National Living Wage rises could lead to more jobs becoming automated, IFS warns

By A P Robinson & Co | Posted: 5 Jan 2018

In a new report, the Institute for Fiscal Studies (IFS) has warned that future increases in the National Living Wage (NLW) could lead to more UK jobs becoming automated.

Under current plans, by 2020, the NLW will have risen significantly, as part of the government’s commitment to ‘support working families with the cost of living’. The IFS predicts that, by this time, the NLW will rise to over £8.50 an hour.

The NLW is currently £7.50 per hour. It is set to rise from 1 April 2018, reaching £7.83 an hour.

The Institute’s report warned that a higher NLW will eventually begin to ‘affect jobs that appear to be more automatable’, such as retail cashiers and receptionists, which could be replaced by computerised systems.

Individuals who work in the wholesale and retail sector are most likely to be affected by automation, the IFS said. Those working in the manufacturing industry are also highly likely to lose their jobs to automation, according to the report.

The IFS also found that, currently, the NLW is rising faster than workers’ average earnings, meaning that more individuals are being paid at the minimum level.

Commenting on the findings, Agnes Norris Keiller, Research Economist at the IFS, 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.

‘Even higher rates . . . would bring even more employees in more automatable jobs into the minimum wage net.’

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