The Aging World and AI Opportunities

AI is said to be able to help countries experiencing population aging and labor shortages.

REUTERS/JASON LEE

A robot waiter carries dinner plates ordered by guests to tables at a restaurant in Beijing, China, November 2018.

A number of countries are experiencing population shrinkage, one of which is due to the continued decline in birth rates. This condition also has an impact on the unmet need for labor in these countries. In the midst of this situation, there is hope that artificial intelligence or artificial intelligence (AI) can fill the empty space although it cannot replace it completely.

One of the countries experiencing a decline in birth rates is Japan, which has seen a decrease for eight consecutive years until 2023. According to a report from Reuters, the birth rate in Japan is expected to decline by 5.1 percent compared to 2022, reaching 758,631 in 2023. Meanwhile, the marriage rate is expected to decline by 5.9 percent, reaching 489,281. For the first time in 90 years, the marriage rate has fallen below 500,000.

However, the availability of human resources is an important factor in the economic growth of a country. Therefore, amid the continuous decline in population, AI is expected to be a solution in filling the gap between labor demand and availability. Moreover, Japan has long been known as one of the leading countries in innovation and technology.

Also read: Shrinking Population Trends and World Anxiety

AFP/RICHARD A BROOKS

A restaurant employee ordered food from an unmanned robot during a trial of robot delivery service by Uber Eats Japan, Mitsubishi Electric, and robot developer Cartken in downtown Tokyo, Japan on Tuesday (5/3/2024).

Quoted from the BBC, Saturday (20/4/2024), Eat&Holdings, the parent company of the Osaka Ohsho brand, which is famous for producing gyoza (Japanese dumplings), has utilized AI. This innovation was driven by limited labor when demand surged during the Covid-19 pandemic. Because, to maintain the quality of the gyoza produced, repeated checks are needed by workers.

Ultimately, the answer lies in technology. In January 2023, they opened a high-tech gyoza production site equipped with AI cameras. With this technology, the camera is able to detect errors ingyozaproduction. This facility is capable of producing two gyoza per second or twice the speed of other Osaka Ohsho production sites.

"By implementing AI, we have reduced labor in the production line by nearly 30 percent," said the company's spokesperson, Keiko Handa.

Osaka Ohsho recently launched a cooking robot equipped with AI called I-Robo in some of their restaurants in Tokyo. The company believes that this technology can solve the problem of labor shortages, especially since training cooks takes up time.

By implementing AI, we have reduced labor on the production line by almost 30 percent.

In addition, in Japan, AI is also being used in the agricultural sector, one of the fastest aging industries in the country. The average age of Japanese farmers currently stands at 68.4 years old. AI is used to identify various diseases, pests, and weeds in plants. Therefore, early detection and disease prevention can be carried out.

"The accuracy level is around 70-80 percent. So, it's not as good as the diagnosis of experts, but it's better than most farmers. The longer we work on this application, the more we realize how extraordinary human work is. However, the problem is that the number of experts continues to decline, so AI can become a solution," said Kentarou Taniguchi from Nihon Nohyaku.

One Japanese farmer, Kensuke Takahashi, who has been using the application for three years, agrees that AI can help modernize the agricultural sector. "The number of farmers in Japan has dropped drastically but total agricultural production in Japan has increased," he said. However, he also acknowledges that many elderly farmers remain skeptical of AI.

Inhibits productivity

Apart from Japan, population aging is also occurring in Europe, one of which is Germany. Quoted from Bloomberg, the working age population in Germany reached its peak at the end of the 20th century. However, after that, Germany was helped by the arrival of millions of immigrants and an increase in the number of women working. However, these two supporting factors are now starting to fade as the baby boomer generation retires.

KOMPAS/JANNES EUDES WAWA

This robot is capable of sorting food materials in a factory, making the work process shorter. This is part of the artificial intelligence introduced by Panasonic at an exhibition in Tokyo, Japan in October 2018.

This is felt very strongly by Andre Schulte-Suedhoff, the leader of Schuko, a company engaged in the business of air filtration systems and technology. In 2023, for the first time in 20 years, he will have to spend the weekend working directly at the production site. He is forced to do this because his company is short of workers, while the deadline to complete orders is getting closer.

Also read: The threat is called "Baby Shortage"

For Schuko and thousands of other companies across Germany, those obstacles are becoming increasingly commonplace. In fact, they actually have the opportunity to continue to expand. ”(But) The main thing that is hampering it is the lack of labor,” said Schulte-Suedhoff.

For years, Germany, the country with the largest economy in Europe, has had an economic growth engine in the form of productivity, especially by engineering and automotive companies, ranging from small to global scale. However, in recent years, relative productivity has stagnated. Productivity growth has been less than 2 percent since 2015. This condition is different from that of the United States, for example, which achieved 8 percent in the same period.

One of the factors causing stagnant labor productivity in Germany is the slow transition to the digital era. The presence of AI is believed to be able to help developed countries such as Germany in overcoming the problem of aging populations. However, according to Schulte-Suedhoff, trained workers will still be needed to service robots and set up digital infrastructure.

AFP/AXEL HEIMKEN

The photo taken in April 2023 shows a woman interacting with a robot produced by Devanthro-The Robody Company at the Hannover Messe 2023 technology exhibition in Hanover, Germany.

Global challenges

Meanwhile, the decline in fertility rates is expected to trigger demographic changes in the next 25 years, which will have an impact on the global economy. As reported by CNBC, this prediction is based on the results of a study published in the journal The Lancet on March 20 2024. The study states that three-quarters of countries in the world will be below 2.1 births per woman in 2050.

This shift in the demographic landscape is expected to have a significant impact on social, economic, environmental and geopolitical conditions at the global level. The shrinking of the labor force in developed countries is inevitable and will require significant political and fiscal intervention. However, on the other hand, technology will help overcome this.

"As the workforce decreases, the overall economy will tend to decline even though output per worker remains the same. There will be many challenges. "However, AI and robotics will reduce the economic impact of these conditions, although some sectors, such as housing, will be seriously affected," said Dr Christopher Murray, lead author of the report.

And what about Indonesia? In the short term, Indonesia is said to reach the peak of its demographic bonus in 2030. At that time, the number of productive age population will be larger than the non-productive population.

Preparing human resources is one of the crucial homework tasks so that the demographic bonus can move the wheels of the economy, instead of becoming a burden or being replaced by AI. Thus, Indonesia will be able to move towards Indonesia Emas (Golden Indonesia), not Indonesia cemas (Worried Indonesia).

KOMPAS/RADITYA HELABUMI

Visitors take food and drinks delivered by a robot waiter named Kitty at the Rasa Koffie cafe, Jakarta, Saturday (15/1/2022).