U-turns and the Citizens’ Wage

By Glen Jenkins, former CIPD Reward Examiner

During the recent debate on welfare cuts and the government’s u-turn, I read some articles on automation. The onward march of technological innovation is leading us to the Automated Technological Revolution (ATR). The future we are told will include autonomous electric pods that will be at the centre of our new public transport systems. While you savour that for a moment, think about all those bus, tube, taxi and train drivers who will no longer be needed. Now, before you shout ‘Luddite’, previous technological revolutions have led to fundamental changes in the way the labour market operates displacing previous forms of employment with newer ones. In the agrarian and mechanical revolutions, the increase in productivity generated by new technology eventually led to higher wages for all and boosted demand and growth. However, since the 1970s, the productivity gains from the Information Technological Revolution (ITR) have not been fully passed on in higher wages but have been distributed more unevenly leading some argue, to increasing levels of inequality.

Recently the Bank of England did some projections on the impact of ATR. They argue that the adjustment from one form of labour market to another is rarely smooth. The transition from the displacement of labour (unemployment) and the compensation of newer employment is fraught with ambiguity not least in how the gains from the huge increases in productivity that will be generated by ATR will be distributed.  Fears have been raised that in the short term ATR will threaten 47% of jobs in the USA alone. Already there is evidence from food retail companies, such as McDonald’s, with plans to install self-ordering kiosks or mobile ordering at restaurants while displacing thousands of jobs. These companies have cited productivity gains and reduction in labour costs but such changes are unlikely to result in wage rises or reduced workloads for those employees who remain. The old mantra that we will work less, have a better work life balance as automation progresses is no longer believed because this is not what happened in the ITR, in fact, quite the opposite - employees are now working longer and longer.

The question then is how will demand be generated during the ATR transition? If people are out of work or wages remain stagnant, will the state need to intervene? In response to such changes Paul Mason has suggested a kind of Citizens’ Wage - a non-means tested £6000 a year for everyone of working age. He did some calculations that compared the present welfare bill of £167bn to a Citizens’ Wage bill of £320bn. Pie in the sky? Look no further than across the North Sea to the Utrecht experiment where from January, Utrecht job-seekers will receive €1,300 a month with no strings attached even if another source of income is found. This suggests that more welfare u-turns may be needed in the future for arguably without welfare of this kind fewer people will be riding in those automated electric pods.

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