This study examines the determinants of automation and its employment effects, with a particular focus on the role of labor-management relations. As digital transformation and smart manufacturing have increasingly reshaped production processes in the ...
This study examines the determinants of automation and its employment effects, with a particular focus on the role of labor-management relations. As digital transformation and smart manufacturing have increasingly reshaped production processes in the manufacturing sector, automation has become an important strategy for improving productivity and competitiveness. However, its implications for employment remain theoretically and empirically contested. This study therefore analyzes whether labor unions and the labor-management relations climate affect the level of automation and whether these labor-management factors moderate the relationship between automation and employment.
Using the 2019, 2021, and 2023 waves of the Workplace Panel Survey (WPS) conducted by the Korea Labor Institute, this study constructs a three-wave panel dataset of manufacturing establishments. The analysis proceeds in two stages. First, the effects of union presence and labor-management relations climate on automation are examined using static panel models, including pooled OLS, fixed-effects, random-effects, and hybrid models. Second, the effects of automation on employment size are analyzed by employment type, including total employees, regular workers, non-regular workers, and indirectly employed workers. For this analysis, both static panel models and dynamic fixed-effects models including lagged employment are estimated.
The main findings are as follows. First, union presence has a statistically significant positive association with automation. Establishments with labor unions show higher levels of automation than non-union establishments, and this result remains consistent across several model specifications. This suggests that labor unions do not necessarily function as obstacles to technological change; rather, under certain conditions, they may serve as institutional actors that facilitate or accommodate automation.
Second, the labor-management relations climate is also positively related to automation. In particular, the hybrid model shows that the between-establishment effect is statistically significant, indicating that unionized establishments with a more cooperative labor-management relations climate tend to have higher levels of automation. However, the within-establishment effect is not statistically significant, suggesting that the effect of labor-management relations climate is more closely associated with accumulated differences in trust and consultation practices across establishments than with short-term changes within the same establishment.
Third, automation does not have a statistically significant direct effect on employment size. Across all employment types, including total employees, regular workers, non-regular workers, and indirectly employed workers, automation shows no significant effect in either static panel models or dynamic fixed-effects models. These findings indicate that, based on the three-wave panel data used in this study, automation cannot be said to consistently increase or decrease employment size, nor is there sufficient evidence that its direct effect differs significantly across employment types.
Fourth, the moderating effect of union presence is partially supported. In the dynamic fixed-effects models, the interaction term between automation and union presence is positive and statistically significant for regular workers. This suggests that the slope of the relationship between automation and regular employment is higher in unionized establishments than in non-union establishments. However, this moderating effect is not found for non-regular workers or indirectly employed workers, indicating that the role of unions may be uneven across employment types. Given that a statistically significant direct effect of automation on employment is not confirmed, this result should be interpreted as limited evidence of a moderating role rather than as a definitive buffering effect against job loss.
Fifth, the moderating effect of labor-management relations climate is not supported. Among unionized establishments, the interaction between automation and labor-management relations climate is not statistically significant for any employment type. This implies that although a cooperative labor-management relations climate is associated with higher levels of automation, it is not identified in this study as a significant factor that changes the relationship between automation and employment size.
Overall, the findings show that labor-management relations play different roles in the adoption of automation and in subsequent employment changes. While labor unions and cooperative labor-management relations are positively associated with automation, automation itself does not show a significant direct effect on employment size. Moreover, the moderating role of unions is found mainly in relation to regular employment, while no significant moderating effect is found for non-regular or indirectly employed workers. These results suggest that the factors associated with the adoption of automation may differ from those shaping employment changes after automation is introduced.