Business brief: Jobs in the digital era work differently
“We are the children of a technological age. We have found streamlined ways of doing much of our routine work. Printing is no longer the only way of reproducing books. Reading them, however, has not changed.” Lawrence Clark Powell
Ongoing innovation in technology is changing labour markets worldwide. To understand the future of work in the digital era, we need to move away from the traditional economic classification of manufacturing and non-manufacturing sectors. The main differentiator in the digital era is routine tasks versus non-routine tasks. Medium-skilled workers performing routine-tasks in particular run the risk of being replaced by computers doing their job more efficiently, while the share of employment in non-routine tasks is growing. Research on the “Future of Work in the Digital Age” by KU Leuven and Utrecht University, and commissioned by Randstad for the flexibility@work 2016 publication, outlines the transition currently taking place in the labour market. For this the researchers assessed two related phenomena: deindustrialisation and job polarisation in OECD countries. These phenomena capture the shifting composition of a labour market, which is clearly in transition. Next to the decrease in manufacturing in the developed countries, the growth in services can be decomposed into low-tech, low-paying and high-tech, high-paying employment, which reveals the current trend of the job polarisation.
Job polarisation captures the increasing importance of the least and most paid occupations in the economy at the expense of mid-level jobs. In response to the digital economy many new markets and jobs are being created, but many existing jobs are and will be eliminated, or will have to be significantly re-tooled in the process. Medium-paid jobs, such as machine operators and assemblers; office clerks and customer service clerks are disappearing as a result of automatisation, robotics and outsourcing. The research shows this phenomenon is taking place in all developed countries and across all sectors, with an emphasis on manufacturing.
There is a second kind of job polarisation occurring: both the least and most innovative or tech-intense sectors are increasing their employment share. In developed economies, investment in science, technology, engineering and mathematics–the socalled STEM disciplines–is increasingly seen as a means of boosting innovation and economic growth. The tech-intensive sectors create high-tech STEM jobs which are typically more productive and therefore generate additional demand. These companies tend to concentrate in high-tech hubs where high-paid workers employed in STEM occupations are likely to spend their income on local non-routine services. The research shows that the creation of a single high-tech job generates between 2.5 and 4.4 additional jobs outside tech-intensive sectors in these high-tech regions. This is an important fact because, contrary to what is sometimes claimed, boosting high-tech employment helps, rather than hurts, employment growth at the lower end of the labour market.
In many areas and regions employment is picking up, so much so that employers say they cannot fill their vacancies because even highly-qualified candidates have the wrong skills for the jobs available. The current education systems, employers argue, teach yesterday’s skills to tomorrow’s graduates. Many are concerned that applicants lack “soft skills”, such as interpersonal, communication and analytical problem-solving abilities. This clearly indicates that jobs in growing sectors, such as health, education and other in-person services, require a different skill-set than those acquired by people who previously worked in sectors with declining employment, such as agriculture and manufacturing.
The changes in the digital era raise profound issues on how to adapt labour market policy and institutions, as well as decent flexible work arrangements and social security, in order to provide adequate security for workers while harnessing the potential of new ways of working to enhance opportunities. As the authors state: “the technology change is clearly skill–or better said–routine biased”. The paradox lies in the fact that we still have little understanding about how we perform many tasks, particularly those that require a human touch and soft skills. These tasks often require little effort for humans to accomplish, but still pose great difficulty for computer programmers to put into computer language.
We need to become as innovative in creating good jobs as we are in developing innovative products and services. What skills are needed for these non-routine tasks? What would it take for business, policy, and educational leaders to work together to make it happen? If our approach does not change, people will be denied the opportunities they need to develop the skills they require in the digital era.
Randstad is a sponsor of OECD Forum