Institute of Fiscal Studies
Automation is in the news, after the Institute for Fiscal Studies (IFS) warned in a new report that a rise in the minimum wage could lead to more automation as businesses look to increase efficiency and save on costs.
For employees aged 25 and over, the minimum wage is expected to change as follows:
- Current rate £7.50 per hour
- April 2018 rising to £7.83 in April
- During 2020, the rate is planned to reach 60% of median wages – which on current forecasts equate to £8.56
Agnes Norris Keiller, a research economist at the IFS and one of the authors of the new study, said:
‘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.
‘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.’
Certainly companies looking to automate have more options available than ever, as industry 4.0 and the smart factory have moved out of the ‘test phase’ to become reality. Investment in automation has been significant over the last few years for manufacturing and packing tasks to name but a few. The emergence of self-navigating AIV (Autonomous Intelligent Vehicles) adds another opportunity for factories to improve efficiency.
The impact on the nation’s employment prospects is not necessarily bad news for employment rates. The IFS said it could not be certain whether there would be adverse effects for low-skilled workers and commented that automation of some jobs can actually lead to the creation of other jobs related to the new technology, such as servicing the machinery. Employees can be freed from the more repetitive and mundane tasks to work at a potentially higher level.
From a business perspective, companies that choose to automate can expect to use efficiency gains to become more competitive.
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