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Chapter 3: The future of work in Europe: job quality and work organisation for a smart, sustainable and inclusive growth
activities notably in the services sector Chart 20: Annual average change in absolute employment
(though not necessarily associated with by wage quintile in private sector, EU, 1998–2010 (1 000)
higher job quality). 600
LTI+LKIS HTI+KIS
400
An important policy challenge will be to
exploit the future job growth potential 200
of emerging innovations in ICT and KETs, 0
such as bio-based products, smart vehicles,
sustainable construction and smart grids. -200
Where future developments are charac - -400
terised by a shift from mass-produced
goods and services to more customised -600 1995-2007 2008-10
high-quality goods, there is strong poten- -800
tial for the resource-poor, skills-rich EU to 1 2 3 4 5 1 2 3 4 5
create high quality and value added jobs.
Source: DG EMPL calculations based on Eurofound (2013) available at http://www.eurofound.europa.eu/
emcc/ejm/summary.htm
SMEs will have an important role to play in Notes: LTI: low-tech industry, LKIS: low knowledge intensive services, HTI: high-tech industry, KIS:
this industrial renaissance since they are a knowledge intensive services. No data for BG, MT, PL or RO.
major source of job creation and innovation.
Workers’ performance is largely determined
by the scope with which educational systems Such developments will reinforce ongoing will be short-lived. This view is in sharp
are complemented by in-work training (see labour market polarisation in the private contrast with, for example, Brynjolfsson
Chapter 2). Therefore, job training in SMEs sector in the EU economy (Chart 20). The and McAfee (2014) who argue that the
will be important to ensure their workers’ left pane of Chart 20 shows changes in ongoing ‘digital revolution’ (character-
productivity and their international com- the earnings quintiles in low-tech indus- ised by exponential growth in computing
petitiveness. In this context, SMEs face very tries and basic knowledge services, power, digital information and supply of
specific challenges that may reduce their while the right pane of Chart 20 shows relatively cheap devices which leads to
efforts to reinforce their workers’ educational changes in the earnings quintiles in new business opportunities) carries an
attainment. Indeed, compared to larger the high-tech and knowledge intensive even stronger potential for sustainable
firms, SMEs have fewer internal human services. Blue bars show the pre-crisis innovations and growth than the past
and financial resources for skill develop- period (i.e. 1995–2007), while the red ‘industrial revolution’ — though its ben-
ment both at managerial and lower person - bars show the period since the onset of efits will not automatically be distributed
nel level. Therefore, improved regulation of the crisis (i.e. 2008–2010). in an equitable way.
credit markets and lending conditions for
SMEs is crucial to ensuring sufficient access In the run-up to the crisis, the lowest At the same time, others, e.g. Autor
to credit for skill formation. Where financial quintile within the low-tech and basic (2014), emphasise that employment
markets may fail to provide such finance, knowledge services showed the strong- polarisation does not automatically
public funding should be considered. est increase, while the highest quintile lead to wage polarisation since the lat-
within the high-tech and knowledge ter is also determined by 1) degree of
4.1.4. Technology change can intensive services showed the strong - complementarity (e.g. performances of
produce unbalanced outcomes est increase. In both sectors, the other workers may improve significantly to
in the population: stronger quintiles showed more modest increases. the extent they can be complemented
labour market polarisation During the crisis, the same pattern can be with the computing power of machines),
observed but in the context of employ- 2) the price- and income-elasticity of
As discussed, there is a risk that the ment reduction: the lowest quintile within demand for services (e.g. low price elas-
skill and talent-biased industrial renais- the low-tech and basic knowledge ser- ticity for intensive manual work allows
sance brought about by strong tech- vices showed the weakest decrease, for stronger wage increases for these
nological changes will sharpen the while the highest quintile within the high- service providers) and 3) elasticity of
ongoing labour market polarisation. It tech and knowledge intensive services labour supply (e.g. it usually takes more
is expected that further digitalisation of showed an increase. time to form highly-skilled workers than
economic activity, in combination with to train intensive manual workers).
globalisation (see below), will increase Uncertainties about projecting future
the demand for highly skilled workers, developments in employment and earn- This uncertainty requires permanent
increasing their job security and earn- ings distribution remain. For example, monitoring and assessment of devel -
ings, while the opposite may be observed some analysts, e.g. Gordon (2014), claim opments in the field of technologi-
for low- to medium-skilled groups and that today we are facing the first phase cal progress.
the long-term unemployed. The coming of a secular stagnation as future innova -
technology change is expected to benefit tion will not carry the same productiv- 4.1.5. The role of adequate
the strongest talents disproportionately, ity growth potential as past innovations labour market policies
i.e. the ‘superstars’ that create services related to the use of power generation,
such as Facebook, for which there is a chemistry, etc., and that the observed In this context, the potential for tech-
very strong demand (e.g. Brynjolfsson changes in employment distribution nology change to improve job quality
and McAfee, 2014). generated by information technology will require proactive labour market
151
activities notably in the services sector Chart 20: Annual average change in absolute employment
(though not necessarily associated with by wage quintile in private sector, EU, 1998–2010 (1 000)
higher job quality). 600
LTI+LKIS HTI+KIS
400
An important policy challenge will be to
exploit the future job growth potential 200
of emerging innovations in ICT and KETs, 0
such as bio-based products, smart vehicles,
sustainable construction and smart grids. -200
Where future developments are charac - -400
terised by a shift from mass-produced
goods and services to more customised -600 1995-2007 2008-10
high-quality goods, there is strong poten- -800
tial for the resource-poor, skills-rich EU to 1 2 3 4 5 1 2 3 4 5
create high quality and value added jobs.
Source: DG EMPL calculations based on Eurofound (2013) available at http://www.eurofound.europa.eu/
emcc/ejm/summary.htm
SMEs will have an important role to play in Notes: LTI: low-tech industry, LKIS: low knowledge intensive services, HTI: high-tech industry, KIS:
this industrial renaissance since they are a knowledge intensive services. No data for BG, MT, PL or RO.
major source of job creation and innovation.
Workers’ performance is largely determined
by the scope with which educational systems Such developments will reinforce ongoing will be short-lived. This view is in sharp
are complemented by in-work training (see labour market polarisation in the private contrast with, for example, Brynjolfsson
Chapter 2). Therefore, job training in SMEs sector in the EU economy (Chart 20). The and McAfee (2014) who argue that the
will be important to ensure their workers’ left pane of Chart 20 shows changes in ongoing ‘digital revolution’ (character-
productivity and their international com- the earnings quintiles in low-tech indus- ised by exponential growth in computing
petitiveness. In this context, SMEs face very tries and basic knowledge services, power, digital information and supply of
specific challenges that may reduce their while the right pane of Chart 20 shows relatively cheap devices which leads to
efforts to reinforce their workers’ educational changes in the earnings quintiles in new business opportunities) carries an
attainment. Indeed, compared to larger the high-tech and knowledge intensive even stronger potential for sustainable
firms, SMEs have fewer internal human services. Blue bars show the pre-crisis innovations and growth than the past
and financial resources for skill develop- period (i.e. 1995–2007), while the red ‘industrial revolution’ — though its ben-
ment both at managerial and lower person - bars show the period since the onset of efits will not automatically be distributed
nel level. Therefore, improved regulation of the crisis (i.e. 2008–2010). in an equitable way.
credit markets and lending conditions for
SMEs is crucial to ensuring sufficient access In the run-up to the crisis, the lowest At the same time, others, e.g. Autor
to credit for skill formation. Where financial quintile within the low-tech and basic (2014), emphasise that employment
markets may fail to provide such finance, knowledge services showed the strong- polarisation does not automatically
public funding should be considered. est increase, while the highest quintile lead to wage polarisation since the lat-
within the high-tech and knowledge ter is also determined by 1) degree of
4.1.4. Technology change can intensive services showed the strong - complementarity (e.g. performances of
produce unbalanced outcomes est increase. In both sectors, the other workers may improve significantly to
in the population: stronger quintiles showed more modest increases. the extent they can be complemented
labour market polarisation During the crisis, the same pattern can be with the computing power of machines),
observed but in the context of employ- 2) the price- and income-elasticity of
As discussed, there is a risk that the ment reduction: the lowest quintile within demand for services (e.g. low price elas-
skill and talent-biased industrial renais- the low-tech and basic knowledge ser- ticity for intensive manual work allows
sance brought about by strong tech- vices showed the weakest decrease, for stronger wage increases for these
nological changes will sharpen the while the highest quintile within the high- service providers) and 3) elasticity of
ongoing labour market polarisation. It tech and knowledge intensive services labour supply (e.g. it usually takes more
is expected that further digitalisation of showed an increase. time to form highly-skilled workers than
economic activity, in combination with to train intensive manual workers).
globalisation (see below), will increase Uncertainties about projecting future
the demand for highly skilled workers, developments in employment and earn- This uncertainty requires permanent
increasing their job security and earn- ings distribution remain. For example, monitoring and assessment of devel -
ings, while the opposite may be observed some analysts, e.g. Gordon (2014), claim opments in the field of technologi-
for low- to medium-skilled groups and that today we are facing the first phase cal progress.
the long-term unemployed. The coming of a secular stagnation as future innova -
technology change is expected to benefit tion will not carry the same productiv- 4.1.5. The role of adequate
the strongest talents disproportionately, ity growth potential as past innovations labour market policies
i.e. the ‘superstars’ that create services related to the use of power generation,
such as Facebook, for which there is a chemistry, etc., and that the observed In this context, the potential for tech-
very strong demand (e.g. Brynjolfsson changes in employment distribution nology change to improve job quality
and McAfee, 2014). generated by information technology will require proactive labour market
151
