Category: Uncategorized

 

Stehrer, a researcher at the Vienna Institute for International Economic Studies (wiiw), confirmed that investments in traditional assets such as transport equipment and machinery strongly affected employment growth. Contrary to popular beliefs about the destructive impact of automation on employment, Stehrer found that investments in digitalisation and intangibles, including databases, software, and R&D, did not destroy jobs, and had even a slight positive effect on labour demand.

 

Moreover, the study shows a mixed effect of capital accumulation on labour income shares, with generally minor effects observed. However, software and databases positively impacted labour income and compensation shares.

 

While the paper sheds light on the limited disruptive impact of new technologies on employment, it also emphasises the importance of enabling all workers to adapt to technological advancements. Hence, policy should concentrate on helping all workers engage with new technologies through training and skills development programs. These efforts could aid workers in learning new tasks and assist companies in implementing technological advancements.

 

Furthermore, policymakers must ensure the fair distribution of productivity gains from these technologies, particularly considering the negative correlations associated with certain assets, such as machinery and R&D.

 

Robert Stehrer, “The impact of ICT and intangible capital accumulation on employment growth and labour income shares”, Structural Change and Economic Dynamics, Volume 70, 2024, Pages 211-220.

 

The earlier version of this paper is available here

The paper is available here

The policy brief from UNTANGLED, a three-year research project, highlights the challenges to Europe from an ageing population, labour market shortages, and skill mismatches. Migration from non-EU countries and internally within the EU emerges as a central theme in addressing these issues. Drawing on the project’s research findings, expert consultations, and stakeholder inputs, researchers identified policies that can be implemented, improved or need further consideration.

 

“We should remember that migration can lead to job creation, improve productivity, stimulate innovation, and contribute to international trade,” said Klavs Ciprikis, co-author of the brief and researcher at ESRI. “The ageing of the EU population reinforces the need to recruit workers from outside the EU, so lawmakers should shape policies that help integrate them.”

 

In recent years, member states have observed relatively high migration to the EU and within the bloc. UNTANGLED findings show that the education level of incoming workers varies significantly based on their region of origin, requiring tailored approaches to improve their adaptation and integration.

Enhancing geographical mobility between European regions can efficiently address some labour market imbalances and improve economic performance, the UNTANGLED researchers found. They advocate for national-level financial incentives, including reimbursing regional mobility costs and supporting people moving to different areas. Additionally, they propose introducing preferential tax schemes to attract high-skilled foreigners, enhancing fiscal incentives.

 

“Empirical evidence shows that tax incentives are an effective policy to encourage labour mobility, especially among high-income workers and professions with little location-specific human capital,” said Ronald Bachmann, co-author of the study and researcher at the RWI – Leibniz Institute for Economic Research. “Strengthening policies that offer residence and work permits for non-EU individuals to meet labour market demand will be crucial.”

 

The researchers point to insufficient standardisation of qualifications requirements as one significant barrier to cross-border mobility. While this has improved in recent years, with the European Qualifications Framework playing a pivotal role in facilitating recognition of minimum requirements for authorisation to work in specific occupations across the EU, stronger implementation is needed, the researchers found.

 

Improving recognition of foreign qualifications can help professions which struggle to fill vacancies, such as healthcare.

 

Another major barrier to labour movement within the EU and the integration of immigrants is a lack of language proficiency, according to the policy brief.

 

“Several EU member states provide publicly funded language courses,” said Klavs Ciprikis. “More countries must follow suit, ensuring free or affordable access to language training. It is impossible to overstate the role language skills play in the integration of migrants and their engagement in the labour market.”

 

Another way to foster the societal integration of immigrants is to facilitate access to host country citizenship, the researchers found, adding that the liberalisation of birth-right citizenship also significantly improves the school performance of immigrants’ children.

 

The full policy brief can be found here.

 

Active measures such as public employment services, training, employment incentives, supported employment and rehabilitation, direct job creation, and start-up incentives work better than passive ones, which include out-of-work income maintenance and early retirement plans, according to a policy brief by Fabrizio Pompei of the University of Perugia. The document draws on the three-year Project UNTANGLED findings, expert consultations, and stakeholder inputs.

 

Project UNTANGLED recommends how policymakers can address structural labour-market challenges arising from the megatrends of digitalisation, globalisation and demographic shifts.

 

“The European labour market is in a good shape, but these megatrends and recent challenges such as geopolitical tensions and the Covid-19 pandemic have threatened job quality, working conditions and labour supply,” Pompei said. “Demographic shifts will only deepen the problem of labour shortages, so we have to do everything we can to mobilise existing reserves and resources. We can achieve that by prioritising social inclusion and new measures combating relatively low workforce participation among vulnerable social groups, older women, migrants, and people without digital skills or internet access.”

 

Many social policies today are inefficient and do not address the source of the problem, Pompei found. European countries still have a disproportionate number of participants in passive labour market policies, compared to more efficient active ones.

 

Similarly, the increasing use of automation technologies is affecting wages and employment, leading to unequal distribution of labour income. However, the degree to which inequality in the labour market translates into income inequality in households depends on government policies that redistribute resources to low-income working-age households, specifically non-pensioners in the poorest quartile of the population, Pompei found. For instance, social transfers are crucial for reducing the risk of poverty and income inequality for women and children.

 

“The pandemic has made it clear that labour shortages cannot be solely attributed to wages and income, as the multidimensional aspect of job quality is crucial to understanding the situation in some sectors and labour markets,” Fabrizio Pompei said. “Inadequate working conditions arising from a mismatch between job demands—including physical and psychological hazards, high work intensity and irregular working hours—and available job resources, such as task discretion, flexible work hours and training opportunities, have resulted in strained environments. This is particularly evident in sectors such as healthcare and transport.”

 

To simultaneously address the three issues of job quality, integration of migrants and labour shortages in strained sectors, policymakers have to adopt a holistic approach. While there is no single solution for all EU countries and policies have to be tailored to social conditions, certain programmes can serve as a blueprint for efficient reforms. In particular, Germany’s Concerted Action on Care (Konzertierte Aktion Pflege, KAP) serves as a model for addressing all three challenges simultaneously, with a specific emphasis on sectors such as healthcare.

 

UNTANGLED research finds that wage-based incentives alone are insufficient for retaining or recruiting staff; they must be complemented by factors such as access to training and greater autonomy over working hours.

 

Certain issues of job quality are caused by labour shortages, which can be partially addressed by the migration of workers from outside the EU. In this area, researchers point out that the mismatch between labour demand in European companies and labour supply from non-European migrants may be caused by the difficulties migrants face in having their formal qualifications recognised in the EU.

 

For policymakers, therefore, the issue of migrants’ diploma recognition should be one of the priorities for inclusive policies. The Swedish Fast Track is an example of a successful programme that facilitates the recognition of migrants’ qualifications gained abroad, and provides advice, information and training to validate skills for both migrants and employers, as well as training on the language, local culture and institutions.

 

Finally, institutions providing employment services and those delivering social services, for example addressing challenges related to housing, mental health and personal financial difficulties, must have the capacity and willingness to cooperate, Pompei said.

 

The full policy brief is available here.

 

In the first of three presentations, Ursula Holtgrewe (ZSI) discussed project UNTANGLED case studies in manufacturing and financial services, which examined the impact of digitalisation and globalisation on employment, job quality and inequality. The research revealed that technological changes and their adoption are characterised by incremental advances, rather than disruptive innovations. Holtgrewe pointed out that analysis of employment showed (skilled) staff shortages in all cases, leading to intense competition for highly skilled workers across sectors. However, labour shortages did not necessarily improve job quality and wages. At the same time, automation posed a risk to low-skilled workers, for instance in the manufacturing sector, even though for now the replacement of workers by robots has been compensated for by expanding markets. Regarding skill changes, the UNTANGLED researchers found that automation could lead to upskilling and retraining workers in both sectors. However, inequality persisted in training and learning, with more opportunities reserved for highly skilled employees. Discussing job quality changes, Holtgrewe argued that the automation of routine-intensive tasks led to work intensification, which limited the space for teamwork and peer learning.

 

Anna Milanez (OECD) presented cross-country case studies exploring the impacts of AI technologies on the labour market. Researchers demonstrated that manufacturing and finance companies adopted several AI technologies, including computer vision, natural language processing, and machine learning. Among the occupations most often impacted by technological changes were customer service representatives and maintenance & repair workers. Milanez emphasised that redundancies were rare due to the limited advancement of AI technologies. Instead, automation targeted minor tasks within jobs. Labour shortages caused worker reallocation within firms, and companies prioritised improved product or service quality over labour cost savings. Milanez also argued that the impacts of AI and AM on job quality are mixed. While AI technologies were credited with improving physical safety, working conditions, mental well-being, and engagement, conflicting perspectives existed, with workers often expressing ambivalence and reporting increased work intensity and stress.

 

Trine Pernille Larsen and Anna Ilsøe (FAOS) discussed their new research on the Danish manufacturing sector, AI adoption, and its effects. Their data showed that the industry recently increased its use of AI and Algorithmic Management (AM) technologies. They also addressed recent debates in Denmark caused by the widespread adoption of technology, which centred around worker surveillance, data security, health and safety risks, legal implications, and the impact on wages and working conditions. Larsen and Ilsøe also presented their findings on how AI affects job tasks, training, and mobility.

 

Ursula Holtgrewe presentation is available here.

Anna Milanez presentation is available here.

The workshop will present results from Project UNTANGLED on demographic trends and their underlying forces, as well as other insights into how technologies including automation can address the challenges those trends pose for societies in the European Union and beyond.

 

The workshop will feature a presentation by Vegard Skirbekk, a professor at the Columbia Aging Center, Columbia University and a Senior Researcher at the Norwegian Institute of Public Health. His research focuses on understanding the links between ageing, health and individual productivity in countries undergoing demographic change around the world. Professor Skirbekk looks at differences across countries in terms of health and cognitive skills and relationships with investments in education and health, and is interested in comparing variations in life trajectories in health across societies and countries.

 

Klaus Prettner, a professor of macroeconomics and digitalisation at the University of Economics and Business Administration in Vienna, will also deliver a presentation.

 

Maryna Tverdostup, an economist at wiiw and a country expert for Estonia, and wiiw Scientific Director Robert Stehrer will serve as the moderators.

 

To participate, please register here.

 

The researchers from Warsaw’s Institute for Structural Research analysed demographic and industry-level data in 14 European economies between 2010 and 2018, finding that technology adoption affects demographic groups differently. Higher exposure to information and communication technologies (ICT) and robots increased the employment shares of young and prime-aged women, but reduced them for women aged 60 or more and prime-aged men.

 

As the digitalisation of European economies accelerates, the study’s findings are important for calibrating public policies, including support for lifelong learning and the design of pension systems.

 

Until now, little has been known about the impact of technological disruption on particular gender and age groups. Notably, the value of ICT capital per worker in Europe surged by 91% from 2000 to 2019, while robot exposure, measured by the number of industrial robots per 1,000 workers, jumped by 140%.

 

Albinowski, M and Lewandowski, P. The impact of ICT and robots on labour market outcomes of demographic groups in Europe, Labour Economics, Volume 87,2024, 102481. The article is available here.

Earlier version of this article:

 

Maciej Albinowski, Piotr Lewandowski (2022). The impact of ICT and robots on labour market outcomes of demographic groups in Europe (Deliverable 3.1). Leuven: UNTANGLED project 1001004776 – H2020. The paper is available here.

 

As AI technologies continue to develop rapidly, predictions of labour market impacts range from far reaching substitution of both routine and non-routine work, to more moderate expectations. In many sectors, the changes appear to be more incremental than what tech visionaries assume. Improvements in job quality are found, as well as work intensification. Skill needs are often increasing rather than decreasing. Further challenges are emerging to representation of workers’ interests, as algorithm- and AI-based systems may be deployed in more opaque and complex ways than other digital technologies for which consultation and co-determination have been established in countries and sectors with strong social partnership.

 

Our webinar will feature presentations from researchers who will share insights from several case studies:

 

Ursula Holtgrewe (ZSI) will discuss how digital changes impact workplaces in the manufacturing and services sectors, based on case studies from Project UNTANGLED.

 

Anna Milanez (OECD) will present recent findings from an OECD study.

 

Trine Pernille Larsen and Anna Ilsøe (FAOS) will share findings from the INCODING project.

 

To register and receive a Zoom link, please email Leonie Dworsky at dworsky@zsi.at.

 

In the policy brief: ‘Ensuring the quality of new and existing jobs’, researchers from the three-year project looked into recent policy proposals aiming to enhance both work and life quality and the delicate balance between them. Drawing on findings from Project UNTANGLED, expert consultations, and stakeholder inputs, they identify areas of policy that can be improved or need further consideration.

 

“While labour markets in the EU are doing well, technological advances and demographic changes will affect not only the number but also the quality of jobs in the coming years,” said Mikkel Barslund, UNTANGLED project coordinator and research manager at HIVA-KU Leuven, who co-authored the policy brief. “We need to ensure that the policies we are implementing now will contribute to shared prosperity.”

 

The COVID-19 crisis accelerated the adoption of working-from-home, praised by many for fostering employee autonomy, reducing work pressure, and increasing work effort. However, with the surge in teleworking, the drawbacks have become more apparent, including hindering team collaboration, triggering feelings of isolation, and extending working hours. Furthermore, the fact that not all workers can perform their tasks from home worsens working workplace relations and creates inequality. To address these challenges, UNTANGLED researchers argue that employers and employees should discuss and agree on the optimal number of teleworking days and workplace rules.

 

Digitalisation and teleworking have also blurred the lines between home and work life, prompting employees to respond to calls, texts, and emails at all hours. Several EU countries have implemented or are considering legislation safeguarding the “right to disconnect” to prevent burnout and help workers re-establish work-life balance. Yet, Ludivine Martin, a researcher at the Luxembourg Institute of Socio-Economic Research (LISER), part of the UNTANGLED consortium, cautions against one-size-fits-all solutions, such as blocking server usage during weekends, and emphasises the need for tailored strategies that take into account sector, occupational, and technological nuances of work outside regular hours.

 

Another technological development, the emergence of platforms such as Uber, Deliveroo and Bolt, has given rise to new forms of work that are organised and regulated in new ways. Platform workers, representing around 5% of employees, are exposed to limited labour protections, predominantly low and irregular income, and lack of control over working conditions. Due to their relatively new status, unregulated nature, and fast development, platform jobs create challenges that policymakers are now trying to address at the EU and national levels. The UNTANGLED researchers argue that in addition to regulating their legal employment status, granting platform workers collective bargaining rights is also crucial for improving their well-being, social protection and fair working conditions.

 

“Many challenges in regulating platform work arise from its uncertain legal status and varied regulations across countries,” said co-author Adrien Thomas, a researcher at the LISER. “Governments and the EU have to define the status of platform workers and whether they should be considered employees or independent workers. Digital platform companies often position themselves as mere ‘intermediaries’ between service providers and clients, aiming to evade the responsibilities of an employer.”

 

Last month the EU reached a provisional agreement on the Platform Work Directive, which aims to ensure the correct classification of platform workers’ employment status. The new rules introduce a presumption of an employment relationship, and still need to be adopted by both the European Parliament and the Council to enter into force.

 

At the same time as workers, companies and governments are wrestling with the implications of these new technologies, the ageing population is becoming a major challenge for labour markets, increasing the demand for health and long-term care (LTC) workers. Many EU member states are already grappling with significant labour shortages in these sectors, marked by low pay, high turnover, and poor working conditions. LTC workers are particularly exposed to a lack of full-time work.

 

Urging prompt government action, the UNTANGLED researchers propose policies to attract and retain workers in the health and LTC sectors, including raising wages, improving working conditions, and increasing staffing ratios to lighten workloads. Governments could also use their influence to encourage private facilities that receive public funds to adhere to collective bargaining agreements or meet higher job-quality standards, such as minimum wages. Policymakers should also explore strategies for attracting migrant workers, including programmes that help integrate foreign workers into local systems and re-evaluating qualifications and language requirements, the researchers said.

 

Barslund, M. et al. (2023). UNTANGLED Policy brief: Ensuring the quality of new and existing jobs (Deliverable 7.2) Leuven: UNTANGLED project 1001004776 – H2020.

 

You can read the policy brief here.

 

In their paper “Automation in Shared Services Centres: Implications for Skills and Autonomy in a Global Organisation”, Zuzanna Kowalik, Piotr Lewandowski, Tomasz Geodecki, and Maciej Grodzicki investigated SSCs, which are business units that handle back-office functions such as accounting, finance, human resources, and IT, to assess how automating tasks affects both the quantity and the quality of jobs.

 

“Our study found that robots, algorithms, and bots introduced to SSCs did not reduce headcount or employees’ workloads, but changed the tasks they performed,” said Zuzanna Kowalik of the Institute for Structural Research. “These technologies eliminated “click work”, the monotonous, laborious tasks that workers find undesirable.”

 

The researchers focused on the Polish SSC sector due to its popularity with global companies setting up such facilities. While the sector has experienced rapid growth over the last two decades, accounting for 6.7% of total business sector employment in Poland, it is marked by routine-intensive, repetitive jobs, making it particularly vulnerable to automation. The adoption of technologies such as robot process automation (RPA), artificial intelligence (AI), and intelligent process automation (IPA) can easily replace human labour.

In recent years, Polish service centres have increasingly adopted automation, with almost 60% now using solutions based on IPA, and an additional 30% planning implementation to optimise costs. Yet fears that automation will reduce employment have not yet materialised.

 

This automation surge is happening against the backdrop of a labour shortage. The supply of educated graduates, a primary labour source for service centres, has dwindled due to demographic declines. Simultaneously, corporate headquarters have delegated more complex tasks to centres in Poland. With the growing demand for more complex skills and a limited number of people who can perform standard tasks, the automation of routine functions has emerged as a pragmatic solution to address labour shortages and improve the appeal of SSC jobs, facilitating the recruitment and retention of qualified candidates.

 

“Employees of SCCs aren’t afraid of automation; it makes their work easier, and they can focus on more interesting, challenging tasks,” says study co-author Piotr Lewandowski. “In this sense, automation improved job quality by eliminating most mundane and repetitive chores.”

 

While the approach to automation varies among firms, the researchers observed that employees of SSCs that adopt a bottom-up approach tend to enjoy greater autonomy and higher job satisfaction. This approach assumes active worker engagement in the automation process, with employees developing micro-solutions or enhancements to simplify and significantly shorten processes.

 

Furthermore, employee involvement in the automation process contributes to skill development. As tasks evolve, workers must adapt to more advanced roles, emphasising personal and professional expertise. Entry-level workers benefit from increased demand for skills such as critical thinking.

 

Kowalik, Z., Lewandowski, P., Geodecki, T., Grodzicki, M. (2023). Automation in Shared Service Centres: Implications for Skills and Autonomy in a Global Organisation,  IBS Working Paper 08/2023

“Digitalisation and automation aren’t as detrimental to the current organisation of production networks as previously thought,” said Isabelle Rabaud, a professor in international economics at Université d’Orléans, in France, and co-author of the study.

 

“Rather, technologies tend to strengthen existing backward and forward links that already exist between countries,” Rabaud said.

 

Economists have long understood that robotics and high-tech innovations can fuel productivity gains, but little focus has been paid to how technology affects where production is located globally. This knowledge gap includes whether the adoption of robots will lead to “reshoring,” the process of returning production to Europe from abroad.

 

To address this academic shortcoming, Rabaud together with colleagues from Université d’Orléans, Camelia Turcu and Marcel Voia and Robert Stehrer from the Vienna Institute for International Economic Studies, reviewed data from the OECD, the World Bank, the Centre d’Études Prospectives et d’Informations Internationales (CEPII), and the International Federation of Robotics. Using these data as inputs, the researchers created two models to test technologies’ effect on production networks.

 

In the first model, foreign value added in gross exports was analysed from 63 origin countries present in the exports of 27 EU destination countries. Internet use and broadband subscriptions were used to determine the role of digitalisation on the importance of backward global value chain (GVC) participation. The researchers speculated that higher degree of diffusion of ICTs would raise backward linkages in line with easier communication and lower costs of coordination.

 

Twenty-eight sectors in 36 non-EU countries of origin were examined. Sectors included transport, postal activities, accommodation and food services, insurance, and financial services.

 

 

To capture the effects on forward GVC participation, the researchers created a second model to simulate the effect of robot use in imported intermediate products (such as raw materials, ingredients, energy, and services) on the receiving industry in the destination country.

 

Using gravity equations, the researchers confirmed that the industrial use of robot, internet use and fixed broadband subscriptions in both origin and destination countries tend to increase fordward GVC participation. Results on backward GVC participation were more mixed.

 

“As economist Richard Baldwin famously suggested, technology enabled localized concentration of production and trade, in what he termed ‘factory Europe,’ ‘factory Americas,’ and ‘factory Asia,’” said study co-author Stehrer. “Our findings reinforce this and confirm technology’s leading role in the regional organisation of production.”

Rabaud,I., Stehrer, R., Turcu, C., Voia, M. (2023). The impact of technology and connectivity on trade patterns (Deliverable 3.4). Leuven: UNTANGLED project 1001004776 – H2020.

The paper is available here.