The UK is lagging behind its major competitors in the adoption and use of industrial robots. As a result, national productivity – which has been flatlining since the 2008-09 financial crisis – has suffered.
That’s the claim made by supply chain specialist Balloon One, which has published figures showing that the UK is only the 20th most productive nation, behind all of its major industrial competitors in Europe, Asia, and North America.
Compared to nations with a similar manufacturing output, the UK uses fewer robots in manufacturing and is therefore not able to achieve the same productivity levels. But is it that simple?
Balloon One looked at the countries with the highest robot density (the number of industrial robots per 10,000 workers), productivity (measured by GDP per number of hours worked), and each country’s reliance on its manufacturing sector (the value added as a percentage of GDP).
It found that the UK has a robot density of just 85 – which is extremely low when compared with Sweden (240), Denmark (230), the US (200), Belgium (192), Italy (190), Netherlands (172), Canada (161), Spain (157), Finland (139), and France (137) – the nine countries that have similar manufacturing levels. All have significantly higher productivity.
Balloon One found that:
- For countries with a robot density of 200 and above, average productivity is GDP $53.81 per hour worked and average manufacturing levels are 71 percent of GDP (in terms of value added).
- For countries with a robot density between 150–199, average productivity is GDP $52.17 per hour worked and average manufacturing levels are 43 percent of GDP.
- For countries with a robot density between 85–149, average productivity is GDP $44.88 per hour worked and average manufacturing levels are 86 percent of GDP.
Managing Director of Balloon One, Craig Powell, said,
“This analysis shows that countries with a robot density of 150 or more are, on average, experiencing higher productivity levels than those with a robot density of 149 or less.
“While it could be argued that this is a result of some nations being more focused on manufacturing as part of their economy, and therefore having developed better infrastructure to meet demand, higher levels of productivity aren’t skewed towards nations that rely more heavily on manufacturing. In fact, manufacturing levels are, on average, higher (17.86 percent of GDP) in less-robot-dense nations.
“Because there is a correlation between robot density and higher levels of productivity, it seems that if the UK increased its robot density, it could boost productivity.”
Interesting tensions in the data, which suggest that some manufacturing hubs are succeeding with relatively low automation – findings that may be linked to sweatshop conditions, low human wages, and poor workers’ rights in some places.
The point about some nations being more focused on manufacturing is significant however: the UK is overwhelmingly a services-based economy.
According to 2019 government figures, service industries accounted for 80 percent of total UK economic output (gross value added) and 82 percent of employment in Q3 2020, when the measurements were taken.
It stands to reason, therefore, that manufacturing is less important to the UK economy than to many others, though there are significant opportunities in making the sector more competitive and productive.
So Balloon One’s broad point about automation and productivity stands. However, such claims are far from original or new: the International Federation of Robotics (IFR) has been publishing periodic studies of robot density and productivity for years, making the same point about UK productivity levels and the missed advantages of increased automation and robotics, compared with its industrial peers.
In a previous study (using 2015-16 data), the IFR calculated that the UK had a robot density of just 71, making it the only G7 nation with a density below the global average. So the more recent figure of 85 suggests that the UK has actually been making good progress and is investing in automation.
The problem is that the figures quoted by Balloon One come from 2017 data – and a lot has happened since then.
In 2019, the UK government announced a long-term ambition to raise the national spend on research and development (R&D) to 2.4 percent of GDP. According to the ONS, the UK was then spending a poor 1.69 percent of GDP on R&D, compared with an estimated EU average of 2.07 percent.
By comparison at that time, Japan was investing 3.1 percent, Germany 2.9 percent, the US 2.7 percent, and China 2.1 percent (of an economy then valued at $12.2 trillion). South Korea, the country with by far the highest robot density, was ploughing nearly 4.3 percent of GDP into new product development at the time the announcement was made.
Today, South Korea remains by far the world’s most automated nation, with a robot density of 710 and productivity levels that far outstrip the UK’s – at least, according to 2017 figures and Balloon One’s analysis. The pandemic may make most of these figures irrelevant.
On the face of it, however, the statistics do suggest a case of cause and effect: more robots equals more productivity in industrial settings, partly driven by the ability to run lights-out factories 24.x7, of course.
Critics of automation should note that unemployment tends to be low in highly automated economies, which frequently generate new, often skilled, jobs for human workers.
But there is a significant anomaly in any analysis that claims automation equals growth: China. Currently the world’s number two economy, whose growth has outstripped every Western economy in recent years, China is broadly acknowledged as the world’s manufacturing hub. In the midst of the pandemic, China is the only economy that continues to expand.
Yet in Balloon One’s view of the world, China is performing very badly: just one place above the UK at 19th in the productivity league, with a very low robot density (just 97 – slightly above the UK, and just 13.6 percent of South Korea’s total).
That’s quite an anomaly, because few would argue that the Chinese economy has performed badly this century, with low productivity levels. So either Balloon One’s figures present an over-simplistic view of the world, or the story of Chinese growth has barely begun.
China is automating (increasing its robot density) faster than any nation on Earth, driven by Beijing’s desire to match the performance of countries such as South Korea. So if Balloon One is right and automation is the simple key to productivity – insert it, turn the ignition, and watch the economy boom – then China is barely getting started.
But the real world is rarely as simple as that. As China automates faster and faster, its economic growth has actually been slowing. So beware of any study that suggests simply buying a technology is a fix to complex, intractable problems.