February 02, 2018

Automation could deepen the UK’s north–south economic divide

Automation could deepen the UK’s north–south economic divide

Introducing robots into workplaces has the potential to compound the UK’s north–south divide and deepen economic and political divisions, according to a new report by think tank Centre for Cities.

Workers in the Midlands and the north of England, areas with a high proportion of jobs in retail and administration, are at the greatest risk of losing their jobs to robots, while Oxford, Cambridge, and London, areas described in the report as attracting more high-skilled roles, should escape relatively unscathed, the report claims.

Seven of the 10 cities most susceptible to losing jobs because of upcoming technological innovations were in the north, with Mansfield, Sunderland, and Wakefield named in the top three. Outside of the south of England, a quarter of jobs could be threatened by 2030 as a result of technological unemployment—higher than the 18% average for locations nearer to London.

The think tank’s chief executive, Andrew Carter, warns: “Automation and globalisation will bring huge opportunities but there is also a real risk that many people and places will lose out.” He recommends reform of the education system so that young people have the necessary skills to thrive in the future. Greater investment is also needed in lifelong learning to help adults adapt to the changing labor market.

Michael Gibbs has explored how new technology is changing job design for IZA World of Labor. He says that “[p]olicymakers should encourage technology that complements employees’ work, and should foster education and training that help workers adapt to change.”

A universal basic income (UBI) or higher taxes for companies making heavy use of robots have also been proposed by different political parties to offset mass redundancies.

Ugo Colombino observes in his article that “[UBI] appears to be an especially sound approach for redistributing the gains from automation and globalization, by building an efficient and transparent buffer against global volatility and systemic risks.”

He warns, however, of the potential costs of such a policy and the distortions that might be introduced by raising taxes to cover those costs. He recommends investigating alternatives to progressive income taxation, e.g. a flat tax, wealth tax, consumption taxes, or environmental taxes. He also notes that there may be room to combine unconditional and conditional benefits: “cash transfers conditional on recipients taking certain education or health steps might represent an interesting and less extreme version of unconditional basic income.”

At the World Economic Forum in Switzerland on January 25, UK Prime Minister Theresa May pledged the government’s commitment to helping people “secure the jobs of tomorrow,” with plans to create a national retraining scheme to equip “people with the skills they need—and the skills business needs—to be successful in a changing global economy.” Skills that “work for everyone.”