The Future will be automated: What can we expect from automation?

Posted on: 21/02/2019

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In 2017, it was reported that South Korea had introduced the first “robot tax” to combat the effects of automation on taxable income. As one of the world’s major factory nations, South Korea also has the highest concentration of robots in the world (531 multipurpose industrial robots for every 10,000 employees). Sufficiently worried about the impact of automation on its workforce, the nation withdrew tax subsidies that had previously been awarded to manufacturers that bought robots. Whilst not technically a “tax”, the motive was clear: limit the benefits of automation and automation will slow down. South Korea’s concern – that that a too-rapid expansion of automation in heavy industry has the potential to strain both social structures and government coffers – was reaffirmed when the subsidy reduction, due to expire at the end of the year, was extended into 2019. This raised important questions regarding the future of automation and sparked debate about how governments will inevitably be forced to deal with a significant reduction in their taxable income.

In the US, for example, payroll tax and income tax make up 81% of federal tax revenue. Both will decline as automation increases, and the government will have to compensate for a loss in revenue. Although estimates vary, most agree that a large percentage of the workforce is already threatened by automation. PwC predicts that by the mid-2030s, 30% of all UK jobs are at risk of automation and 47% of low education jobs, such as retail and manufacturing, will be threatened.

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Amazon’s robots bring shelves of goods out of storage and carry them to employees, allowing Amazon to retrieve more items for more customers simultaneously

 Although automation is due to hit some high-wage professions, such as radiology (radiologists are posed to be the first wave of AI-driven job loss amongst doctors), it is widely accepted that, at least initially, it will be disproportionately concentrated on low-wage, low-skill employment. Thus, automation threatens to worsen inequality. Already, we have seen the hollowing-out of British high streets by the e-commerce shift to huge spaces such as Amazon’s “fulfilment centres” where machines take care of all the picking, packing and processing.

Moreover, technology that was once considered expensive and undeveloped is already here and being used extensively. Amazon uses 100,000s of “robot drivers” to move goods around its vast distribution centres worldwide. There have also been calls to address the forthcoming automation of truck driver jobs, which number some 3.5 million in the US, and are the most common job for males in every state. Drivers, whom must be rested, insured and paid will slowly and surely be phased out by the industry. This is not to mention the vast trucker infrastructure of approximately 5 million who work at truck stops, motels, diners and retail establishments. When fully autonomous trucks cease to stop (except to charge, presumably autonomously), one can imagine the drying up of economic vitality on an unprecedented level in many of these communities.

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Volvo’s driverless truck concept Vera, which comprises a fully electric system, as well as autonomous driving capabilities

 Tech giant Bill Gates is one of the well-known advocates of a robot tax. He has argued that governments should levy a tax on the use of robots in a goal to fund retraining of those who lose jobs and to slow automation. However, many are critical of such a move, arguing that it will stifle innovation. In 2018, the European Parliament rejected a similarly proposed robot tax, arguing that automation and the use of robots create new jobs by increasing productivity, pointing to a correlation between robot density and employment in advanced industrial nations. For one thing, it would be very difficult to create a robot tax because, in practice, robots aren’t easily identifiable or defined. For example, if we were to tax a robots output, how would we measure this? The rate of tax could perhaps be based on the cost of the human labour that the robot has replaced, but this creates further challenges such as the fact that humans have finite lifespans, unlike robots.

Against such difficulties, alternatives to a robot tax may be more appealing. Helping those affected by automation (e.g. truck drivers) is a front-runner. If an individual is displaced by automation they will need immediate reskilling in order to prevent long-term unemployment. Ethical employers should want to ensure that their employees are looked after, so there may be scope for legislation to ensure that companies are required to pay for some re-training, but even this would be difficult to define in detail enough that it would not be subject to abuse. There are also clear advantages to automation other than increasing efficiency, such as improving safety and promoting innovative industry. Whether discouraging automation is desirable is perhaps a debate that will continue as long as new technology continues to develop.