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Amazon using more robots at fulfilment centres – jobs growing slower than reveneues

By December 1, 2014 No Comments


Amazon is committed to driving down costs and providing better value for its customers. They’ve also been in trouble for paying low wages in their fulfilment centres. Hence it’s not surprising that they are investing heavily in warehouse automation systems. Back in 2012 they acquired robotics company Kiva and now they have announced their latest generation warehouse which uses “robotics, vision systems, and other high-end tech”.

The interesting thing for me is what this means for jobs. There have been lots of predictions recently that up to 40% of employment is at risk from automation and artificial intelligence such as Amazon is deploying. As you can see from the picture above the new warehouses do still have human workers, so we aren’t looking at a 100% automation scenario. However, if we compare the growth in Amazon’s employees with their revenue growth we can get a picture of the extent to which these new technologies are displacing human labour.

Amazon said recently that it will hire 80,000 additional workers to fulfil customers orders this holiday season. That’s a 14% increase on last year. Revenues meanwhile are growing at 21% so it follows that without the robots there would have been a requirement for more additional workers. A 21% increase in additional workers would have taken the total to around 85,000, making it a reasonable first level assumption that the robots have taken 5,000 jobs.

Moreover, it would be interesting to see the job numbers broken down by fulfilment centre. My guess is that the newer centres are more tech enabled than the older ones, and in those new ones a greater amount of human labour is being replaced by robots.

And is this a bad thing?

In the long run, no, so long as we can feed and house everybody it is a good thing that robots are liberating us from menial jobs. In the short term it’s also good, so long as unemployment stays low. Additionally, whether it’s a good thing or a bad thing is slightly irrelevant because it’s happening and it would be a huge mistake to try and stop it. That would mean forcing companies to use less efficient means of production undermining which would undermine competitiveness and send business and jobs to jurisdictions that weren’t restricting the use of robots.