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The IUP Journal of Supply Chain Management :
The Impact of Automation on Business and Employment in South Korea
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The use of machines to reduce or replace human labor is a phenomenon as old as work itself. Such developments, often described as ‘automation’, may confer great benefits on businesses in terms of reduced production costs, potentially increased quality, and enhanced profits. However, those benefits also come with inherent burdens, which tend to disproportionately affect those least equipped to bear them, including small businesses and those workers with lower educational attainment or less developed job skills. Reduced wages, higher unemployment, and decreased social stability have long been recognized among the undesirable side effects of automation. This paper looks at the reality and inevitability of automation, especially as it could affect employment in South Korea. We address the likely impact on the Korean industry, concluding with steps that could mitigate the undesirable effects of automation, including possible reduction in work hours, increased spending on employee training, and greater attention to workforce planning and outplacement.

 
 
 

Automation and robotics are rapidly changing the world of business, and their effects are deep and far-ranging. While the use of capital equipment to replace labor is hardly a new development in business, the current automation revolution is unfolding with remarkable speed and enormous influence upon our lives. These effects include not only machines replacing humans’ jobs, but also economic dislocation and social disorder (Merchant, 2014). While companies benefit from automation, largely through lower labor costs and higher price competitiveness, it does come with potential problems. Recent studies (e.g., Frey and Osborne, 2013; and Arntz et al., 2016) warn that adoption of fast-paced automation at work puts many employees at risk of losing their jobs. With Corporate Social Responsibility (CSR) considered as one of the strategic imperatives to gain competitiveness in today’s market environment (Bai and Chang, 2014), it is important for firms to consider employees’ job security and well-being when moving toward workplace automation.

Automation differently impacts different countries, and nowhere are those impacts more significant than in South Korea (hereafter, Korea). According to the International Federation of Robotics, as of 2013, five countries, including Korea, China, Japan, USA, and Germany, represent about 70% of total robotics sales. For every 10,000 employees, Korea deploys 478 industrial robots, far ahead of the 315 units in Japan and 292 units in Germany (IFR Press Release, 2015). However, despite the rise in manufacturing and increased use of automation, the consequences of such automation in Korean workplaces have been relatively overlooked. Considering Korea’s important role in the world business, especially in the Asia-Pacific region, a deeper examination of automation’s economic and social effects is critical.



 
 
 

Supply Chain Management Journal,Automation,Production costs,Potentially increased quality,Employment in South Korea.