Is there contradiction between automation created resilience and the full employment (with high wages)?

Question

From the one side - full employment with the high wages (but still under the level of creating inflation threat) is nice thing and politicians and central banks are highly motivated to achieve this.

From the other side - automation created technological unemployment or underemployment (assuming that the population still maintains skills) is beneficial for the resilience - if the economy can tolerate and can function with reduced human participation (e.g. by employing automation and software) then economy can direct idle resources towards demand that arises from the needs of crisis management. E.g. today economy can afford to shift workforce and resources to the research and production and delivery of vaccines and personal protection equipment and so many adaptations. If the current economy had required the full participation of the human workforce then there would be loss of production due to lockdowns, rising inflation etc.

So - this sketch/vignette provided the contradiction between the full employment from the one side and the resilience from the other side. Is such contradiction really and issue that can attract the attention of economist and is there literature on it? Maybe there is specific term for this contradiction? This vignette also assumes that there is un-used possibilities for introduction of technology. Such possibilities always exist when human beings are forced to compete against machines to do the same job with less wages/resources. Low social support makes this human/machine competition more fierce and the under-use of technology more pronounced/

Answer 1

There is not necessarily any contradiction. Full employment does not mean every single person in economy is employed. Full employment is (Worswick; 1987):

Full employment does not mean zero unemployment. There can be dislocations where large numbers of workers are displaced from their present employment, and time is needed before new workplaces can be created. This can happen at the end of a war, or following some major technological change. Apart from such special cases, regular allowance must be made for frictional and seasonal unemployment. Policy would not aim, therefore, at zero but at the elimination of unemployment attributable to demand deficiency.

So generally speaking the technological change per se might only reduce the rate at which economy will attain its full employment. In addition, the concept of full employment is somewhat vague. In order to make it operational it will often be measured by the non-accelerating inflation rate of unemployment. It is completely possible for NAIRU to become higher as a result of technological change.

Next, automation does not necessarily create unemployment (see Nakamura et al 2018). Automation, can as well increase the number of jobs avaiable through effects on increasing aggregate demand. Of course, it is possible that it would create more unemployment, but empirically that did not happen in economies such as US till now (excluding current pandemic where it is hard to say what unemployment is due to automation and which due to other issues).

There is research that examines impact of automation on resilience of supply chains (see for example Hosseini et al 2020), but there does not seem to be a paper that would look at a tradeoff between resilience and full employment (or at least google scholar search did not show anything up).