3 Ways Robots Can Help an Economy in an Inflationary Period

Robotics and technology are revolutionizing the future of the workforce. With inflation at 7.5% and increased competition in the market, businesses need every advantage they can get to reduce costs. Robots may save businesses in such an inflationary period.  

Technology has played a vital role in expanding business through data-driven decision-making and automation. The use of technology was prevalent decades ago in farming tools and is relevant to date with the help of assembly-line robots in significant factories and warehouses. Robots are becoming more popular in this decade. They have started working alongside the human workforce in the warehouses of Amazon and assembly lines of Tesla Motors. This trend can help the economy and businesses in many ways:

1. Improved Productivity 

Economic growth can come from the increased quality of labor, capital, and productivity. Integrating robots in the workforce automate menial tasks and frees up the working time of the skilled workforce of an organization. This helps businesses optimize the working hours of their employees and enables skilled workers to focus on complex tasks instead. It improves the overall labor productivity of an organization and helps it cut down on high labor costs in inflationary times. Decreased overheads will enable the businesses to keep their margins afloat in price hikes, protecting them from being driven out of business due to the potential threat of loss-making. 

Technological tools facilitate business expansion as they eliminate the need to keep hiring workers for the expansion needs of the business. In inflationary times, companies struggling to maintain their break-even and profit margins can expand or diversify their product lines or operations to generate more revenue without additional labor costs.

2. GDP Growth

As the productivity of businesses increases with the integration of robots and automation, the overall GDP of the economy improves as well because of low output being produced with limited resources. A paper by the London School of Economics titled "Robots at Work," which studied the effects of integrating robots in an economy, has shown that across 17 countries, usage of industrial robots increased the GDP by 0.36%. This can be compared to the technological boost in the 20th century and economic growth resulting from increased productivity.

In times of inflation, countries that have integrated robots into their workforce and primary industries will win even if economic growth is being affected by increased poverty and unemployment. Businesses which have technology will be able to keep their prices competitive in international markets and expand their operations and exports, helping improve the economy. With lower overheads due to automation, existing businesses in the economy can even target various international markets to maintain and increase their overall market share.

3. Job Creation

An economy facing high inflation is likely to face unemployment. Integrating robots improves productivity, which can create more jobs in such an economy during inflationary times as the demand for skilled professionals increases in robotics and AI-related industries.

Robots are often considered evil as they eliminate the need for labor to perform repetitive tasks. However, increasing robots in the workforce also increase high-skilled workers' demand. Automation only replaces low-skill jobs like sorting raw material in warehouses, organizing orders, transporting and stocking, and quality-related tasks. Advanced robots in the workforce also require many hardware engineers, artificial intelligence (AI) experts, and software experts. The growing use of robots increases the demand of the businesses that manufacture robots and promotes overall innovation.   

Endnote

Inflation can have various adverse effects on an economy ranging from a fall in purchasing power of individuals and businesses shutting down due to low demand or profitability to unemployment. Individuals and companies can counter these effects on an individual level or collectively. Individuals can prepare ahead of time by investing their savings in stocks, cryptocurrency, or precious metals.

However, in inflationary periods, even the stock market is affected adversely as stock value usually falls as a result of rising inflation. Where inflation can lead to a crashing stock market, it can also increase the value of gold at the same time. Investing in precious metals like gold is a much better way for individuals to combat inflation and preserve the purchasing power of their savings. You can look into Augusta precious metals review to better understand the market of gold and silver and invest to hedge against inflation. 

On an organizational level, businesses can move towards automation, robotics, and technology to improve their overall productivity and decrease overhead costs to maintain profit margins. This will help them maintain their revenue and sustain the business in inflation. Increasing the use of robots in business can increase jobs in high-skilled professions. It will improve the workplace's productivity and help companies optimize the work hours of their employees. It will also enable and sustain the overall economic growth and can even increase its GDP in tough times of inflation.