Revenue from robots.
Automation is coming for our jobs, robots will soon be doing all kinds of work. They don’t need holiday pay, lunch breaks or sick pay. And sadly, they are replacing people who are consequently losing their jobs. But the unemployed are not the only losers. Let me explain.
These people that are now no longer working, are not paying tax or National Insurance, instead, they are claiming benefits. So from being a net contributor to the Treasury, they are now a net receiver from the Treasury.
What does this mean?
I shop at the local Asda store, which, like the majority of supermarkets, has installed self-service checkouts. These checkouts have replaced human operatives.
In this particular store, there are six self-service checkouts and the shop is open from 7.00 AM to 11.00 PM (16 hours). The following figures relate to pounds sterling. For dollars increase them by one-third.
The minimum wage is £8.21 per hour
6 employees, working 2 x 8 hours each (96 hours) would earn £788.16 for the day.
Let's assume 5 days, that’s £3940 for the week.
Tax-free allowance for the 12 employees is £2885, leaving £1055 taxable, which at 20% is £211
National Insurance for those employees would be 12% of gross earnings which would be £468 per week.
The employer would pay towards National Insurance at the rate of 13.8%, which on £3940 would be £543 per week.
Therefore total loss to the Treasury would be £211+£468+£543 =£1222 per week.
This is just one Asda store. Asda has 630 stores nationally, which would equate to £769,860 per week.
Annually that comes to £40,032,720.
There’s more. Those 12 employees would in all probability be claiming job seekers allowance (unemployment pay). This currently stands at £73.10 per individual, per week; £877 for all 12 employees. Over the year, the cost to the Treasury would be £45,600. That would bring the total potential loss to the Treasury of £40,078,320 for the year.
Sainsbury’s has 1428 stores, potential loss (assuming a similar level of replacement) of £90,740,800
Tesco has 2652 stores, potential loss (same assumptions) of £168,518,200
Morrisons has 494 stores, potential loss (same assumptions ) of £31,390,700
So, four of the UK’s biggest supermarkets could lose the Treasury approximately £290,650,200 per year.
Manufacturing industries are becoming automated, financial services are replacing staff with machines. These will all result in lost tax revenue. The lost money will need to be replaced. These are basic figures and do not take into account any additional benefits which the unemployed may claim, such as housing benefit, council tax or child benefit.
Governments could reduce benefits but this would be politically risky and socially unacceptable. Governments, really, only have one option and that is to raise corporation tax. This seems only fair, companies are reducing their costs and increasing their profits by making people unemployed, and should contribute to their former employees' well-being.
Automation is advancing swiftly and decisions will need to be made swiftly, or Governments will find their coffers emptying far quicker than they can replenish them.