Is automation stealing manufacturing jobs? Evidence from South Africa’s apparel industry

Abstract

There are growing fears that automation will lead to major job displacement and increasing unemployment, particularly in labour-intensive manufacturing. This is especially worrying for developing countries because of the importance of labour-intensive manufacturing to economic development. The purpose of this paper is to evaluate the threat of automation to employment, focusing on the manufacturing sector. It does so by critically reviewing studies that evaluate the current and future impact of automation on employment, as well as using industry-specific evidence from the apparel industry in South Africa. Through our literature review, we find that many studies fail to acknowledge: (1) the full range of factors that determine the net impact of automation on employment and; (2) many country-specific and industry-specific barriers to adopting new automation technologies, particularly in developing countries. A qualitative case study such as this one could therefore be a valuable contribution to the literature. The apparel industry has been chosen as a case because many forecast studies predict that the industry will suffer huge job losses due to automation. South Africa has been chosen as a case because the current literature is lacking case study evidence in the context of developing countries, and because South Africa is among those few developing countries adopting automation technologies in the apparel industry. Our evidence draws on 26 interviews with firm managers in the South African apparel industry, as well as with government and union representatives. We find that the overall impact of automation on unemployment has been negligible and is predicted to continue to be negligible. But in some instances, increased automation has and is predicted to increase employment by improving productivity at the firm level.