improvements in GDP per capita, thanks to increased automation:

ScreenHunter_18202 Mar. 26 13.24

If anything, countries experiencing more rapid aging have grown more in recent decades… we show that since the early 1990s or 2000s, the periods commonly viewed as the beginning of the adverse effects of aging in much of the advanced world, there is no negative association between aging and lower GDP per capita… on the contrary, the relationship is significantly positive in many specifications.

Again, the last thing that Australia should be doing is running a mass immigration program which, as noted many times by the PC cannot provide a long-term solution to ageing, and places increasing strains on infrastructure, housing and the natural environment.

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Unconventional Economist
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  1. Automation is the key. In 30 years time he has the most robots will win. End of story. Large populations will suffer most and moderate to small technological populations will flourish.

    • Specificially for this topic AI,when compared to immigrants and Strayans as well:
      Economics ::Much cheaper, and becoming more so
      Speed ::Much faster
      Accuracy::far more accurate (precise)
      Reliability :: far ahead (many have error correction built into them)
      Rapidity of control ::many current machines are unstable and need AI to make them practical
      Freedom from boredom:: An overwhelming advantage
      Bandwidth in and out :: Aagain overwhelming
      Ease of retraining::Change programs, not unlearn and then learn the new thing consuming hours and hours of human time and effort
      Hostile environments:: Underwater, high radiation fields, warfare, manufacturing situations that are unhealthful, etc. Submarines!
      Personnel problems::they tend to dominate management of humans but not of machines; with machines, there are no pensions, personal squabbles, unions, personal leave, egos, deaths of relatives, recreation, etc.
      And remember the modern battle field is no place for an immigrant.
      Thus robots and AI have an overwhelming advantage

      • 30 years. Haha. Yeah after my time. I’ve heard that so many times. 10 years and your going to have significant dislocation of Labor. Not 30 years. We are already at the early stages this why no wage growth globally or benign inflation (although inflation is calculated incorrectly)

      • We are already at the early stages this why no wage growth globally

        Well, except in places like China and India, home to something like 40% of the world’s workers between them.
        We’ve already been hearing for 5 years that there will be no work for anyone in 10-20 years – the dole queues in the developed world should already be stretching over the horizon if that time is anywhere near close to reality, yet unemployment has been going down in the US and the UK over that time frame.

      • There’s about 1.6 million seafarers in the world, most of whom are either Filipino or Chinese (there might be 1000 or so Australian seafarers on the several dozen remaining Australian flagged vessels).
        Meanwhile, China’s workforce is shrinking by about 3 million per year, so if you automate shipping overnight, it will be barely touch the sides.

      • SS when shipping is automated, bulk grain carriers become silos at sea
        the margin for our grain growers now depends on disaster some where else (bit like those surfing companies)
        bulk grain, or bulk most perishable commodity, on demand, will ruin most agricultural industry in the western world.

      • Mate I spend my working life studying shipping accidents – it’d suck to be you if your floating grain silo went the way of the MOL Comfort or the Kirki.
        The need to put a crew on a ship is not as much of a barrier to using a ship as a floating silo compared to the risk of the damn thing sinking or the cost of building a seaworthy silo with propulsion compared to building a land based silo. Remember, the existence of the FSPO is largely based on the existence of tankers with no work being valued at less then their scrap content – and the overbuilding cycle for grain transporters isn’t nearly pronounced as for tankers (partly because they can usually carry a variety of other cargos, so just get redeployed if there’s a change to grain demand) – and oil being found under the sea floor (not much grain is harvested in bluewater areas).

      • Yup. Will be curious to see whether competition from robots causes humans to raise their game, work more efficiently and whinge less or whether they go the other way and demand the government “do something”.

      • I assume the timelines for moving grain around are pretty long and dominated by how long it takes to load, unload, and cross the ocean.

        How does the automatable aspect – human decision making about when and where to do so – introduce a significant delay in the overall process ?

  2. reusachtigeMEMBER

    Robots don’t buy investment properties, well not yet anyway, but we can only hope (relations robots), so the answer is, of course, importing larger numbers of human capital who need housing!

  3. The more sensible policy option is to restrict immigration and instead better utilise the existing workforce and use automation to overcome any loss of workers as the population ages

    Fantastic plan, now can you please supply me with a list of those Australian’s that truly have world class Automation skills. Probably just make it an SMS because there won’t be many names on that list.
    Just because our obvious Australian Automation opportunities are beyond our own capabilities does not mean that these opportunities will go forever unfulfilled, no, they’ll just become one more lost Aussie opportunity and one more unnecessary Imported item, One more thing in the long list of things we should be able to do for ourselves but can’t.

    • If you are talking about “automation” for the manufacturing sector, Australia can never compete with China or Europe because we lack both economies of scale and huge government subsidies. But, when it comes to Autonomous mobile robots for mining and stevedoring, Australia has a natural advantage and has been a world-leader in these areas for more than a decade (ANU, CSIRO, ACFR).

      • Interesting point which demonstrates that Australia does have small pockets of Automation expertise, however to really prosper from the Automation revolution / Inflection point, we need to be leveraging this capability and growing the industry exponentially. Unfortunately this wide spread leverage of Automation expertise is not happening in Australia. It’s not happening in our industries, it’s not happening in our Universities, it’s not happening in our schools, it’s not happening in our lives. Trouble is it is happening outside the Bubble and that’s likely to be all that counts.
        As any decent Venture capitalist will tell you, Ninety percent of the value in startups is created by leveraging Technology generated Inflection points.

    • I am working on a product that automates software creation. A software robot that writes new software. Less developers will be required to be hired by companies that buy software that automatically creates new software using machine learning

  4. none, there is no real problem with ageing, just the one we crated to make sure GDP grows exponentially

    half of the jobs out there are bullshit jobs anyway, we can get rid of them and improve quality of life for almost everyone

  5. Is it the rank odor of regulatory capture (UK & US banks holding maybe 40% of Top 4 Australian Bank plain vanilla equity) that is propelling house prices up at the top of the business cycle (US & UK banks take our earnings, MARK I) and retarding the value of Aussie stocks until the bottom of the business cycle when they can benefit from private placements of Aussie stocks at any discount to the market price they want regardless of the dilution in value to you existing shareholders (US & UK banks take our earnings, MARK II)? Repeat (MARK III). Repeat ……… See limited foreign ownership hints here:

  6. nations with a youth bulge will be more affected than others. A large youth population whose employment and future is threatened by automation could drive political instability and violence…

    Are there many countries with a youth bulge left? The median age of the world population is already over 30 years old, and climbing.

  7. Then you should support universal income or at least removing the job search requirements of Newstart.

    The ALP/LNP are hell bent on giving the jobs to 457 visa staff anyway. Oh, there is the 400 visa as well. And the 189 visa. Brilliant!

  8. Increasing automation in all aspects of life is Australia’s future, unless citizens demand otherwise. For a sane healthy society, even benign automation must be planned, not left to market forces. At the moment, its introduction is driven by profit-seeking through reducing costs, particularly labour costs. Logically, Australia will require less immigrant workers in the mid- to long-term, and we could achieve ZPG, and zero per capita GDP growth at a sustainable high income level, if managed well. With the right taxation of the super-profits from the ownership of the human-displacing robots, income inequality could be much reduced. So at the end of our 10- hour work ‘week’, its Pina Colladas all round as we watch the robots clean the house, prepare the meals, entertain the kids, and drive us to our preferred tribal gathering (AFL, Soccer, Cricket, Basketball…). What’s not to like?

  9. If immigration is a cure for the increasing number of old people on a pension, how come young immigrants can bring their elderly parents over on a visa as well, and worse, those elderly parents also become entitled to go on the dole after 2 years and get a pension after 10 years even though they have never worked here?

    • Transferring Boomers from the medium living standard of the aged pension to the UBI will be interesting cause the UBI is equivalent to NewStart. Generation X, the larger cohort, will demand it.

  10. Jumping jack flash

    Clearly the answer.

    But then again, I’m biased due to reskilling into this area.

  11. The test of the economic argument that Australia needs more people ( and 70% or more of what is coming in are unskilled migrants) is what is the opposite case ?

    Australian is a commodities exporter, primarily in minerals energy and some food exports.
    79% of Australian exports are primary low labour & highly automated based.

    The actual number of people engaged into those core export industries is fractional – less than 1% of the population. Say 250,000 or less.
    Every additional person dilutes that core income.

    If Australia only had 15 million people we would all be better off.
    Take to an extreme to test the argument.
    If we only had 2 million people, we could still manage most of our export income and be fantastically well off.

    Virtually everyone in Australia would be a multi millionare, living in huge mansions, very low needs in government, wages would be high, most would not need to work or pay tax and we could all live cradle to grave on the royalty and trade export surplus – very low import needs as a small population feed by much the same export volume maintained by a fraction of the population. Nuclear weapons to defend ourselves and a proper migrant guestworker program aka Brunei or the Middle East for labour rather than the sham visa arrangements we have now.
    Australian citizenship would be highly restrictive like Switzerland or Brunei or Qatar or others and 20 year waiting period & only exceptional cases would it be granted.

    So the proof appears to be we are not all ‘better off with uncontrolled & unskilled migrant intake or sham TR migrant guestworker visa rackets.
    We all get poorer, we dilute and erode our individual wealth and standards of living.

    So the point is : there is no case in the ‘wealth’ or ‘sustainability’ argument for additional migrants at all.
    We could accept a lower GDP export trade output (80% of today) but individually all be far better off.

    We would all be much wealthier