Is it time to invest in labour-saving technology?

Labour shortages, technology and government policy intersect in these FT articles on the post-Brexit demand for skilled workers.
Paul Lewis
May 02, 2017

The FT’s employment correspondent, Sarah O’ Conner, writes that (despite the hopes of many Brexiters) expected staff shortages may not raise wages, as employers look to labour-saving technology where possible to fill the gap.

The FT reports here how a Lincolnshire farm in the UK is using a new generation of robots for rudimentary tasks such as transporting strawberries and weeding. Though it may take a decade or two before robots can pick strawberries faster than a skilled human picker, the cost-benefit calculation appears to be moving in favour of the machines. The question for companies is whether post-Brexit,  there will be a fundamental change in the wage structure of their industry before deciding to undertake major strategic investments in technology.

There is precedent. In the 1960’s, when the U.S. government sought to placate American workers by restricting immigrant labour from Mexico, farmers changed production techniques and invested in machines, thereby keeping wages low. The technology they adopted already existed, but it was the labour restrictions that had helped make the investment cost-effective. In Japan, where jobs outnumber applicants in many sectors, wage growth remains weak as companies turn increasingly to robots.

O’Connor notes an alarming statistic that employers might bear in mind as they calculate their future wage bill: ‘the average worker in Britain will earn no more in 2021 than he or she did in 2008.’ adding that this is ‘the worst period for pay in more than 70 years and forecasts say the end is barely in sight.’

It’s harder to imagine robots taking over in service sectors. In this case, government policy matters more. Michael Skapinker, FT columnist and executive editor at the FT-IE Corporate Learning Alliance, writes, that issuing so-called barista visas—a two-year post-Brexit visa for young non-UK EU workers—is  an ‘astonishingly complacent idea’ which will not solve the imminent staffing and skills crisis facing Britain’s hotels and restaurants.

Paul Lewis

Editorial Director at Headspring