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Swedish firms are embracing automation while keeping job losses to a minimum and supporting innovation.

Around the world, people are eyeing automation technology with the suspicion that it will displace human employees and cause mass unemployment. This is not the case in Sweden and other Scandinavian countries, however, due largely to their generous social welfare systems. A survey by the European Commission found that 80% of Swedes see robots and artificial intelligence in a positive light. If such technologies make their companies more efficient, employees see a direct benefit, as their wages can be expected to rise along with their employer’s profits.

This plays out differently in the United States and Britain, where wages have stagnated despite soaring corporate profits. Correspondingly, 72% of Americans surveyed by Pew Research Center reported being “worried” about a future in which robots replace humans. People in the US are generally more dependent on their jobs, since employers are often responsible for their health insurance. Employees are less likely to leave to pursue other careers or start businesses, and unions have a mandate to prioritise job protection. Innovation can suffer as a result.

The Swedish economy has a different orientation. Since the government provides healthcare as well as ample unemployment benefits, people have more mobility and unions have more leeway to champion innovation. “A good safety net is good for entrepreneurship”, says Carl Melin, policy director at Swedish think tank Futurion. “If a project doesn’t succeed, you don’t have to go broke.”

Having employees who are receptive to automation, rather than threatened by it, gives Swedish companies an advantage. This is especially the case in the mining industry, which plays a dominant role in the Swedish economy. Particularly for mines which produce lower-grade ore, continually increasing efficiency is essential to staying competitive. Operating loaders remotely using joysticks and deploying self-driving trucks can help achieve this.

On a global scale, however, automation is expected to have a significant negative impact on jobs: A 2016 study by the World Economic Forum surveyed 15 major economies, together holding two-thirds of the global workforce, the New York Times reports. It concluded that “the rise of robots and artificial intelligence will destroy a net 5.1 million jobs by 2020”. A report from Oxford University, “The Future of Employment: How Susceptible Are Jobs To Computerisation?”, estimated that around 47% of total US employment is at risk, particularly in “routine intensive” occupations.

Many people will inevitably have to find different kinds of work. Sweden and other Nordic countries are preparing for this transition, for example with “job security councils”, financed by employers to help displaced employees find new jobs. Thus far this approach has worked. One such council in Stockholm, the TRR Trygghetsradet, has succeeded in finding new jobs for 83% of participants, with two-thirds moving into positions that pay the same or better than their previous jobs.

As automation technology continues to expand, however, such systems could become overwhelmed. Further, Sweden’s social safety net could be stretched too thin by the influx of immigrants from war-torn countries. “There’s a risk that the social contract could crack,” said Marten Blix, an economist at the Research Institute of Industrial Economics in Stockholm.

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