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Review: Employment impact of digitalisation hard to predict

Government Communications Department
Publication date 20.2.2017 14.19
Press release 79/2017

Trends involving digitalisation, such as the collaborative economy and automation of knowledge work, change the contents of work, the labour market and the required expertise and education.

As estimated in research literature, the opportunities of finding employment are the weakest among those who are less educated, those who do routine jobs and those who live outside major cities as digitalisation progresses.

Among the changes brought on by digitalisation that are repeatedly mentioned in literary sources are increasing inequality and wage differences, fragmentation of work and the fact that in the future workers may have many concurrent employment relationships. Many workplaces whose existence is not clearly threatened by digitalisation may also face great changes in their work, requiring new skills and the ability to adapt to the new circumstances. These are the conclusions of the review of research literature “Qualifications and employment in the digital transformation” (In Finnish: Osaaminen ja työllisyys digimurroksessa) carried out within the Digital transformation project (Digimuutos).

Through digitalisation, developed economies mainly gain an increase in productivity and economic growth, but the effects on employment may be negative. However, the ability of machines to replace human labour is easily overestimated and the future scenarios do not sufficiently take into account the importance of the interaction of automation and labour in achieving productivity growth. On the other hand, the role of intuition and the human factor in work is underestimated, making their digitalisation harder than presumed. With respect to automation, it is essential to examine the tasks in which humans have a relative advantage over machines.

Research literature contains numerous examples of how challenging it is to predict which sectors will see a significant increase in the number of jobs and of the considerable differences between countries. Every country should analyse their current situation and draw up plans based on their strengths. Basically, Finland's potential to succeed in the digital transformation is very good because we are already competing with our competence that keeps improving, instead of cheap hourly rates.

The subproject “Qualifications and employment in the digital transformation” of the Digital transformation project was conducted as part of the implementation of the Government’s 2016 plan for analysis, assessment and research. VTT Technical Research Centre of Finland Ltd and Demos Helsinki carried out the project. The goal is to examine the potential impacts digitalisation has on employment, the balance between the demand and supply of labour, skill requirements, and changes in work and work tasks. The results of the trial included in the project and policy recommendations are published in spring 2017.

Review (in Finnish)

Further information about the Government’s analysis, assessment and research activities at tietokayttoon.fi.

Inquiries: Anu Seisto, Team Leader, VTT Technical Research Centre of Finland Ltd, tel. +358 40 5471 609, anu.seisto(at)vtt.fi and Hanna-Maria Urjankangas, Senior Adviser, Ministry of Employment and the Economy, tel. +358 40 542 1168, hanna-maria.urjankangas(at)tem.fi