Man(ufacturing) vs. Machine

Employment Alert


Many of the conveniences that we have grown to take for granted in our daily lives we owe to remarkable advances in technology, including the development of artificial intelligence (AI). Over the past decade, we have developed the ability to speak to our devices, to have cars transport us unassisted and to open stores that require no cashiers.

It is therefore not surprising that many have questioned how the advent of AI and the ability to automate jobs will impact the global labour market. A major research report published last year by McKinsey & Co. concluded that 78% of predictable physical work (e.g. welding, assembly line, food preparation) could be replaced by machines. The broad consensus is that automation is inevitable. However, the extent of its impact and how soon employees will feel it - especially those in particularly susceptible sectors like manufacturing - remains the subject of intense debate.

On 7 March 2017, DLA Piper sponsored a panel discussion in collaboration with BusinessCloud where the impact of technology was discussed between leaders in the manufacturing sector. Panel members included representatives from BAE Systems, Cranes Payment Innovation and Hotter Shoes.

It was clear from the panel discussion that technology, including AI and automation, are providing tangible benefits to manufacturers. The panel were keen to stress that - at least at present - the benefits are in the form of assisting the current workforce, not replacing it. Although the members of the panel acknowledged the potential impact of automation on the workforce, the consensus was that recruitment, training and retention of staff are vital to the success of their businesses and an area of significant investment.

With National Apprenticeship Week earlier this month, swiftly followed by the introduction of the Apprenticeship Levy with effect from 6 April 2017, this is a hot topic.

Although the levy is generally considered as another cost for employers to account for, its introduction could prove to be a cost-effective way for employers to recruit and train their next generation workforce.

The levy will be charged at a rate of 0.5% of an employer's pay bill. Each employer will receive an allowance of £15,000 to offset against their levy payment meaning the levy will be paid by employers in the UK whose annual payroll exceeds £3 million. Payment of the levy can then be used to fund apprenticeship training and assessment schemes. The Government will apply a 10% top-up to these funds, increasing the value available but it should be noted that these funds will expire after 24 months. For those under the threshold to pay the levy, only a 10% contribution to the cost of initial relevant training will be required with the Government contributing the remainder (up to an overall funding cap).

If you would like to explore how the introduction of the Apprenticeship Levy impacts your business and how to get the maximum benefit from it, please contact the author.