A Closer Look

The Future of Work – This time is different

There are several reasons why current technological progress differs from the past. Innovation cycles are faster. Firms can engage in rapid product prototyping and marketing. Many organisations are less dependent on a core workforce, as they can draw on the power of the crowd and online (platform) labour. The digital world also allows for fast upscaling of ‘digital innovators’ in winner-take-all markets.

New technologies have usually translated into cheaper and better products, creating higher demand from consumers and more jobs. However, in recent decades the link between higher productivity and labour’s income share has been severed in most EU countries. This time around, technological progress may exacerbate income inequalities.

The demographic crunch also threatens societies’ ability to adapt to the changing skill demands of future labour markets; for instance, it is usually more difficult for mid-career workers to upskill and change jobs than for their younger counterparts.
And while past technological breakthroughs tended to replace low-skilled, routine work, today many high-skilled tasks, including in the health, legal, finance and education industries, can be performed faster and better by machines than humans.

How technology affects labour markets

Despite these differences from previous industrial transformations, evidence to date on the impact of robots on employment is mixed. Some studies point to a positive (or neutral) net employment balance associated with technology (especially research and development and product innovation) and some forms of automation. While US research has found a significant negative effect of robot adoption, evidence from Germany and other advanced economies points to positive job creation spillovers across industries, albeit with distributional consequences for wages and work hours for workers of different age and skill level.

Of most concern, however, is that job creation through innovation seems to have run out of steam: instead of creating new jobs or tasks, commercial innovations using AI, such as industrial robots, are increasingly displacing labour.

Technological skills obsolescence and training

For lower-skilled workers the introduction of automating technologies at work may require a long period of hardship and adaptation until they acquire new skills to cope with new tasks or find a new job.

But technological change, and the skills obsolescence it brings, affects all workers; on average 16% of EU workers – 28% in Estonia – fear that digitalisation will render their skills outdated. Higher-qualified workers faced with technological skills obsolescence often express job dissatisfaction and fear of job insecurity. However, analysis based on ESJS data reveals,that they are more likely to undergo upskilling and on-the- job learning to cope with new tasks and skills complexity than workers whose jobs have not been affected by changing technologies. There is little evidence that technological advances inevitably cause adult worker deskilling. In any case, policy-makers should be wary of the fact that advancing technologies reinforce higher skill demand and training, widening the digital divide and putting low-skilled workers at further disadvantage.

In the past four years (2015-18), most EU Member State training policy initiatives were geared towards providing people in initial and continuous VET with digital skills. Such policies had the highest rate of full-scale implementation and government regulation.

Chosen excerpts by Job Market Monitor. Read the whole story at Artificial or human intelligence?: digitalisation and the future of jobs and skills: opportunities and risks

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