Looking to Automation as a Weapon in Curbing Inflation

There is no doubt that the current inflation figures are troubling.

Automobile plant

There is no doubt that the current inflation figures are troubling. Our inflation rates are now higher than in the last four decades. The reasons underlying such unprecedented inflationary pressures are diverse and well-entrenched. Supply chain pressures that started snowballing with the long drawn-out pandemic compounded with labor shortages, global energy shortages, the ongoing Ukraine crisis and wage inflation have resulted in a perfect storm of rising costs.

Although the pandemic witnessed a massive push for business digitization, supply chain digitization has lagged starkly in comparison. That, coupled with the red-hot labor market, means inflation is rising. We have more job vacancies than workers, and employers are in a wage war to attract talent. But as companies pay more, so do consumers. The costs get passed on, and we have inflation — resulting in increasingly lower purchasing power over time.

As bleak as the economic picture may seem, we also have an unprecedented technological advantage available to us now that was never there before. I believe automation could provide a historical opportunity for businesses to cut short the inflationary pressures and retain margins without drastically impacting labor markets. Robots and autonomous systems can address endemic process inefficiencies in many industries and soften the workforce crunch.

Automation Can Help Reduce Inflation by Increasing Supply

Currently, we are in the early stages of automation. We've seen how it can take over routine tasks and assist humans in different factors of work and life, but automation can go further. We are already trending toward not having to put humans in harm's way because automation is capable of doing jobs that can expose humans to carcinogens, fires or other dangerous tasks. Low-code and no-code environments in software development indicate the same trend toward automation. On the other hand, the promise is human workers will be able to move up to do higher-value tasks rather than grunt work.

Beyond obvious cost, quality, and speed improvements, automation can help improve or enhance current workforce competencies and allow businesses to reduce their dependency on wage inflation. Just imagine what automation for automobile production has done and could mean for our country. We will be able to produce more and even better quality cars and, more importantly, make them here rather than offshore thanks to cost benefits ensured by automation. Now imagine the same principle applied to industries across the board, from software, logistics and pharmaceuticals to retail — automation can help reduce inflation as it results in increased supply. Instead of the central banks relying mostly or solely on increasing the price of borrowing to slow down demand, we can help balance out the equation by increasing supply.

Automation Will Not Leave People Jobless

Wages can become inflated when there are not enough people around to fill the job vacancies. Automation can help companies fill vacant job openings as well as take the place of hazardous jobs where people typically need to risk their lives. Conversely, raising interest rates has been proven to create unemployment. To me, the notion of the Fed deliberately trying to create unemployment seems completely backward. We should try to provide jobs to everyone who wants one. If people are fully employed, and we need more (like in the current scenario of high inflation), we can either let foreign workers temporarily come in or add more automation so that workers here can earn more.

Automation will likely enable people to get back to their core specialties. This means that if you are a plumber or carpenter, you will still be able to make good money as those skills are not yet automated. But if you are in a position that has the potential to be either fully or partially automated any time soon, you will need reskilling or upskilling.

In the automotive industry, for instance, plenty of hazardous roles require people to move heavy objects and operate between moving machine parts. It's a good thing that automation can potentially save lives by fulfilling such chores. The workers can, in turn, become skilled robot operators. In jobs that cannot be fully automated, robots can work as assistants to human workers and help offset the workforce crunch. All of this can ultimately lead to reduced inflation with better efficiencies and an increased supply of goods.

Most importantly, I think this will make America more competitive in the global economy. Traditionally, we had companies outsource jobs to offshore units due to cheaper labor costs, etc. With automation, this disparity can come down significantly and put us on a more even footing.

How Companies Might Start Out With Automation

As automation's benefits become clearer, more companies are keen to start automating. But many lack a sense of direction when it comes to starting with automation. It can look different for your organization, but in our business, we have started simply by focusing on process automation for healthcare, bill and payments. The pandemic forced us to switch up our workstyle for the sake of our employees, which led us to focus on those three areas first. It's not that people don't want to work, but people have very real reasons why they cannot or may not be able to travel to the office. To address this, we built a platform that enables us to recognize and pre-process documents (such as bills, complaints, forms, etc.) to a certain extent before employees receive them. Now, they don't have to start from scratch. This has been a very successful deployment for us and is expected to cross 200 million transactions annually.

We are invested in creating a better work environment for our customers and employees, especially addressing where, how and when they have to work. And we are bringing automation to play in what I call creating 'good tech' — technology that genuinely improves the quality of life — so people can focus on important things. I think automation has a key role in realizing this future. It could also be a secret weapon to keep rampant inflation at bay.

The Newsweek Expert Forum is an invitation-only network of influential leaders, experts, executives, and entrepreneurs who share their insights with our audience.
What's this?
Content labeled as the Expert Forum is produced and managed by Newsweek Expert Forum, a fee based, invitation only membership community. The opinions expressed in this content do not necessarily reflect the opinion of Newsweek or the Newsweek Expert Forum.