What future for work in a digitised world?

By Shruti Singh and Guillermo Montt.

Many innovations over the past decades have substituted labour and changed how we work. Much of the tasks we perform today are mediated by computers or machines. Connectivity is a requirement as different jobs and tasks can and in fact are carried out over distances and borders. Many factories are almost completely automated because industrial robots are now cheap and easy to customise. Tasks like service support or sales are offshored to distant call-centers; even professional tasks are increasingly being outsourced or offshored through “gig”-economy platforms.

The digital revolution, globalisation and rapid population ageing are changing profoundly the types of jobs needed and the way we work, and may lead to even more dramatic changes over the coming decades. Will the many unemployed ever find a job again with the skills they have today in  new world of work? Where are new jobs being created and what do they look like? How many more old jobs will disappear and how will the remaining jobs change? What will workers need to stay employable? Answers to these questions are crucial in order to adapt our employment and social policies to the new reality and promote an inclusive labour market through more and better jobs.

Technological change is shaping the future of work

In addition to globalisation and demographic change, technological change will have a major impact on the future landscape of jobs and skills.

Innovation and change have been a constant since the Industrial Revolution. However, while jobs have changed, employment has remained. Some argue, that this time is different (McAfee and Brynjolfsson, 2012; Frey and Osborne, 2013). Artificial intelligence, Big Data, unprecedented computer power, the connectedness of workers and firms, the integration of production across borders and demographic change may render our current views on work obsolete. The magnitude of these changes is still debated, as new jobs are created both directly and indirectly (e.g. Autor, 2015; Goos, Konings and Vandemeyer, 2015; Mokyr, Vickers and Ziebarth, 2015; Moretti, 2010; ZEW, 2015).

Technological progress and innovation will trigger at least three types of changes in the labour markets. First, some tasks and occupations will be substituted, in the same way as many other tasks and occupations have been since the Industrial Revolution. The demand for high-skilled labour will increase, particularly for those workers who have skills that complement automated activities. Second, as technology enters the workplace, the tasks associated to each job will continue to change (e.g. Bessen, 2015; Spitz-Oener, 2006). Today, workers in over 95% of large businesses and in over 85% of medium-sized businesses have access to and use the Internet as part of their jobs yet still around 55% of adults have less-than-basic proficiency in problem-solving in technology-rich environments (OECD, 2013). These changes will affect the skills needed with a stronger demand for high- (and low-) skilled non-routine tasks. This implies that we could be heading towards a polarised labour market with high-skilled, stable and well-paid jobs on one side, and unstable, low-paying and low-skilled jobs on the other. For workers, the priority is to update skills constantly; the risk is being stuck on the wrong side of the divide.

And as if all that were not enough, we are witnessing a third transformation with the rise of the ‘gig-’, ‘on-demand-’, ‘sharing-’ or ‘platform’- economy (e.g. AirBnB, Uber, Nubelo, Amazon Mechanical Turk, Task Rabbit, Youpijob, Frizbiz, etc.) (OECD 2014ª; OECD, 2015). These platforms facilitate the matching between the demand and supply for tasks, and allow more workers to enjoy the flexibility of freelancing and to top-up the income from their usual job(s). Though small in scale, the platform economy raises important questions, as it could seriously weaken the role of traditional labour protection policies. Members of these platforms, like temporary workers, are less likely to receive training and cycle between these types of jobs (OECD, 2014b). Minimum wages, statutory working hours and collective bargaining offer no protection for many of these workers. Contribution to health and unemployment insurance and pension schemes need rethinking if most workers are self-employed. Some have hailed a new employment contract as a solution (Harris and Krueger, 2015); others have voiced their opposition to it (Sachs, 2015) on the grounds that it may be an incentive for all firms to contract-out their workers.

Skills and active labour market policies will be key policy levers

Skills development is crucial to master these changes. Skill needs of the future need to be anticipated and workers need the skills to make the transition towards these new jobs and occupations. They also need the skills to remain up to date as their jobs change. At the same time, active labour market policies, including unemployment benefits and job-search support mechanisms can facilitate a smooth transition to new jobs. Both skills and activate labour market programmes are necessary but not enough. More redistributive taxation and measures ensuring a more equal distribution of profits to bump up the incomes of those who lose out will also be necessary; as will be to adapt social protection schemes to the new forms of work.

This is easier said than done. Fiscal budgets continue to be tight in most countries complicating governments’ efforts to adapt their labour market and social policies and institutions. The challenge is to protect workers adequately while exploiting new opportunities for individuals and enterprises alike.

Preparing for tomorrow’s world of work

Policy makers around the globe need to be prepared for skills and labour market changes and adapt policies to enable inclusive growth in a globalised, digitised and interconnected world. On 14-15 January 2016 the OECD hosted a Ministerial meeting on Labour and Employment, and a Policy Forum on the Future of Work. Policy makers and more than 300 representatives from academia, business, the trade unions and civil society discussed how to respond to future challenges and opportunities in the labour market and the implications for jobs and skills.

In the coming weeks, more posts will summarise the discussion on the impact of digitisation on skills policies and share the participants’ views on how skills can help countries, individuals and employers take advantage of the new opportunities brought about by rapid structural changes.