The increasing presence of automation in the UK retail sector is raising urgent discussions about its impact on employment. As self-service checkouts and automated systems become more common, many are questioning whether this technological shift will lead to a new economic renaissance or a troubling future marked by job losses.
Economic indicators suggest a mixed landscape. Unemployment in the UK has reached its highest level in a decade, excluding the peak of the Covid-19 pandemic, while economic output continues to grow at a modest pace. This dissonance highlights a significant rise in productivity, primarily attributed to a decline in low-wage jobs, particularly in retail.
The British Retail Consortium (BRC) attributes the challenges in the sector to rising employment costs, including a recent increase of £25 billion in employer national insurance contributions and living wage adjustments. These factors have contributed to a reported 10% jump in hiring costs for full-time entry-level retail roles.
Amid these changes, traditional hiring patterns are shifting. According to data from the job site Adzuna, retail vacancies fell by nearly 6% in November, a month typically characterized by seasonal hiring. Openings are now at their lowest in a decade, excluding the pandemic period. The decline in consumer demand coupled with the surge in online retail is exacerbating this trend, but the rise of automation is also playing a pivotal role.
Industry surveys indicate that investment in automation is now the second most common response to changes in business tax policies, trailing only price increases. This shift has led to a staggering reduction of over 350,000 jobs in retail over the past decade. Young applicants seeking entry-level positions, which are often the easiest to automate, are particularly affected.
In response to rising employment costs, firms are increasingly looking to automation as a solution. Tera Allas, a professor at the Productivity Institute, states, “The higher your employment costs, regulation, and risk around hiring – the more likely you are as a business to consider options to automate.”
Despite these challenges, there are signs of tentative progress. Business investment increased by 1.5% in the third quarter, and productivity rose by 1.1% compared to the previous year. While these figures still fall short of the 2% annual average seen before the 2008 financial crisis, they reflect a departure from previous stagnation.
Historically, the UK has grappled with productivity issues, and successive governments have sought to address this through various policies. Yet, the current situation presents an irony for the Labour Party, which has its roots in the labour movement that emerged during the Industrial Revolution.
Andrew Bailey, the Governor of the Bank of England, has warned that job displacement akin to that of the Industrial Revolution may occur if proactive measures are not implemented. He emphasized the need for the UK to invest in “training, education, [and] skills in place” to support those at risk of losing their jobs to automation.
While Allas expresses optimism about the potential for new technologies to create fresh job opportunities, she cautions against a poorly managed transition. “Humans are infinitely resilient. We have a capability to learn and we’ll figure out how to learn in new ways,” she notes. Nevertheless, the demand for support in adapting to this new landscape remains critical.
As the UK navigates these significant changes, the lessons from history are clear. The Labour Party, along with other stakeholders, must consider the implications of automation and work diligently to ensure that the workforce is not left behind in this rapidly changing economic environment.
