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Competence Centre on Foresight

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Page | Last updated: 23 Jul 2019

Developments and Forecasts of Changing Nature of Work

Foresight

The digital age is disrupting labour markets and changing skills needs. Technological progress—automation, AI and other emerging technologies—change the nature of work and employment. New work patterns emerge; work is increasingly flexible, decentralised, and knowledge-based, driven by self-fulfilment and increasing entrepreneurial spirit. Digital and socio-emotional skills are increasingly necessary to thrive in the new world of work.

Demographic trends of workforce

  • Regional demographics of working-age population are deepening: by 2050, the number of people of 20-64 years old will decrease (compared to 2015) by 49 million in Europe, by 22 million in Russia, by 20 million in Japan and by 195 million in China. Over the same period of time, in the United States the number of potentially active workers is expected to increase by 20 million, while in sub-Saharan Africa the working age population (ages 15-64) is projected to triple, to some 1.3 billion -- about the double of that of all high-income countries combined.
  • The share of people above the age of 65 will increase significantly in all European countries. In the EU, if patterns of economic activity stay at current levels, the economic old age dependency ratio (the ratio between the inactive elderly (65+) and number of employed) is projected to rise from 43.1% in 2016 to 68.5% in 2070.
  • The labour force participation rates among adults have been declining for the past 25 years (1993-2018) and ILO expects this trend to continue, as shown by 2023 forecasts.
  • Although the gender gap in labour force participation has been narrowing over the past 25 years (1993-2018), women's global labour force participation rate is still 26.5% below that of men (49% for women, compared to 76% for men) (ILO). The gender gap is closing more rapidly in high-income countries, but continues to widen in emerging economies. ILO estimates that reducing the gender gap by 25% would increase global GDP by $5.8 trillion by 2025.
  • The US attracts inventive talent and observes the highest immigration rate, followed by Australia and Canada. In the period 1995-2010 European countries lagged behind with France, Germany, and the UK seeing more inventors emigrating than immigrating.
  • Older population keeps more active (by will or by necessity); over 50% of people 65+ in Germany, Sweden, and UK are earners through some independent work.
  • By 2030, hyper-connected, tech savvy millennials will make up 75% of the workforce. 

| Related Megatrends: Technology; Inequalities; Demography 

Globalisation

  • International trade can alter the composition of labour demand by increasing the demand for high-skill workers and by causing reallocation of employment from middle to top occupations, notes OECD.
  • Trade with non-EU countries has led to the creation of millions of jobs in Europe. In 2017, the European Commission estimated that about 36 million jobs are linked to trade with non-EU countries. Being in the same single market has also led to more trade between EU countries.
  • However, globalization might also be linked to some job losses. Nevertheless, the rate of job losses due to offshoring has decreased from 7% in the 2003-2007 period to 4% in the 2008-2010 period and continued to decline to under 3% in 2015-2016, notes the ERM annual report 2016.

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Technological progress

Technological change has had little effect on the aggregate number of jobs so far, but estimates suggest that AI-enabled machines may expand the scope and spectrum of future job automation.

AI and automation

Rapid implementation of automation and robotics and the emergence of AI and IoT are radically changing the work environment. Smart homes, virtual secretaries, AI doctors, care robots, and flying warehouses and self-driving cars are among the technologies that will shape our future living and impact work.

  • Studies show that by 2035, AI has the potential to double the annual economic growth rates in 12 developed economies analysed.
  • From 2020 to 2022 almost 2 million new units of industrial robots are expected to be installed in factories around the world. By 2022, 4 million industrial robots are being expected to be in use around the world -- more than double the stock of 2017. Investment in industrial robots will grow 10% per year in the 25-biggest export nations through 2025, compared to 2-3% growth in recent years.
  • Robotics industry is growing more rapidly than initially forecasted. BCG (Boston Consulting Group) is projecting robots market to reach $87 billion by 2025, while Tractica --incorporating the robotic and AI elements of the emerging self-driving industry -- is forecasting $237 billion by 2022.
  • The automation of production is accelerating around the world. China is the world's largest industrial robots market (2020) and the robot density in China surpassing global average.
  • Globally, in 2018, on average there were 99 industrial robots installed  per 10,000 employees in the manufacturing industry. The average robot density in Europe is 99.  74% of global robot installations are found in five countries: China, Japan, the United States, the Republic of Korea and Germany. Germany is the fifth-largest robot market in the world with a total of more than 26 ths. have been installed in 2018.
  • Global assets managed by robo-adviser portfolio managers could reach $13 trillion by 2025 (up from $100 billion as of December 2016), according to a group of equity analysts at Morgan Stanley.
  • Among the top 20 companies filing AI-related patents, 12 are based in Japan, three are from the U.S. and two are from China. China has a strong position in AI innovations due to fewer obstacles to collecting vast amounts of data, notes the WIPO 2019  report.

Impacts on the number of jobs

  • The estimates of the share of jobs that could be automated in the future vary widely across studies; e.g., globally, between loss of some 2 billion, to creation of 375 million by 2025/30.
  • About 50% of current jobs globally, theoretically could be automated. For about 60% of occupations, at least 30% of the constituent activities could be automated. Hence, 40% of the workers' time could be freed up for continuous learning and to exercise or develop creativity. There might be a net loss of over 5 million jobs in 15 major developed and emerging economies by 2020.
  • Automation is affecting and will affect countries in different ways. About 14% of jobs in OECD countries are automatable and another 32% of jobs could face substantial change in how they are carried out (previous estimate was of 9% of jobs in 21 OECD countries to be automatable -- the highest in Austria and Germany, at 12%). Between 37% to 69% of jobs in the EU could be partly automated in the future. For an additional average of 25% jobs, 50-70% of tasks are likely to change significantly because of automation. Although about 14% of jobs in the EU labour market will face a very high risk of automation, in the survey, 72% of EU citizens expressed fear that technology may “steal their jobs”.
  • Certain sectors, such as transportation, manufacturing, customer services, finance, healthcare and agriculture are particularly susceptible to automation. Some research suggests that "chat robots" and computers could replace almost 250,000 public sector jobs over the next 15 years, in UK alone.
  • Occupations where work organization is highly routinized and limited in social interaction are more likely to be automated. Also jobs that require relatively low levels of formal education are more prone to automation, noted McKinsey in 2017.
  • Women, workers with a lower secondary degree education and workers in lower-wage occupations will be most affected by automation, warns ILO.

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Opportunities

New technologies are also creating new job opportunities.

  • While there are less new jobs created directly by technological progress, one additional technology job creates around five new, complementary jobs in the local non-tradable sector.
  • Jobs newly created account for 33%-40% of the number of new entrants.
  • Advanced technologies will create new jobs, which will need new sets of skills, some not even known, yet. Automation and AI will accelerate the shift in skills that the workforce needs.
  • In the EU, 2 million new jobs have been created due to digitalization over the last decade and 1.75 million new jobs are expected in ICT by 2030.
  • Jobs requiring the use, maintaining and upgrading of new technologies are expected to continue to emerge and grow faster than others; e.g., some professions of the future may emerge like AI 'trainers' (workers performing tasks useful to train AI systems), AI 'explainers' (workers interpreting the outputs generated by AI systems), and AI 'sustainers' (workers monitoring the work of AI systems).
  • New opportunities in employment will emerge for e.g., programmers and specialists in robot maintenance, in relation to the manufacturing of robots or in the provision of robotics support services.
  • In the ICT sector, the number of practitioners in the EU is estimated to reach some 8.7 million by 2020, with a potential gap between supply and demand of some 500,000.
  • Since AI technology will remain limited and unable to replace human interaction and wisdom, the service and knowledge-work sector could grow 50 - 60% by 2030.
  • In India, that has 600 million people (45% of the country's almost 1.4 billion population) under the age of 25, which if properly trained (around 46% of India’s youth are employable after graduation), will constitute a great asset for the country. In 2016, India produced 2.6 million graduates with STEM skills. Such talent pool is India's biggest asset to drive innovation. Some estimate that India has a potential to create even 1 trillion dollars of economic value from the digital economy in 2025.
  • In Africa, the technology change could help generating the jobs of the future and allow youngest population in the world benefiting from it, but new digital regulations implemented in several African countries may prevent the growth of a tech ecosystem.
  • China - aims to become the world's leader in AI by 2030, thus, creating many IT jobs, which, at their turn will be supporting job creation in other sectors. 

| Related Megatrends: Technology; Education; Inequalities;

Education and training

  • By 2030, hyper-connected, tech savvy millennials will make up 75% of the workforce. 
  • An estimated 90% of today's jobs require some IT skills. In the EU, an estimated 61 million people do not have adequate basic skills.
  • Life-long learning and skills-based education are becoming intrinsic to the evolving education system.
  • New technologies and availability of information are making "I don't know" obsolete, creating new skills and knowledge possibilities never known before. 
  • STEM (science, technology, engineering and mathematics) education is accelerating the adaptation to the emerging working environment, further accelerating the factors of change.
  • The emerging hybrid system supporting inquiry-based learning for self-actualization is fostering creativity and critical thinking, as well as the best use of new technologies and AI tools.
  • Automation and AI are accelerating the demand for technological skills over the next 10-15 years, while the need for basic cognitive skills, and physical and manual skills will decline. Through 2030, the fastest growing need will be for advanced IT and programming skills -- 90% growth compared to 2016, followed by basic digital skills, with an increase by 69% in the USA and by 65% in Europe.
  • The projected talent (degree holders) shortage could be 2.2 million in France by 2020, and 10 million in Germany by 2030.
  • Due to the lack of skilled people in the field, the worldwide skills gap in cybersecurity jobs accounts to 2.9 million. India alone, will need up to 1 million cybersecurity professionals by 2020.
  • An estimated 96% of all workers at threat from technology could find similar or better work with adequate training. In the EU in 2016, only 45.1% of adults aged 25-64 participated in education and training during the last 12 months, notes Eurostat. Closing the Skills Gap 2020 aims to help reskill some 18 million people by 2020.
  • As technology makes data-driven HR decision-making possible, people analytics is gaining speed, increasing the use of workforce data to predict business performance, to better match skills with jobs, and to identify the education & learning gaps to meet future business needs.

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Platformisation of work

  • Work is increasingly more cognitively complex, more collaborative, more dependent on technological competence, more mobile and less dependent on geography
  • In the 'Gig Economy', jobs are chosen on an ad hoc basis through online platforms, based on one's own interests, skills, and timeframe. The platforms could be classified into 4 groups taking into account distinction between the mode of delivery of service (physical vs. online) and customer (collective vs. individual):
    • physical delivery of service to individual customer
      (e.g., UBER, listminut', Pawshake)
    • online service delivery to individual customer
      (e.g., peopleperhour, freelancer, guru)
    • physical delivery of service to collective customers
      (e.g., appJobber, FieldAgent)
    • online service delivery to collective customers
      (e.g. prolific, Clickworker).
  • The 'platform economy' is growing:
    • The increase in sharing economy will be driven by demographics: the emerging middle class, women and the elderly.
    • Online labour platforms have grown considerably in recent years and the number of people who tried platform work is increasing slowly but steadily in Europe.
    • In Europe, an estimated 11% of the adult population has ever used online platforms for providing some type of labour services; about 1.4% are main platform workers (work at least 20 hours a week on platforms and earn at least 50% of their income via online labour platforms).
      | Related Megatrends: Technology; Inequalities
  • The platform work introduces major transformations on the labour market: from hiring local staff to reaching remote workers, standard employment is increasingly supplemented or substituted by temporary work, from continuous/permanent employment towards project-based (casual), from single employer towards multiple concurrent clients.
  • The platform workers are younger than offline workers; based on the Colleem survey the average age of offline workers was 42.6 in 2018, while the average age of platform was 33.9.
  • The participation of male in the platform work is higher than female, but the profile of platform workers is becoming less male-dominated.
  • There is a high economic insecurity of platform workers. In 2017, only six out of ten respondents were covered by health insurance, and only 35% had a pension or retirement plan, notes ILO.
  • The State of California, USA, adopted legislation that gives many independent contractors (including gig-workers) employee status, with guaranteed minimum wage and benefits. The law will go into effect in 2020.
    | Related Megatrends: Technology; Inequalities; Education;

Non-standard forms of employment on the rise

  • Non-standard forms of employment -- e.g., all forms of employment other than a full-time permanent contract -- have increased over the past few decades in both developed and developing countries, and their use become more widespread across economic sectors and occupations. However, for most workers, employment in non-standard forms is not voluntarily and is associated with insecurity, notes ILO.
  • The work relationship is diversifying as workers hold several jobs and multiple income sources at the same time. In France, there are more than 4 million slashers -- 16% of the active population; for 77% of them, the second job being in a different sector than their primary job.
  • Some 20%-30% of working-age population (some 162 million people) in Europe and the USA are engaged in some kind of independent work.
  • Globally, the number of people in vulnerable forms of employment (e.g., self-employed) is rising. The estimated 1.4 billion people in vulnerable forms of employment in 2017 is estimated having increased by 17 million per year in 2018 and 2019. In developing and emerging economies the rates are above 76% and 46% respectively.
  • More than 50% of independent workers in Europe are not covered by unemployment benefits.
  • In the EU27 and the UK, the share of part-time employment in total employment (age group 15-64) went up from 15.6% in 2002 to 19.4% in 2017 while the share of temporary employment grew from 12.4% to 14.3% during the same period.  
  • The proportion of the self-employed working part-time increased in the EU over the past years. The self-employed without employees experienced reduction in worktime, remarks ILO.
  • New forms of employment --e.g., employee sharing, job sharing, interim management, casual work, ICT-based mobile work, voucher-based work, portfolio work, crowd employment, collaborative employment have become increasingly important in Europe since the year 2000 next to part-time and temporary employment.
  • Women are more likely to be solopreneurs than men.
  • Older population keeps active longer (by will or by necessity); over 50% of people 65+ in Germany, Sweden, and UK are earners through some independent work. 

| Related Megatrends: Inequalities; Demography; Health

Other relevant developments for changing nature of work

  • The work/leisure meaning and balance are changing, driven by priority to self-fulfillment and an increasing entrepreneurial spirit, moving towards self-actualization economy.
  • The meaning of 'the workplace' is changing. It does not relate only to a physical place where work is performed but also includes any space where the worker goes and performs his/her duties.
  • The work relationship is diversifying as workers hold several jobs and multiple income sources at the same time.
  • There is increasing argument that personal data should be treated as a form of labour and therefore, people should be paid for access to it.  
  • Decent work deficits are widespread. In 2018, over 25% of workers in low- and middle-income countries were living in extreme or moderate poverty, notes ILO.
  • New work patterns include:

| Related Megatrends: Inequalities; Technology;  Education