It's incorrect to say "less need for labor" because labor in general is the most scarce resource (it's easy to prove: we have unused natural resources and capital always requires labor to make them work and maintain them). This is exactly why everybody tries to build capital which makes labor more efficient.
It is clearly more efficient for a man to control 10 cars with a computer instead of the one with his bare hands.
What other 9 persons would do? Either control more cars (if there rises a demand for them) or shift to remaining, more important processes where the labor is still less efficient (and thus costs more), or any combination of these. Think of it like "we solved the problem with cars, lets now move on the next task".
And as you know, existing capital and technology lets people learn and adapt more and more efficiently. So it's not "progressing economy needs less labor", but rather "progressing economy makes labor more efficient by solving some productivity problems and shifting labor where unsolved, more urgent problems remain."