AI and Bots a Solution to Labor Woes, but at a Cost

Our friends from the German-speaking business community have just published the 25th annual business climate survey, a not insignificant period of time over which to test the economic health of a country.

Indeed, so respected is the German-Hungarian Chamber of Industry and Commerce (DUIHK) survey, and so important Germany’s position as Hungary’s leading trade partner – the more than 2,500 German firms present here employ in excess of 200,000 people – that Minister of Finance Mihály Varga, present for the launch joked that “there is an old Hungarian saying: ‘The sure sign of spring approaching is the publication of DUIHK’s conjuncture report’.”

It is doubtful that this year’s survey will have surprised many. Confidence is somewhat down from last year, but since 2018 was the best on record, that is only to be expected, as DUIHK president Dale Martin noted.

Areas of concern continue to include lack of labor and perceived corruption (both identified by 70% of respondents) and the lack of transparency of state tenders (64%). On a more positive note, asked if they would invest again, 82% said “yes”. Indeed, Hungary is the second most attractive investment destination in the region, behind Slovakia only.

The ever tightening labor market is causing problems for companies of all nationalities, of course. Many see digitalization as a way out. At a conference organized by the Netherlands-Hungarian Chamber of Commerce together with SwissCham Hungary and in cooperation with the British Chamber of Commerce in Hungary, the Danish Business Club and the Swedish Chamber of Commerce in Hungary, a speaker from Big Four advisory firm KPMG cited one of its own studies in which a some 99% of CEOs report that they preparing for digitalization challenges.

Some of those will clearly involve the disappearance of low-skilled jobs. The same conference produced the sobering statistic that 30 jobs are replaced by robots every minute, according to the World Economic Forum. The KPMG advisor added that, by 2027, about ten million jobs might be lost to robots in the United States alone.

Digitalization, it threats and it promises, was also to the fore at the recent annual American Chamber of Commerce conference on the subject, which this year took AI as its theme. There was yet another potentially chilling stat to come out from that event, this time from the Bank of England, which estimates that 66% of jobs in the United Kingdom are now at risk from automation.

As I wrote in my editorial in our last issue, we may not know what the future will look like, but we do know it will be digital. Everyone agrees that some routine jobs are going to go the way of the dinosaurs, but new jobs will be created too. It will be up to governments to manage the changes, and the uncertainties that will come with them. The reality, though, is that it will be businesses, and in particular their HR departments, that will have to find workable solutions. We can but wish them luck.

 Robin Marshall

 Editor-in-chief