According to research from Oxford Economics in 2019, up to 20 million manufacturing jobs could be replaced by robots by 2030. If we then add in those jobs from other sectors which could be easily automated, the future looks extremely bleak for millions of workers who will see their jobs and skill-sets completely disappear.
One solution which has been put forward to combat this job loss is a tax on robots. After all, one of the main advantages of using robots instead of workers is the lower cost. Research by a number of economists has found that increased automation in the workplace has resulted not only in job loss, but also in lower wages for workers who try to compete with their robot rivals.
But how would a robot tax work? The robot isn’t paid a wage so they can’t pay income tax! And even if they did, they wouldn’t even know!
The tax would therefore be paid by the firm for using robots to complete tasks which otherwise would be done so by human workers. This would increase the production costs for the firm, therefore offsetting the gain from employing robots instead of people.
Some economists are therefore arguing that a tax on robots, combined with cuts to income and payroll tax, is the most effective way to level the playing field. One research study found that this tactic could increase employment in the US by 4%, that is equivalent to around 5 million jobs.
Whilst automation has and will continue to displace some workers, there is also the argument that robotic workplaces are more productive and actually a driving force in strong economic growth and industrial competitiveness. In addition, the technology sector employs millions of highly-skilled workers, many of which are working in the research and development of more innovative ideas which are likely to transform the way we work and live, hopefully for the better!
Rather than stifling automation and innovation with a robot tax, perhaps it would be better to retrain workers and create jobs which can only be completed by humans.
THINK LIKE AN ECONOMIST!
Q1. What is a robot tax?
Q2. Explain the market failure which is described in the article.
Q3. Analyse the impact of a robot tax on the demand for labour.
Q4. Discuss the view that the government should use a robot tax to protect manufacturing jobs.
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