South Korea has introduced what is being called the world’s first “Robot Tax”. Their fears are that intelligent machines will replace human workers and lead to mass unemployment. The South Korean government plans to limit the tax incentives they give to companies who are investing in automated machines.
If you are building, selling or integrating robots, this may sound like a bad idea, but are there other considerations. This view reflects that of leading industry thinkers like Microsoft’s Bill Gates who argues for a technology levy. His view is that robots who take human jobs should pay taxes. He argues if a human worker does $50,000 of work in a factory, that income is taxed. Gates said in an interview with Quartz. “If a robot comes in to do the same thing, you’d think we’d tax the robot at a similar level.”
Until now robots have complemented workers, replacing many heavy, dirty and boring jobs that workers don’t want or can’t do. With increases in AI, Cloud and Machine Vision, machines are more adaptable, capable, and even cheaper and faster. The idea is to tax businesses using automation and robotics to compensate for lost income and social taxes from workers.
The overwhelming majority of responses from manufacturers and the EU is that this is a bad idea. However, it does raise an important issue that we cannot presently answer, namely, do robots create of destroy jobs? What we don’t need is a Government raising a robot tax simply to raise money for the exchequer.
But what happens if robots do replace large numbers of jobs currently undertaken by humans? This will introduce a new perspective for shareholder returns and social responsibility. On the other hand, if they create human jobs there is no need for Governments to tax robots use.
In terms of productivity, the UK is behind most industrialised countries and needs to find ways of improving productivity. Manufacturing robots are one way of achieving this.
Robots in the UK
With UK unemployment at its lowest for 40 years it is probably
true to say we are running out of workers. Although the increase in retirement age will keep more older people in the workplace, Brexit will offset this.
Over the last ten years, job creation in the UK has been very strong, but productivity growth has stagnated. Some of this has been a shift from high productivity manufacturing low productivity industries.
There is a growing shortage of skilled worker, and an increased willingness to change jobs. Skill shortages tend to drive up wages and the combination of both will drive increases in robotics and smart automation. In turn, economists recognise that investment and the application of technology drive economic activity.
Recent reports however show that UK investment on industrial robots fell by 15% in 2018 according to BARA. (British Automation and Robot Association. This is significantly below most European competitors. However, a recent editorial in Drives and Controls reported on a survey by the International Federation of Robotics (IFR), a much better position although still only 15th in the European robot league.
What is a robot?
Robot is a generalised term covering a wide range of devices and equipment from robotic limbs, and auto insertion machines to welding robots. We are used to automotive robots and automated warehouses using AGVs and pickers. The future will see new types of automation taking service as well as manufacturing jobs. Driverless cars, robot vegetable picking, burger flipping, bricklaying and even some forms of surgery are coming.
Famously, Elon Musk of Tesla recently blamed too much automation for some of their ills. In an interview with CBC, he agreed with Tesla’s critics that there was over-reliance on robots and automation and too few human assembly line workers. Maybe he was trying to get ahead of the automation curve without considering the current stage of the technology.
Is a robot tax likely?
The use of manufacturing robots is a continuum. At one end only robots are the right choice and at the other end humans predominate. It is the middle ground where robot use will increase. The idea of cobots, with robots and human occupying the same manufacturing space and working in harmony and safety. However it is also this middle ground that will shift more to robotics as developments in AI and machine vision develop. With each new generation of electronics and optics robots will become better at everything.
Will robots create or destroy jobs, or will work change to create more leisure time and hence new opportunities? Maybe the jobs of the future are not yet created or even imagined. If this is the case a robot tax is not the way forward.