When robots replace workers: Rethinking industrial incentives for the intelligent industrial age

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By Dr Theodora Twongyirwe Mondo

The factory has always been a symbol of employment to ordinary citizens. A new plant opening meant hope, the clang of machines, the smell of iron, the rhythm of people at work.

Policymakers rewarded these images with generous tax incentives, assuming that every new industry would bring hundreds of jobs to the community.

For decades, that assumption was sound. Today, it is quietly collapsing. For years, Uganda’s tax incentive regime has been guided by a familiar economic logic: attract industries that will substitute imports, stabilise consumer prices, grow production, and expand employment opportunities for Ugandans. While the objectives of import substitution and price stabilisation remain sound and necessary, the assumption that every new factory will automatically translate into large-scale job creation needs to be rethought.

The modern industrial floor is shifting from long rows of workers to intelligent machines, sensors, and robotics — a world where efficiency increases even as human labour quietly declines. In some factories, a robot does not even ask for lunch or transport refund; it simply needs to be charged.

Across the world, and steadily in Uganda, the industrial revolution is no longer powered by sweat and shifts but by code and automation.

The vocabulary of modern industry now includes robotic welding arms, digital twins, AI-driven maintenance and automated logistics. Even smaller manufacturers are adopting machine vision systems and labour-saving technologies.

Companies are not doing this out of hostility toward workers; they are doing it because the economics of production have changed. Efficiency has become the new employment, and algorithms rarely take sick leave.

Yet our industry incentives policies have not caught up with this reality. Uganda’s incentive framework still rewards capital expenditure and asset acquisition on the assumption that more machines equal more jobs. But in an age of robotics, the opposite may be true.

A single automated production line can now replace what previously required three shifts of workers. A smart warehouse with conveyor belts, scanners and barcoding systems may operate with only a handful of technicians.

Fully automated plants in Asia today operate with up to 70% fewer workers than they did a decade ago. In the automotive sector, the international average is nearly one robot for every five workers. Closer to home, Ugandan manufacturers are visibly adopting automated cutting, digital material handling, and AI-supported quality inspection.

The traditional link between “new factory” and “new jobs” is weakening by the day.

If we do not revise the incentive formula, we may soon find ourselves subsidising the machines that replace the very workers those incentives were meant to empower.

If we do not revise our policy compass, we may soon find ourselves subsidising machines to replace the very people those incentives were meant to employ.

The current model rewards investment in equipment without questioning its labour impact.

A firm that spends $10 million importing robotic systems could qualify for greater tax relief than a firm that hires and trains 500 Ugandans to do the same work manually. It is a policy blind spot that deserves urgent correction.

This does not mean innovation should be punished. Far from it. We need a tax regime that rewards inclusive innovation, not just automation for its own sake. Government should consider introducing AI-Transition Impact Assessments for large-scale industrial investments.

Companies applying for incentives should disclose anticipated automation levels, expected workforce changes, and their reskilling or redeployment plans. Incentives can then be tiered, for example, full incentives for firms that combine automation with strong human capital development, or partial incentives for firms with minimal labour integration plans, and Innovation credits for firms that invest in building local AI and robotics capacity.

We must also revise what we consider “job creation.” The jobs of the AI economy may not be on factory floors but behind screens and dashboards — robot technicians, data analysts, quality analysts, AI auditors, cyber-security specialists, and automation engineers. A forward-looking incentive system would reward companies that invest in these emerging skill sets, thereby turning Uganda into a developer of technology, not just a consumer of imported machinery.

Of course, this is not a call to romanticise the past. Robots will always have their advantages — do not go on strike, ask for lunch allowances, they don’t quarrel, don’t ask for airtime, and don’t form unions or forget the night shift. But people still build nations, and more importantly, robots don’t vote; people vote.

A policy framework that ignores the social consequences of automation is not forward-thinking industrialisation; it is short-term arithmetic with long-term costs.

It is time for the Ministry of Trade, Industry and Cooperatives, Ministry of Finance, Planning and Economic Development, the Uganda Investment Authority, and the Uganda Revenue Authority to take a fresh look at our incentive regime and ask a simple question: Are our incentives aligned with the future we are actually building?

The factories of tomorrow will hum with code, not crowds. Our challenge is to ensure that when the machines go to work, Ugandans still have a place in the story. Our responsibility is to ensure that Ugandans still have a meaningful place in that future — not as bystanders, but as designers of their own economic destiny and beneficiaries of a smarter, fairer industrial economy.

The writer is a Senior Lecturer at Mbarara University of Science and Technology (www.must.ac.ug).

Email tmtwongyirwe@must.ac.ug