Minimum wage rises could cause job losses amid rise in automation, report finds
Rises in the minimum wage could lead to job losses as employers turn to automation to keep costs down, according to research by the London School of Economics (LSE).
The report, which analysed the impact of minimum wage policies on automation and offshoring, showed manufacturing jobs are most likely to be under threat from robots.
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A £1 increase in the minimum wage led to a 0.58 percentage point decline in the share of jobs that could be automated, with the largest impact felt by low-skilled men and older workers.
The research, funded by the Low Pay Commission, followed a recent US study showing the significant impact of the minimum wage on jobs.
Overall, the LSE found minimum wage rises were followed by a reduction in jobs that could be moved offshore or automated. But it said these effects were “modest” and much smaller than those seen in the US.
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Low Pay Commissioner Professor Sarah Brown said: “The research we commission is vital for our understanding of the effects of the minimum wage rates we recommend.
“Over the last 20 years our commissioned research has helped us to successfully fulfil our remit of raising pay for the lowest-paid without causing unemployment.”
The study concluded some low-skilled jobs, such as delivery drivers and security guards, are likely to be wiped out completely by automation. Other low-skilled jobs, such as social care and hairdressing, are likely to survive, the LSE said.