AI-driven unemployment in Hong Kong can be offset by a tax on profits generated by robots

Scott Cheng and David Ketchum say the Hong Kong government must reckon with the impact of artificial intelligence on human employment. One way to do this would be to amend the tax regime, by taxing profits generated from using robots

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A visitor to the Mobile World Congress in Barcelona, Spain, takes a selfie with a robot from SoftBank Robotics, on February 28. Photo: Reuters

Published: 10:47am, 31 Mar 2018Updated: 6:12pm, 31 Mar 2018

Robots and artificial intelligence are increasingly more efficient, reliable and functional. Businessmen also see great cost benefits to them because robots do not need wages and health insurance.

It is therefore an inevitable trend that automated intelligent machines or so-called robotic process systems will take over more human roles.

In the 2018-2019 budget, Hong Kong’s Financial Secretary Paul Chan Mo-po vowed to spend more money to boost innovation and development. In the long run, this progressive initiative is likely to displace hundreds of thousands of workers as AI and robots take over the jobs traditionally handled by humans.

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In this scenario, while gross domestic product may rise and corporations will generate higher profits because of the lower labour costs, the government will collect less from salaries tax (given that more people will be jobless).

Any responsible government must address the gap between the interests of potentially displaced workers and those of shareholders and corporate management.

Governments should be thinking about how to deal with the potential upheaval as a result of massive unemployment

Today, one in three jobs is vulnerable to replacement by AI and robotics, according to research firm Gartner.

Anti-Luddites argue that more new jobs will be created faster than the jobs destroyed, and the new jobs will be higher-paid, and generate higher income tax revenues. At least in theory, some of the industrial and service jobs lost will free up workers to refocus on education, social service and other roles that require human skills and empathy.

However, with job losses predicted at 30 per cent of the UK workforce and 38 per cent in the US in a PricewaterhouseCoopers report, and even more in China and in developing countries, every responsible government should be thinking ahead about how to deal with the potential economic and social upheaval as a result of massive structural unemployment.

Job losses won’t be confined to bus drivers and factory workers; stockbrokers, accountants, lawyers and other rules-based professions, and even doctors and surgeons are at risk.