#FriendsofEurope: Beyond the #Robot scare

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Fears about number of jobs

The great robot scare of recent years seems to have eased into more sober assessments of the quantitative and qualitative implications of the digitalization and automation revolution (DAR). As opposed to sensationalist predictions that 40% of jobs would disappear over a 10-year period, today we expect less than 10% of jobs to be knocked out completely. The OECD has spearheaded research to put expectations on a sounder footing, which is connected to its preparations for a new jobs strategy to be launched in 2018.

More robots in the economy should logically mean fewer jobs for humans, but surveys of the actual results do not seem to support this conclusion. If we take a comparative approach in Europe, we find that the technologically advanced – that is, highly digitalised and automated – economies are also high-employment societies: Sweden, Denmark and The Netherlands, for example. On the other hand, in countries where the employment rate is low, such as Hungary and Bulgaria, this is not the result of a large number of robots crowding out the workforce from their jobs.

In a global perspective, Japan has advanced robotisation in industry and services but very close to full employment. The country is nowadays demanding that older cohorts remain in the labour market in increasing numbers. Cases like these actually reverse the expected causality. Robots are not emerging for unknown reasons, but because of a shortage of labour due to factors such as high growth, low fertility and modest immigration. Robots are being introduced more intensively in our work and life because we need them and there are many things we could not do without them.

More robots in the economy should logically mean fewer jobs for humans, but surveys of the actual results do not seem to support this conclusion

By and large, this is the reason why prominent labour economists, such as Christopher Pissarides, appear to be intensely relaxed about the net job quantity effects of DAR. There are very few examples where new technology is not both an opportunity and a threat, and policies as well as industrial relations frameworks matter a lot. There is now evidence of an uneven impact of DAR in labour markets that are organised differently. In the US, robotisation did result in large-scale job destruction, but in Germany workers benefitted from this technological trend – including in terms of pay – even though their companies hired fewer young employees. Germany’s overall level of unemployment has actually fallen, even after years of crisis and transformation.

Concerns about sectoral effects and the quality of jobs

More urgent than the impact of digitalisation and automation on the number of jobs is its effect on job quality. This should be addressed in a preventative manner if possible. Governments, in cooperation with the EU, have to monitor sectoral effects and assess and manage the various risks associated with DAR.

Although we also often connect DAR with the concept of Industry 4.0, the transformation is expected to be less marked in industry in the coming years, simply because a huge number of industrial jobs have already been eliminated. The rise of artificial intelligence actually means that professions previously less-affected by technological change could be decimated by the unfolding transformation.

The expected boost to productivity can be offset by the lack of sleep, rest and concentration associated with hyper-connectivity. At the workplace, long hours at keyboards can affect the back, wrist, neck and eyes if no protection is provided, leading to increased health costs. What needs to be prevented most of all is the opening up by DAR of little channels or even avenues out of the social security system, aggravating its current sustainability problems. A general concern throughout the world is whether DAR will further boost social inequality, and a specific European concern is whether it will deepen intra-EU imbalances.

The main reason why DAR scares a lot of people is that it accompanies several recent megatrends. The most important of these are globalisation and flexible work – the rise of atypical forms of employment and the resulting segmentation of labour markets. For many people, these undermine both employment security and income. Hence for many experts, including those discussing the future of work on various fora of the International Labour Organisation (ILO), the question is whether the new wave of technological change can be reconciled with social justice. European trade union leaders speak about a “just transition”, which would need to be supported by a specific fund.

The point is to urgently refresh the content of vocational training and make education in information and communications technology available at all levels

Supporters of a universal basic income (UBI) have started to use DAR as an argument for their favoured simplification of social policy. However, even if DAR does not push us to adopt UBI schemes in the foreseeable future, social security still needs to adapt in every economic cycle, and this one is no exception. Gig workers should not be allowed to remain without health care and pensions, but new branches of the welfare state might also emerge from the new forms of employment.

Agenda for digital era labour market

More education and skills are at the top of every policy response to economic and social challenges, but in this case they are just the beginning of the list. The point is to urgently refresh the content of vocational training and make education in information and communications technology available at all levels and in all age categories.

Highly skilled information engineers are only the tip of the iceberg. The transition has to be made by many people, and the circle of digital professionals is going to be much wider. Projects like Codecool in Central Europe demonstrate how cooperation between businesses and future employees can provide upskilling for the transition.

Policy responses have to be inclusive. Pioneering studies in Germany have been based on workforce surveys and consultation with social partners about their expectations regarding DAR and the reforms that will be needed. Governments need to be attentive to potential job destruction, but filling vacancies for employees with the right skill sets is a more pressing issue in most countries.

In Europe, the promotion of technological change has to be accompanied by a policy for territorial cohesion in order to counterbalance the tendency to form information technology clusters. This seems to be aggravated by the ease with which professionals in that field migrate. Knowledge-transfer strategies have to accompany resource transfers, because DAR represents a general risk to countries whose economic development has been based on assembly or other manufacturing activities. With more robots, production may move closer to large markets, and “reshoring” may turn from hope to reality. Also, DAR is a greater threat to some countries than others, making an additional reason to forge a more intimate relationship between industrial and regional policies in the EU.