The Office for national statistics have calculated that as many as 1.5 million jobs could be lost due to automation. The ONS defines automation as ‘tasks currently carried out by workers being replaced with technology’ which could mean programs, algorithms or even robots (BBC News, 2019).
The ONS analysed 20 million people in 2017 and found 7.4% of these were at high risk of being replaced. Which would have a profound effect on the labour market in the UK and globally. The highest at risk according to BBC News are women and young people. The effects of automation like this on the labour market will be massive.
Workers at risk or when they are replaced will become discouraged workers and will not want to work. Moreover, on a macro level this will cause structural unemployment where there is an excess of supply over demand causing the cost of wages to drop as people sacrifice pay for actually having a job. This will lead to increased number of people below the poverty line and in absolute poverty as there is less opportunity.
Further, this may also cause more people to demand higher education as lower skilled and lower paid jobs will be replaced, thus making the need to be higher skilled to ensure a job and create job security. This will put a strain on universities and collages as they have an increased number of people wanting to become higher skilled.
Due to the loss of jobs, the government will need to increase spending on benefits like JSA(job seekers allowance) in order to ensure people are not left homeless or without food or basic necessities. Again, leading to a bigger deficit in the UK balance of payments. This may even lead to higher taxation as the government try find ways of paying this added cost and will have to cut down on other expenditures.
For labour, the market will become very competitive for high skilled jobs as everyone is trying to secure a higher paid and skilled job in order for them to feel job security. This will in the long run, create more flexible and mobile labour market. But, in the short-run the economy of the UK may fall into negative growth or recession needing austerity measures to be put into place by the government.
Overall, I believe automation will have a large affect on the labour market and the UK economy. This will be a negative effect in the short run for the reasons listed above. But, in the long run I believe could create a positive impact as more people become highly skilled workers creating more transitional skills and flexibility which is good for businesses. More young people will be looking into the future as they will have more information of the jobs available which will not be taken by automation and will create a very competitive and high skilled labour market.
References:
BBC News. (2019). Automation ‘could replace 1.5 million jobs’. [online] Available at: https://www.bbc.co.uk/news/business-47691078 [Accessed 25 Mar. 2019].
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