IFS: living wage increases are automation threat to jobs

A report urges “extremely careful” monitoring of statutory pay increases, warning automation poses a threat to lower-paid jobs.

Increases in minimum wage levels risk raising the pace of mechanisation in the workplace, according to the Institute for Fiscal Studies (IFS).

A report for the economic think tank urges “extremely careful” monitoring of wage rates over the coming years as statutory pay goes up and employers look to cut costs, reports Sky News.

The National Living Wage, which applies to workers aged 25 and over, is set to rise to £7.83 per hour from April from a current rate of £7.50.

Current ambitions will see it hit 60 per cent of median wages in 2020 – around £8.56 if forecasts prove accurate.

The IFS said those set to be brought within the minimum wage net in 2020 are more than twice as likely to be in the 10% most “routine” occupations as those who were directly affected by the minimum wage in 2015.

It believed that left roles such as retail cashiers and receptionists at the mercy of potential automation but the report admitted the future was “uncertain” and that the loss of some jobs to automation could open other opportunities.

The report was released after a separate study in the summer warned that 15 million UK jobs “could disappear due to technological disruption”.

IFS research economist Agnes Norris Keiller, who wrote the study, said: “The fact that there seemed to be a negligible employment impact of a minimum at £6.70 per hour – the 2015 rate – does not mean that the same will be true of the rate of over £8.50 per hour that is set to apply in 2020.

“Beyond some point, a higher minimum must start affecting employment, and we do not know where that point is.”

She added: “Meanwhile even higher rates, as proposed for example by the Labour Party, would bring even more employees in more automatable jobs into the minimum wage net.”

Shadow business secretary Rebecca Long Bailey said: “Technological change, if harnessed effectively, could bring about immense benefits – transforming jobs and workplaces and driving up productivity and living standards.

“All workers should be paid a full and fair wage, which is why Labour has pledged to introduce a Real Living Wage of at least #10 an hour by 2020, as well as support for smaller businesses to pay it.

“Labour will invest in our country’s future, new technologies, our businesses, our infrastructure and people. Higher wages, good jobs, greater investment in skills and technology to boost productivity and high employment all goes
together. They are complements, not trade-offs.”

A Government spokesman responded: “The National Living Wage is creating a stronger economy and a fairer society, having delivered the fastest pay rise for the lowest earners in 20 years.