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10 Mar 2016 10:30am

Automation threatens 600,000 manufacturing jobs

Automatic and overseas competition could lead to 600,000 manufacturing job losses over the next decade, according to research by PwC

Overall, employment in the UK is set to grow by around three million over the next ten years, bringing the total number of jobs to almost 37 million by 2025.

However, the number of jobs in manufacturing could fall by a further 600,000 to around two million in the same amount of time as new automated technologies continue to boost productivity and overseas competition remains strong.

PwC’s Economic Outlook report added that a further 150,000 jobs could be lost in public administration, defence and social security and austerity measures continue until at least 2020.

John Hawksworth, chief economist at PwC, said, “Automation will be a continuing factor in boosting productivity but reducing employment in manufacturing, however, and jobs cuts will continue for some years in central and local government as budgetary constraints continue to bite.”

Hawsworth added the fall in manufacturing jobs should be outweighed by gains in the private services sector, “fuelled by people working to a later age on average and continued net inward migration of workers.”

The services sector will lead the growth in employment in the UK over the coming decade with education and health predicted to add over one million jobs by 2025, making it the biggest of the services sector, the analysis revealed.

Business services are predicted to create an additional 1.5 million jobs.

“The UK has been a powerful job creating machine in recent years and the dominant story of the last century has been the rise of services to its current position as the source of over 80% of total UK employment. Health and education and business services have been the biggest growth areas for jobs since the late 1970s and we see a further 2.5 million jobs being added in these sectors by 2025 as demand continues to rise relatively fast for these services,” Hawksworth added.

PwC’s also projects UK GDP growth to average around 2.2-2.3% in 2016 and 2017, with consumer spending and business investment being the main drivers of growth.

Hawksworth added, “Risks to growth are weighted somewhat to the downside in the short term due to international risks, particularly in relation to emerging markets and uncertainty around the EU referendum. But there are also upside possibilities if the global environment improves and UK productivity growth rates accelerate.

“Inflation will remain low this year but could rise back towards its 2% target by the end of 2017, so the MPC may start to raise interest rates gradually during the course of 2017 and beyond.”

Hawksworth added that George Osborne is likely to confirm plans for further fiscal tightening next week, in order to fulfil his pledge to eliminate the budget deficit before the end of this decade.

“This will impose some drag on the UK economy, but the private services sector should be strong enough to offset this in terms of GDP and jobs growth,” he said.

Sinead Moore

 

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