Minimum wage increase could see jobs automated at greater speed, IFS report claims
The upcoming above-inflation increase in the minimum wage could speed up the replacement of human jobs with robots, according to a new report by the Institute for Fiscal Studies (IFS).
By 2020, companies will be obliged to pay employees above the age of 25 a minimum of £9 an hour. In 2015, 4 per cent of employees aged 25 and over were on the minimum wage; this is set to reach 12 per cent by 2020.
The IFS analysis shows that those being brought within the minimum wage net are in different sorts of jobs to those who have been on the minimum previously and in particular they are more likely to be doing jobs that appear more readily doable by machines or computers.
For example, many of those on the minimum wage in 2015 were in personal service occupations, such as workers in the hospitality sector.
“Those jobs are not readily done by machines, but those set to be brought within the minimum wage net in 2020 are more than twice as likely to be in the ten per cent most ‘routine’ occupations – such as retail cashiers and receptionists – as those who were directly affected by the minimum in 2015,” the IFS said.
“This kind of work tends to be easier to ‘automate’. Ease of automation actually rises even more as one looks somewhat further up the wage distribution, reaching a peak about a quarter of the way up.
“Beyond some point, a higher minimum must start affecting employment and we do not know where that point is.”
The IFS wants the introduction of the new wage to be carefully monitored so that unemployment doesn’t spike as employers rush to automate their workforces.
When trying to discern which jobs will suffer the most from automation, the report looks at which jobs are most threatened by technologies that are already available.
For example, computers are relatively effective at executing ‘routine’ tasks – such as calculating supermarket bills and collecting payment – and less effective at tasks that involve forward planning, or responding to unusual situations, or which require human interaction.
The relationship between wages and the importance of routine tasks is not as obvious as one might imagine the report states.
“Some low-paid jobs actually involve a lot of non-routine work, such as waiters or nursery attendants supervising children, while routine tasks are relatively prominent within some mid-paying occupations, such as bank clerks.
It defines routine jobs as those which involve ‘working to set limits and standards’ and ‘finger dexterity’.
Those classed as less routine involve ‘undertaking direction, control and planning’, ‘hand-eye-foot coordination’ or ‘mathematical and formal reasoning’.
While the ‘routineness’ of jobs doesn’t necessarily relate to the likelihood of them being automated, “research has found that they are both strong predictors of past technological adoption and capable of explaining labour market trends in a number of advanced economies.”
The IFS also suggests that the use of technology to replace some jobs can create new jobs that are complementary to that technology.
A report from last year suggested that 250,000 public sector jobs in the UK could be lost to robots and computers over the next 15 years.