So said Private Frazer in the immortal TV series “Dads Army”. Well, I do wonder if and when this may or could apply to employment markets around the world and the tax consequences that this would have.
There has been a huge amount of publicity and comment about the UK corporate tax take of primarily technology/market companies such as Apple, Facebook and Google. I wrote about this in a previous blog and emphasised the point that the corporation tax take in the UK represents a comparatively low proportion of the total tax bill. The majority of taxes – some 80% - come from income tax and national insurance. This regime suits Mr Osborne and the Treasury very well. Companies do all the tax calculations, take the money from their employees and pay the monies over monthly. If they get their sums wrong, they could be subject to fines and/or penalties. Companies expend money on people and technology to carry out these tasks which represent a fixed cost burden to them. But that seamless transfer of money from corporate bank accounts to treasury coffers would dry up if employment numbers take a downturn.
Currently, unemployment in the UK is around 5% with the number reducing to just over 1% for the London area. Readers will be aware of the awful comparative numbers in Southern Europe of up to 25% for some regions and 50% for under 25 year olds in countries including Spain and France. I would firstly say that unemployment has horrid and far reaching social consequences for a community. The economic consequence is tax – or a lack of it, when employment numbers dip.
So - where could or would employment numbers fall to catastrophic numbers? I refer to the march of technology and the new ‘wonder employee’ - the Robot. I am mindful of the farming industry in the USA. A century ago it employed about 30% of the total workforce. Today it employs around 3% and produces far in excess to what it did a 100 years ago. There is one reason for that - mechanisation.
Robots are already deployed in car factories worldwide, including the UK. Google own Motoman that loads and unloads trucks, the Shaft that climbs ladders and Scots that alerts Marines to danger.
To date technology has produced jobs at about the same ratio as they have been lost. However, Deloitte note that within two decades 60% of today’s jobs in retail could be automated. They go on to say that 75% of jobs in transport could be performed by machinery.
Any employee whose work is predictable will ultimately be under threat when, and not if, a cost effective robot is developed to take the work over. Bear in mind that robots do not have holidays, sick leave or gossip around the water coolers.
Going forward, it would seem that lower and higher paid jobs will be safe. Andrew Haldane, Chief Economist at the Bank of England notes the threat will be to the middle income jobs.
I admit my comments do seem apoplectic, but I cannot believe the threat does not exist.