IMF warns AI will affect jobs and worsen inequality

The International Monetary Fund (IMF) has warned that artificial intelligence (AI) will affect 40% of all jobs around the world and ‘deepen inequality’.

In a new analysis, IMF researchers examined the potential impact of AI on the global economy. It found that, in advanced economies, around 60% of jobs may be impacted by AI. In contrast, in emerging markets, exposure to AI is expected to affect 40% of jobs.

The IMF also suggested that AI could affect income and wealth inequality within countries. Workers able to make effective use of AI may see an increase in their wages and productivity, whilst those who cannot risk ‘falling behind’.

The IMF has urged policymakers to review the rise of AI in the workplace in order to prevent it from ‘stoking social tensions’. It has called for a ‘careful balance of policies’ to tap into AI’s potential.

Commenting on the issue, Kristalina Georgieva, Managing Director at the IMF, said: ‘It is crucial for countries to establish comprehensive social safety nets and offer retaining programmes for vulnerable workers. In doing so, we can make the AI transition more inclusive, protecting livelihoods and curbing inequality.’

For more information, visit our website at www.nhllp.com

47% of workers have had a late or incorrect wage on pay day, research suggests

Research carried out by payment solution provider Caxton has suggested that 47% of UK workers have had a late or incorrect wage paid into their bank account on pay day.

33% of workers polled said that a late or incorrect wage would affect their ability to pay bills, and 32% stated that they wouldn’t be able to pay their mortgage on time.

35% said that they feel more stressed and anxious as a result of being paid late or incorrectly, and 30% believe it would take a toll on their mental health. 23% said they wouldn’t be able to afford food for themselves if they were paid incorrectly or late.

Rupert Lee-Browne, CEO of Caxton, said: ‘These results demonstrate that for many employees across the country pay day is an outdated process for so many businesses. This is causing huge stress and anxiety to their most important assets, people.

‘Whilst many other departments within business have seen huge digital and technology transformation, more recently heavily driven by the pandemic, the payroll function has often been left behind.’

For more information, visit our website at www.nhllp.com

NIC increase causes businesses to raise prices

The increase in national insurance contributions (NICs) will cause a third of businesses to raise their prices, according to the results of a survey conducted by the Institute of Directors (IoD).

The survey of 689 businesses found that 29% would increase their goods and services costs to combat the 1.25% increase in NICs, while 37% said that they would try and absorb it.

The IoD survey also found that 15% of businesses would employ fewer people; 4% said they would reduce wages; and 15% stated that they would reduce planned investment into their business.

The percentage of businesses citing interest rates as a concern also rose, with nearly one in three, 32%, saying they are worried, up from 27%.

Kitty Ussher, Chief Economist at the IoD, said: ‘It’s understandable for businesses to have no choice but to raise prices because of the international cost of energy and other supply problems, but our data now shows that the government’s own decision to push ahead with the jobs tax is also of itself pushing up inflation even further, and at the worst possible time.’

For more information, visit our website at www.nhllp.com

Workers set to benefit from increases in National Minimum and Living wages

UK workers are set to benefit from rises in the National Minimum Wage (NMW) and the National Living Wage (NLW) rates that take effect from 1 April 2021.

The NMW has risen from £8.20 to £8.36 and the NLW has risen from £8.72 to £8.91. 23 and 24-year-olds are now eligible for the NLW – prior to 1 April 2021, only workers aged 25 and over were eligible.

The change follows recommendations made to the government by the Low Pay Commission (LPC), and marks the first step towards the government’s target of the NLW reaching two-thirds of median earnings for workers aged 21 and over by 2024.

Commenting on the wage increases, Bryan Sanderson, Chair of the LPC, said: ‘This week’s increase in the NLW is our first step towards the government’s target of two thirds of median earnings. It is a real-terms increase, meaning that an hour’s work can buy more than it could last year at the start of the pandemic.

‘Young people should be fairly rewarded for their work. We will seek to understand how young people’s pay and employment are affected by this in our consideration of a further reduction in the NLW age qualification to 21.’

The LPC will make recommendations to the government on the 2022 NMW and NLW rates in October.

For more information, visit our website at http://www.nhllp.com

Wage growth ‘accelerates to highest rate since financial crisis’

Data published by the Office for National Statistics (ONS) has revealed that UK wage growth increased to 3.6% in the year to May 2019 – representing the highest rate since the financial crisis in 2008.

According to the ONS, wages have been rising faster than inflation since March 2018. It stated that increases to the National Minimum Wage (NMW) and the National Living Wage (NLW) have helped wage growth to accelerate.

However, the data also showed that average pay is still lower than pre-2008 levels. When adjusted for inflation, pay amounts to £468 per week – £5 less than its pre-recession total of £473 a week.

Commenting on the data, Alpesh Paleja, Principal Economist at the Confederation of British Industry (CBI), said: ‘Despite signs that employment growth is tailing off, the labour market remains tight, with the unemployment rate at a multi-decade low. It’s encouraging that pay growth has picked up further, putting more money in people’s pockets.

‘But as recent data shows, productivity remains in the doldrums. Reinvigorating efforts to boost productivity is critical. Firms must focus on innovative ways to share new ideas and invest in people and technologies.’

Official data reveals wages have risen ‘at fastest pace in a decade’

Data published by the Office for National Statistics (ONS) has revealed that wages rose at the fastest pace in almost a decade in the three months to September.

When compared to the same period last year, wages, excluding bonuses, grew by 3.2% – representing the biggest increase since 2008.

Once adjusted for price inflation, average weekly earnings (excluding bonuses) increased by 0.9% to total £493, the data showed.

Commenting on the figures, Matt Hughes, Senior Statistician at the ONS, said: ‘With faster wage growth and more subdued inflation, real earnings have picked up noticeably in the last few months.’

However, the Trades Union Congress (TUC) stated that pay needs to ‘rise faster’.

Frances O’Grady, General Secretary of the TUC, said: ‘The government could help by giving working people more power in pay negotiations. Unions should have the freedom to enter every workplace to negotiate fair pay rises. And insecure workers need new protections so they have the security to demand fair pay.’

Significant number of UK workers ‘considering setting up a side business’

Research carried out by domain registrar GoDaddy has suggested that a significant number of UK workers are considering setting up a business in addition to working their usual day job.

Nearly a fifth of those surveyed have contemplated starting up a business on the side, GoDaddy revealed.

The survey found that ‘side businesses’ help individuals to top up their income, with some entrepreneurs reportedly earning between £500 and £5,000 on top of the salary from their day job.

48% of those who start up a side business do so to make money from a passion or a hobby, the research revealed.

However, some experts have warned that many have set up side businesses in order to make ends meet. Annie Quick, Subject Lead in Inequality and Wellbeing at think tank the New Economics Foundation, commented: ‘For many more people, this is something they’re being forced to do.

‘We’ve had a decade now of stagnating wages, benefit cuts and increasing prices, so many people are finding that a full-time job is no longer enough to put food on the table and are often having to turn to often poorly paid, insecure employment to top up their income.’

Economists rule out interest rate rise

A survey carried out by the BBC has revealed that economists in the UK do not expect an interest rate rise until ‘at least 2019’.

Economists believe that the Bank of England’s Monetary Policy Committee (MPC) will not want to raise rates whilst Brexit negotiations are ongoing.

The base rate currently stands at 0.25%.

Half of the economists surveyed believe that growth in wages will outpace inflation during the first few months of 2019, the BBC found. In July, the rate of inflation stood at 2.6% – above the Bank of England’s 2% target.

Addressing the issue, Stuart Green, UK Chief Economist at Santander, said: ‘We believe that policymakers will be reluctant to tighten monetary policy until greater clarity emerges around the UK’s post-EU trading framework, and our expectation of declining inflation through 2018 should also reduce the pressure for an interest rate rise.’

However, Michael Saunders, a member of the MPC, recently stated that a ‘modest’ rise in interest rates is needed to ‘curb inflation’. Mr Saunders said that a rise would also ‘help ensure a sustainable return of inflation to target over time’.

Business responds to Taylor Review of employment practices

Business groups have given their reactions to the recommendations of the Taylor Review into modern-day working practices, which sets out the key principles for providing ‘fair and decent work for all’.

The review suggests that a national strategy is needed to help provide security in such areas as wages, quality of employment, education and training, working conditions, work life balance and the ability to progress at work.

One of the main areas of focus relates to the so-called ‘gig’ economy, with the report recommending the creation of a new category of worker, known as a ‘dependent contractor’, to provide additional rights and benefits for those who are currently classed as self-employed, but who work for firms which have a ‘controlling and supervisory’ relationship with their workers.

The additional benefits would include sick pay, holiday entitlement and the minimum wage, and the new employment status would also oblige such firms to pay millions of pounds in national insurance contributions.

The report also suggests that there should be no further increases to the non-wage costs of employing an individual, and called for an end to the cash-in-hand economy, with a move towards such fees being paid for via trackable platforms such as PayPal.

Business groups have given mixed reactions to the report’s findings, with many welcoming the focus on labour market flexibility, but also warning that some areas, including the plans to rewrite employment status tests, are a cause for concern.

However, the TUC warned that the review ‘is not the game-changer needed to end insecurity and exploitation at work’.

Extend minimum wage to cover self-employed, says think tank

Minimum wage legislation should be extended to cover self-employed workers who do not control their own rate of pay, according to a think tank.

The Resolution Foundation claims that of the 4.8 million people defined as self-employed, around half earn below the low pay earnings threshold of £310 a week.

The group argues that the government needs to do more to protect certain groups of self-employed workers, such as those operating in the so-called ‘gig economy’, as they do not have the opportunity to set their own wages.

If enacted, the change could also bring greater protection to those operating in more traditional sectors such as hairdressers and minicab drivers.

It proposes that companies who set the rate of pay for independent contractors would be required to calculate whether a person working at an ‘average’ pace would be able to earn at least the minimum wage after expenses.

The body has submitted its recommendations to Matthew Taylor, who is leading a government review into modern UK work practices.

Conor D’Arcy, a policy analyst at the Resolution Foundation, said: ‘By extending minimum wage protections to those self-employed people whose prices are set by a firm … self-employed people in the gig economy would be given protection against extreme low pay for the first time ever.’

However, Seamus Nevin, head of employment and skills policy at the Institute of Directors, warned that an ‘obligatory minimum wage would undermine the business model of many gig platforms … who would find it hard to justify paying people at times when there was no demand’.