Increased minimum wage risks job losses to automation, IFS suggests

Written by John Ashmore on 5 January 2018 in News

Institute for Fiscal Studies analysis suggests more jobs could be automated with minimum wage rises

Supermarket - Image credit: Holyrood

Increases in the national minimum wage could lead to jobs being lost to automation, an influential thinktank has warned. 

A new report from the Institute for Fiscal Studies (IFS) points out that by 2020 some 12 per cent of all workers over 25 would be on the minimum wage, up from just four per cent in 2015. 

Under the current trajectory the minimum hourly rate will reach £8.50 an hour by 2020, still well below the £10 an hour promised by Labour in their most recent general election manifesto.

While previous increases mainly covered workers in hospitality jobs which are not easily replaced by machines, the upcoming rises risk a swathe of roles which are vulnerable to automation, including shop cashiers and receptionists. 

IFS economist Agnes Norris Keiller, one of the authors of the report, said there was a degree of uncertainty over when the wage rate would start to damage employment. 

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

"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.”

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