Project Untangled

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Project Untangled




    During the 22 November online debate, part of the final conference of Project UNTANGLED, moderator Karolien Lenaerts (HIVA-KU Leuven) posed the question of whether we are approaching a golden age for workers. In response, most panellists agreed that the growing labour shortages are exerting upward pressure on wages and working conditions, theoretically brightening the prospects for employees.


    Frank Siebern-Thomas (Green, and Digital Transitions, Research Unit, DG Employment, Social Affairs and Inclusion, European Commission) highlighted that three-fourths of European SMEs currently face skills and labour shortages, while two-thirds of European companies cannot find IT specialists. While optimistic about worker prospects, he underscored the risks and structural challenges that EU governments and firms must address. These challenges include reskilling the European workforce to adapt to evolving job roles resulting from technological advances and the transition to a green economy.


    Siebern-Thomas also noted that the European Commission is aware of these challenges and committed to addressing them through initiatives such as the European Year of Skills, focusing on upskilling, training, and innovation initiatives across member states.


    “Is this a golden age for workers? Maybe, but much depends on policies and their effective implementation,” Siebern-Thomas said.


    Melanie Arntz (ZEW), also optimistic about workers’ prospects, emphasised additional challenges that must be addressed for a golden age to materialise. She said particular attention should be directed to taxes and transfer systems and how they create incentives for working full-time. Arntz also raised concerns about AI and other technologies potentially devaluing certain skills and knowledge, leading to declining returns on formal education.


    “It will be more difficult for people to guess what the return on formal education will be, which means they may underinvest in education because they might not be sure how much they’ll get out of it,” she said. “Therefore, we should provide as much transparency as we can on all these trends, so people can orient themselves around this new labour market.”


    Arntz also highlighted another challenge: technology-driven mental stress among workers.


    Marguerita Lane (Future of Work team, OECD) focused on the positive impact AI can have on the workforce. She highlighted the technology’s potential to boost productivity, alleviate sluggish growth, reduce the need for human labour in routine and manual work, and liberate workers from unsafe, repetitive, and monotonous tasks. Lane stressed that AI also has the potential to bridge inequality by enabling lower-skilled workers to level up. Similar to previous speakers, Lane emphasised that these positive outcomes can only materialise with the right policies and social safety nets in place.


    “It is about policy choices; in this disruptive time, we need a smooth transition, and for this we need public services, governments, and companies to support workers displaced by new technologies,” Lane said.


    Robert Stehrer (wiiw) took a less optimistic stance on the prospects for workers. Citing recent literature, he argued that the impact of new technologies such as AI on the labour market may not be very significant, and might not help overcome labour shortages. Stehrer also highlighted that the shrinking and ageing of the EU population places a burden on the healthcare and pension systems. According to Stehrer, it is plausible that we are entering a period of secular stagnation: a prolonged period of negligible economic growth.


    “Even if there are higher wages, these will need to be taxed to meet the demands of the healthcare and pension system,” Stehrer concluded.


    The discussion also covered areas such as working conditions, the challenges faced by platform workers, the potential and the difficulties of undeclared work, opportunities for migration to the EU, and gender dimensions within the workforce. Additionally, it explored how the evolving labour market is influencing the welfare state.


    The UNTANGLED debate sheds light on the broad and diverse landscape of opportunities and challenges that makes up today’s labour market. The path to any golden age for workers must pass through that terrain, and technological advances in and of themselves aren’t enough to ensure a safe journey. Instead, it will require thoughtful implementation of policies that uphold the well-being and resilience of the workforce in the face of unprecedented changes.





    Speaking on the panel “Poverty and Inequality Proofing of Policies for a Fair Twin Transition”, Doorley unveiled an UNTANGLED paper’s findings illustrating that tax and welfare policies can alleviate the impact of automation on income inequality.


    The panel focused on the significance of Distributional Impact Assessment (DIA) in the context of policies and reforms implemented by Member States to support the digital (and green) transition. DIA plays a crucial role in measuring how these policies affect different segments of the population in terms of poverty and inequality. Other panellists included Sara De la Rica, the Director of ISEAK; Salvador Barrios, Head of the Fiscal Policy Analysis Unit of the Joint Research Centre, European Commission; and Cinzia Alcidi, Head of the Economic Policy and Jobs & Skills Unit at CEPS.


    This year’s edition of the European Social Forum, hosted by the European Commission, centred around the impact of AI on the world of work. The conference aimed to discuss how EU policy can influence and address AI innovation in member countries, protecting workers’ rights throughout the Union.



    We have also made some changes to the panel. The new list of participants is:


    • Melanie Arntz, (Professor, ZEW)
    • Robert Stehrer (Scientific Director at wiiw)
    • Frank Siebern-Thomas (Head of unit for Fair Green and Digital Transitions, DG EMPL)
    • Marguerita Lane (Economist, OECD)
    • Moderator: Karolien Lenaerts (Head of Research Group Work, Organisation and Social Dialogue, HIVA KU Leuven).


    Event Details:

    Date: 22 November

    Time: 4:00-5:30

    Location: Online

    To attend, please register here.


    Together we will examine pressing concerns such as chronic labour shortages; AI’s impact on jobs; caring for the elderly; job market inequality; the influence of Large Language Models (LLMs) on high-skilled roles; and green transition champions.

    We will also explore the skills that will remain relevant in the evolving job market. Are we entering a period of plentiful jobs, and broad-based productivity and wage increases? Or are we on the verge of a period where the returns on education and skills will change – unpredictably – for all? What role will globalisation play in this? How can we fill (low-paying) care jobs? What role is there for the European Commission? What should policymakers do to address these challenges and reap opportunities, and what constraints do they face?





    The event will take place at KU Leuven on the Campus of Social Sciences on 23 November 2023 and feature a keynote address from Professor Melanie Arntz, Deputy Head of ZEW’s Labour Markets and Social Insurance Research Unit: “Different Perspectives on the Digital Transformation of the Labour Market.”

    We will have nine sessions and over 30 papers:

    1. Jobs and their quality
    2. Global value chains
    3. Skills and tasks
    4. Inside firms and organisations
    5. Technology, jobs and wages
    6. Platform and flexible work
    7. Technology adoption
    8. Regional and structural change
    9. Training, skills and working conditions

    All the detailed information is in the Programme available HERE.

    Register before November 12 HERE

    Any queries can be emailed to Ilse Tobback at:




    New results from UNTANGLED paints a nuanced picture of robotisation and automation’s effects, helping to ease concerns about conditions for millions of workers as technological innovations enhance efficiency and replace tasks. While impacts will be heterogeneous, approximately 80% of 100 major European economic areas will experience net benefits in average workers’ welfare.


    “Digital transformation represents more of an opportunity than a risk for most regions in Europe,” said Michal Burzynski, a labour market research scientist at the Luxembourg Institute of Socio-Economic Research (LISER), and a study co-author. “That said, workers in some parts of Europe will be negatively affected. Understanding these implications is crucial for formulating effective policies that address the challenges, and opportunities, arising from robotisation and automation.”


    To evaluate the potential consequences of robotisation and automation on European labour markets, the researchers used a general equilibrium model, combined with projection scenarios, to benchmark how future technological progress may reshape labour in Europe.


    With data on GDP, wages, employment, education and migration from Eurostat, OECD, and on robotisation and automation from IFR and EU-KLEMS, the researchers quantified average wage effects and changes in wage dispersion across occupations, sectors, geographical areas, and worker groups.


    Overall, the researchers determined that while a strong majority of regions benefit from robotisation and automation, the effect is heterogeneous, both across and within countries.


    “The Paris area, Austria, Switzerland, as well as Nordic and some Baltic regions belong to the main nominal GDP winners of robotisation and automation, followed by the rest of France, the south of Germany, Benelux, and Ireland,” they wrote. “A weaker positive or slightly negative impact is observed in the UK, and southern and eastern European regions.”


    With a benchmark scenario calculated, the researchers then analysed the potential effects of robotisation and automation on workers with different origins, education levels, and skills using three scenarios of robotisation and automation: slow, medium, and fast. The slow adoption scenario will reduce average native welfare in half of the Europen regions. In the medium adoption scenario, average native welfare improved across Europe, except for in roughly 20 regions, particularly in France and Poland. In the fast adoption scenario, the negative welfare impacts concern fewer regions.


    Across sectors, impacts on labour supply also varied. Manufacturing was projected as the most likely beneficiary of robotisation and automation in in Belgian and German regions. Public administration, education, and health services were projected to gain in most regions with higher positive impacts in Nordic and Alpine countries, while transport and storage was projected to experience the highest growth in eastern Europe and Austria. In contrast, construction and financial services tended to shrink in most regions.


    The disparity in regional and sectoral benefits demands strong policy responses, the researchers noted.


    “As robotisation and automation continue to progress, it’s increasingly probable that this trend will impact workers who have, thus far, been relatively unaffected,” said Joël Machado, a LISER research scientist and another study co-author. “Our projected scenarios can help policymakers better target interventions that support those who are adversely affected by the digital transformation.”


    Burzynski, M., Machado, J., and Martin, L. (2023). Digital transformation, demographic changes, and labour markets. Projected implications for 100 European regions (Deliverable 6.2). Leuven: UNTANGLED project 1001004776 – H2020.


    The paper is available here.




    In an interview with Francesca Guerzoni, Piotr Lewandowski of the Institute for Structural Research (IBS) presented the key findings from the UNTANGLED research paper “Automation and Income Inequality in Europe,” which he co-authored. The research reveals that although robots may have some adverse effects on the earnings and employment rates of more exposed worker groups in Europe, their influence on household income inequality is relatively limited, thanks to the balancing effect of European benefit systems.


    Lewandowski highlighted the substantial variations among European countries. For instance, Belgium and Germany have experienced significant labor market disruptions due to automation, but their tax and welfare systems have responded robustly. This contrasts with Eastern European countries, where the response has been less pronounced.


    For the full interview, please click here. To access the research paper, click here.




    In his presentation, “Development of AI: Productivity and Distributive Effects in Europe,” Francesco Venturini shared the results of his work with Fabrizio Pompei, demonstrating that the productivity of firms developing AI is 13.7% higher than of those who are not innovating in this field. The generation of AI technologies also helps laggard firms catch up with the productivity leaders.


    AI development also has a significant impact on the share of labour in regional income (gross value added, GVA). Researchers found that AI reduces labour share and widens regional income disparities. While the share of regional income for highly skilled labour remains unaffected, that of medium-skilled workers decreases by 3%, and that of low-skilled workers decreases by 9 % with the doubling of AI-related innovation. Therefore, AI seems to contribute to an uneven distribution of wage income.


    You can access Francesco Venturini’s presentation here.


    For a deeper dive into UNTANGLED research on AI, read Fabrizio Pompei and Francesco Venturini’s paper by clicking here.

    2021 © UNTANGLED. All rights reserved.
    This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 101004776

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