The transformation of work is not simply from jobs to automation. Its complex, variable character demands a matching policy portfolio.
In the 2010s, the academic and political debate about the future of work was dominated by discussion of technological change and imminent and potentially ever-more-profound effects of digitalisation—in particular, closer interaction between digital technology and work processes and the issue of what work then remained for humans. Over the years, many of us got used to the expectation of change in the structure of the economy and jobs available, with some fear of a disruption which would put major segments of employment at risk.
Yet, including through actual observation, broad agreement emerged that digital technologies would likely not bring human work close to extinction. There would be risks in some occupations and sectors but also potential for new jobs and work enhancement in occupations that were complementary to the technology rather than substitutable by it.
New occupational profiles and more options for participation and autonomy would thus emerge, fundamentally changing how work was performed. With a view to the digital transition, the main challenge became to identify changes in human work which would make it more resilient (and potentially more attractive, in terms of quality), mobilising these complementarities with technological solutions.
Large differences
While this is a valid overview, there are large differences among segments of employment. There is structural pressure on the medium segment within many administrative and manufacturing jobs. Although particularly large and well-protected institutionally in many European countries, relative to others, it tends to be characterised by above-average routine and therefore potentially automatable tasks.
To avoid long-term decline and job devaluation, this segment thus depends on an upgrading strategy. The strong institutional framework regarding collective bargaining and firm-level articulation and typically standard employment however facilitates skill adaptation and new models of negotiated flexibility, while still requiring innovative ideas.
The situation is different in private services, which have grown as demand has switched, that are interactive, manual, local and therefore hard to automate, while labour is not scarce. These sectors, while less at risk of substitution, tend to be much less integrated into collective bargaining, so there is a stronger role for governmental intervention. This could comprise a minimum wage or restrictions on temporary agency work or on legal grey zones regarding vulnerable self-employment but also enhanced training via supportive public policies.
At the other end of the spectrum, more highly skilled workers are in an advantageous position due to the dominance of non-automatable tasks—even with the technological frontier moving—but they still have individual capacities to cope and adapt to change over time. These analytical, interactive, creative jobs have been growing continuously, creating more alternatives for workers with relevant skills, but also bringing gains in average income (not always high income) and job quality, in exchange for demanding requirements and work intensity.
It is no coincidence that claims among such workers for greater autonomy and new modes of work have gained a lot of attention. Many work in standard employment relationships, with additional benefits and higher autonomy perhaps, but also with less collective co-determination, their working conditions depending more on the individual power to negotiate. The situation is more standardised in public-sector jobs, such as in health or education, yet much more diverse with respect to the self-employed, who betray still higher degrees of freedom, adaptability to market changes and autonomy but also economic vulnerabilities.
Inequalities and frailties
Covid-19 has brought old and new inequalities and frailties to the fore. The pandemic appears more disruptive than technological change experienced as evolutionary, while this unexpected shock is having a profound impact on some sectors and occupations that were long-term job-creating engines. It thus interacts with longstanding patterns of technological development, questioning some trends but also highlighting the need to address chronic weaknesses.
This holds in particular for sectors with high shares of the self-employed, such as creative and cultural activities. There we had seen a robust expansion, due to largely automation-proof tasks, but also diverse incomes and patchy social protection, at best, with marginal integration into the welfare state. These highly visible and articulate sectors now have to rely on ad hoc measures providing more or less well-designed support for small businesses and freelances.
Many other professionals who work in regular, dependent employment have moved towards working remotely, including from home, but their jobs are otherwise quite resilient in terms of employment and income stability. Here, both for firms and for workers, digital technologies have been the main tool to ensure business continuity.
Short-time work
Again, the situation looks different in the medium segment referred to earlier. To the extent that there was a temporary demand shock, short-time work was deployed heavily to stabilise jobs and incomes for those unable to work from home, trying to avoid dismissals or at least postpone them (for the time being) for the core workforce. This is particularly relevant where skills are specific and where a return to existing jobs is perceived as a valid option.
This might not hold in all cases, however—in particular if the temporary decline morphs into long-term changes in demand, markets and technologies. In such cases, short-time work will not be sufficient, as is already the case with those workers who are less attached to individual employers due to more replaceable skills and non-standard work arrangements. Here, we have seen a stabilisation effort through unemployment insurance and minimum-income support, with access to benefits eased and their generosity increased in the initial phase of the crisis.
Jobs in some sectors which had been perceived as relatively resilient to automation, such as in leisure and travel, might suffer from long-term decline. Other sectors are however being recognised as essential, with growing demand—including health and education but also food and delivery, where a revaluation of roles can be observed.
Unequal consequences
Both digitalisation and the pandemic have differential consequences for sectors and occupations. Policy should thus reduce unequal access to social protection while lowering barriers to adaptation, so that transitions to better and more resilient work are facilitated.
Social protection is important for those at risk of losing their job or undergoing longer phases of short-time work. This holds not only for dependent employees but also for many self-employed. It does not suffice to refer them to minimum-income support or voluntary types of unemployment insurance.
A forward-looking policy would be to design unemployment insurance that also works for the specific situation of the self-employed. More status-neutral social policies that do not exclude certain categories of workers and allow for a combination of different types of contracts would also help create a less segmented labour market.
Moreover, while employment protection and short-time work schemes stabilise jobs, we need to find better solutions to strengthen the adaptability of firms and workers when old job profiles and business models no longer work—as appears to be the case in the automotive, events and tourism industries—by updating skills on the job or preparing positive transitions to new roles. The latter may be in different occupations or sectors which have a positive outlook in terms of job quantity and quality.
For the foreseeable future, we need timely mobility from declining industries and firms to areas with stronger and more robust labour demand. This requires a regular assessment of skills in supply and those in demand and an early identification of feasible transition pathways that work for individuals, broadening access to adult learning—way beyond individuals with strong capacities to cope with change or those enjoying training provided by their employer. This needs to be as universal as social protection.
Many of these solutions have been longstanding policy priorities, indeed heavily debated, yet not fully adopted and implemented. The digital transition and the pandemic however create an urgency to reduce barriers in terms of qualification and employment type, calling for more status-neutral regulation, training and social policies.
This is part of a series on the Transformation of Work supported by the Friedrich Ebert Stiftung
Werner Eichhorst is a research team leader at the Institute of Labor Economics IZA and an honorary professor at Bremen University, focused on comparative analysis of labour-market institutions and performance, as well as the political economy of labour-market reform.