UK minimum wage: Steep increases could kickstart workplace automation revolution

According to the Institute for Fiscal Studies around 11 per cent of the workers set to be affected by the new minimum wage by 2020 are in jobs that are 'routine' and hence potentially performed by machines

Ben Chu
Economics Editor
Thursday 04 January 2018 01:10 GMT
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Occupations that are easier to automate, according to the IFS, include retail cashiers, bank clerks and receptionists
Occupations that are easier to automate, according to the IFS, include retail cashiers, bank clerks and receptionists (Shutterstock)

Steep increases in UK minimum wage could kickstart an automation revolution in the workplace, with potentially radical consequences for those currently working as cashiers and receptionists among other jobs, according to new research by the Institute for Fiscal Studies (IFS).

For the over-25s, the minimum wage now stands at £7.50, covering 4 per cent of employees, and will rise to £7.83 in April.

The Government plans to hike it to 60 per cent of median earnings by 2020, which would equate to around £8.56 on current projections.

It would then cover around 12 per cent of the workforce.

Labour has pledged to go further, promising a £10 per hour minimum wage in its election manifesto last year.

The minimum wage increases of recent years seem to have had little negative impact on employment levels of the less-skilled, despite warnings that the hikes would cost jobs and hurt the very people they are intended to assist.

But the IFS says around 11 per cent of the workers set to be affected by the new minimum by 2020 are in jobs that are “routine” and hence potentially performed by machines. That compares with just 5 per cent of those covered by the minimum wage in 2015.

The IFS research found that the peak of “automatability” for jobs (16 per cent) does not occur until one goes a quarter of a way up the wage distribution.

Percentage of employees aged 25+ in the most automatable jobs (top 10 per cent of routine task intensity)

IFS
IFS

“Beyond some point, a higher minimum must start affecting employment, and we do not know where that point is. The fact that the higher minimum will increasingly affect jobs that appear to be more automatable is an additional reason why extremely careful monitoring is required,” said Agnes Norris Keiller, a research economist at the IFS.

Occupations that are easier to automate, according to the IFS, include retail cashiers, bank clerks and receptionists.

Traditional low-paid occupations, such as waiters and nursery assistants, actually involve lots of non-routine tasks, making them less susceptible to automation, according to research.

Fears of automation causing a surge of unemployment for the lower-skilled have been a staple of economic commentary for several years.

But the IFS stressed that the impact of technology is deeply uncertain, with some studies showing that automation has been accompanied by the creation of new jobs for the lower-skilled.

The low-skilled could also be “up-skilled” to work with the new technology.

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