June __, 2016 (date)
Abstract
Technological development is an integral part of the modern world’s life. It is difficult to imagine the existence without computers, cell phones, and other devices nowadays. It brings many positive features to the humans’ lives, such as facilitating of many types of labor, allowing easy communication between family members and friends that live far away from each other, enhancing many business processes (e.g. supply chains, distribution of information, client servicing). However, new technologies also bring a number of problems to people. One of the most significant issues is its influence upon the labor market and unemployment rates. Machines have substituted people in many professions that do not exist anymore. However, researchers argue that such changes are not as bad as they may seem and that they bring new employment opportunities along with the decreasing number of current ones. Individuals, employers, and educators just need to be able to adapt to such changes and adjust their approach in response to the process of innovation.
Keywords: employment, labor market, future of jobs
Technological development has been moving forward rapidly during recent several decades. New technologies bring many positive aspects to the life of individuals nowadays. For example, they facilitate many kinds of manual labor, enhance possibilities for learning and obtaining different types of information, bring more opportunities, enhance various processes in business and everyday life, etc. However, there are also a number of negative sides of technological development, such as humans’ substitution by machines and consequent growing rates of unemployment. This research paper is devoted to the identification of the automation’s influence upon the individuals’ incomes, consumption, labor, education, and social interactions.
Technology and Labor Market
The influence of computerization process on the outcomes for labor market is broadly described in the literature, confirming the employment decline in occupations that are routine intensive that means occupations mostly consisting of duties performed in accordance with the well-defined procedures, which may be easily fulfilled by modern machines. The current manufacturing employment decline and the other routine jobs disappearance is the reason of low employment rates. Also some researchers described a structural labor market shift with reallocating supply of labor by the workers to service low-income occupations from middle-income production. Presumably it is due to the fact that the service occupations’ manual tasks are less computerization susceptible, because they demand a higher physical adaptability and flexibility degree (Frey & Osborne, 2013, p. 2).
Along with the decreasing computing prices, skills of problem-solving are getting rather productive, explaining the significant growth of employment in the sectors that require cognitive tasks in which a comparative advantage belongs to the skilled labor, the same as the persistent growth in education returns. There is a trend towards the polarization of labor market, with high-income cognitive jobs and manual low-income occupations growing employment together with a hollowing-out of routine middle-income jobs (Frey & Osborne, 2013, p. 3).
The discussion about technological unemployment is not a new phenomenon. During the whole history, the creative destruction process, following technological progress, has lead to the enormous wealth; however, it provoked also undesired disruptions (Frey & Osborne, 2013, p. 5).
Deskilling. A significant XIX century manufacturing technologies’ feature is that they were deskilling, that means that they substituted for skills by the tasks’ simplification. The process of deskilling started as the system of factories started to displace the shop of artisan, and production became more and more mechanized with the steam power adoption. Labor that had been previously made by artisans later was restructured into highly specialized, smaller sequences, demanding less skill and more individuals. Certain innovations even were created to become deskilling (Frey & Osborne, 2013, p. 8).
Computer Revolution started with the beginning of computers’ commercial uses in 1960s to the e-commerce and Internet development in 1990s. The computation’s cost declined annually approximately at 37% during 1945-1980. In 1980-1990s, costs for computing declined more quickly, annually by 64% on average, together with the computational power growth (Frey & Osborne, 2013, p. 11).
The early XX century machines for the offices increased the number of clerking workers and demand for them. Similarly, computerization improves demand for such work, but, at the same time, it allows them to be automated (Frey & Osborne, 2013, p. 11).
It remains to be seen how the XXI century’s technological progress will influence the outcomes of the labor market. During the history, progress of technological development has broadly shifted the employment composition, from the artisan shop and agriculture, to clerking and manufacturing, and later to management and service occupations. But the concern regarding technological unemployment is probably exaggerated. However, the economists believed that an invention that substitutes people with machines will provide influence on all factor and product markets. A growth in the production’s efficiency which reduces the one good’ price can improve real income and therefore increase demand for other products. Thus, technological progress may have two competing employment effects: (1), as labor is substituted by technology, it causes an effect of destruction, forcing individuals to reallocate their supply of labor; (2) there is the effect of capitalization, because many organizations enter economic sectors in which there is a relatively high level of productivity, causing employment in such industries to improve (Frey & Osborne, 2013, p. 13).
Socio-Economic and Demographic Change Drivers
Source: Leopold, Ratcheva, & Zahidi (2016)
Technological Change Drivers
Source: Leopold, Ratcheva, & Zahidi (2016)
Occupations at Risk
According to Frey & Osborne (2013), most employees in logistics and transportation occupations, along with the administrative support and office employees, and production occupations labor, are at a significant risk. Such predictions are consistent with modern developments of technology. The authors found that a substantial employment share in service professions, where most growth in US job has occurred during the recent decades, are very susceptible to the process of computerization. Such finding is also supported by the recent increase in the service robots market and the gradually diminishment of the human labor’s comparative advantage in tasks that require dexterity and mobility (Frey & Osborne, 2013, p. 44).
According to the authors, the educational attainment and wages exhibit a substantial negative relationship with the computerization probability. This outcome offers a discontinuity between the XIX, XX, and XXI century in the capital deepening impact on the relative skilled labor demand. While XIX century technologies of manufacturing substituted largely for skilled labor by means of the tasks’ simplification, the XX century Computer Revolution caused a middle-income jobs’ hollowing-out. The findings of the authors thus foresee that as technology is going forward, low-skill employees will reallocate to duties which are non-susceptible to the process of computerization, e.g. duties requiring social and creative intelligence. In order to stay competitive, the employees will have to learn social and creative skills (Frey & Osborne, 2013, p. 45).
Future of the Employment
According to Leopold, Ratcheva, & Zahidi (2016), business models’ disruptive changes will have a significant influence on the landscape of employment during the nearest years. Numerous major transformation drivers currently influencing industries globally are predicted to have a substantial influence upon jobs, including either job displacement or job creation, also including widening gaps in skills and heightened productivity of labor. In the numerous countries and industries, the most in-demand specialties or occupations were not available 5-10 years ago, and the change pace is going to increase. Presumably, 65% of children that today enter primary schools will find themselves working in completely new types of occupations that do not exist now. Taking into account the fast evolving landscape of employment, the ability to prepare and anticipate for future requirements to job content and skills, and the total influence upon employment is rather substantial for businesses, individuals and governments with the purpose to fully enjoy the possibilities presented by such trends as well as to avoid negative results (Leopold, Ratcheva, & Zahidi, 2016, p.3).
Recent demographic change and technological advancement waves have caused heightened prosperity, job creation, and productivity. However, it does not mean, that such changes were free of difficulty or risk. Preparing for and anticipating such transition is critical. As a World Economic Forum’s Global Challenge Initiative on Employment, Skills and Human Capital major component of the Future of Jobs project is devoted to bringing specificity to the predicted disruptions to the skills and employment landscape in regions and industries and to promote deeper consideration regarding how governments and business can deal with such change. The analysis of industries offered in this Report will constitute the background of dialogue with the leaders of industry to address talent challenges that are industry-specific, while the regional and country analysis available in this Report will be integrated into regional and national private-public collaborations to promote skills and employment (Leopold, Ratcheva, & Zahidi, 2016, p.3).
Actions Required for the Future
According to Störmer, Patscha, Prendergast, & Daheim (2014), in order to stay successful employers need to:
take responsibility and leadership for skills’ developing necessary for success in business to create the capacity to innovate and resilience in the conditions of increasing market volatility and competitive pressures. The possibility to retain, develop, and attract talent of the world class will grow in importance as a global markets’ differentiating factor;
be capable to manage talent and skills across supply chains and world networks of business, to adapt to more fluid arrangements of employment and open models of business (Störmer, Patscha, Prendergast, & Daheim, 2014, p. 107);
cooperate with government to elaborate sustainable learning and career pathways for youth in a new conditions of labor market;
recognize for increasing workforce diversity, either generationally or culturally, by offering a larger flexible working arrangements’ range and creating organizational values to ensure value and meaning to work;
increase collaboration with the training and education sector to access required skills as the innovation capacity (Störmer, Patscha, Prendergast, & Daheim, 2014, p. 108);
Individuals need to:
adjust mind-set concerning the work’s nature, as it will be more network oriented, less location-specific, technology-intensive and project based;
acknowledge more personal responsibility for continuously updating and acquiring skills for success and progression in the face of government and employers’ limited investment and growing division between high and low-skill jobs. Follow the relevant developments of the labor market and include training and skills opportunities as part of negotiations regarding contract with the organizations;
take advantage and be open to different new ways of learning, e.g. bite-sized learning, self-directed, technology enabled training and peer-to-peer learning opportunities;
jump across boundaries of specialist knowledge as disciplines and technologies converge, developing a technical training blend and better skills of collaboration;
focus on key attributes and skills’ development that will be useful in the future, including adaptability, resilience, enterprise, resourcefulness, cognitive skills (e.g. problem solving), as well as the major business skills for employment that is project based (Störmer, Patscha, Prendergast, & Daheim, 2014, p. 108);
Providers of training and education need to:
closely collaborate with employers to help them in achieving their skills and business goals;
be ready to adapt to the business models and established income streams’ continuing disruption and learning marketization;
continuously invest in new modes and provision content. Follow the developments and know the impact on learning delivery of the technology (Störmer, Patscha, Prendergast, & Daheim, 2014, p. 108);
elaborate systems to present clear information on learning’s connection to the success to motivate employers and learners’ investment decisions;
adapt programs of learning to reflect the significance of an interdisciplinary approach to workplace innovation and the all-pervasive technology’s influence (Störmer, Patscha, Prendergast, & Daheim, 2014, p. 109).
Policy makers need to:
provide a dynamic and flexible environment for investment into skills that enables businesses and people to create their capacity to compete and innovate. The role of the Government will be mostly to coordinate an effective private and public investment alignment with a view to outcomes’ maximizing that contribute to growth and jobs;
make employers expose more control and leadership in the training and education system. Promote strategic relationships between training and education sector and business to ensure cost effectiveness in skills’ developing required for a new environment that is rapidly changing;
empower people by access to training and careers information and advice of high quality, and access to facilitate of financing to support investment in skills by an individual;
elaborate the regulation of domestic market of labor that prevents a labor ‘race to the bottom’ standards. Foster discussions around the labor market regulation facilitation on a world’s scale;
elaborate a comprehensive and coherent long-term strategy in order the low-skilled can remain competitive in the new conditions of labor market challenge;
Mitigate increasing skills and jobs spatial disparities, by labor mobility’s enabling and contributing to the development of the local economy (Störmer, Patscha, Prendergast, & Daheim, 2014, p. 109).
Conclusions
Taking into account the above information, it is possible to conclude that technological development provided a very significant impact upon all the spheres of individuals’ life. On its different stages, automation provided various influences upon, for example, labor market, decreasing the number of existing jobs fulfilled by people; however, creating a large number of the new ones. In general, every individual is able to adapt to such changes, acquire new skills and thus continue earning. However, there are cases, when it is not easy (e.g. for low-skilled workers). In this situation Government’s involvement is required. The policies of the Governmennt devoted to coping with such situations include different kinds of promotion and contribution (financial and non-financial) to learning new professions and skills, collaboration with the educational institutions in this respect, updating curriculum for students, cooperation with employers in terms of receiving information what skills and knowledge are currently required, and etc. Researchers suppose that professional actions of all the stakeholders can help to avoid growing rates of unemployment that are caused by the technological development.
References
Frey, C. & Osborne, M. (2013). THE FUTURE OF EMPLOYMENT: HOW SUSCEPTIBLE ARE JOBS TO COMPUTERISATION? University Of Oxford, 2-45. Retrieved from http://arche.depotoi.re/autoblogs/wwwinternetactunet_8a3fe3331e0ad7327e18d9fe6ec3f0ad04dcea58/media/3722fa7d.The_Future_of_Employment.pdf
Leopold, T., Ratcheva, V., & Zahidi, S. (2016). The Future of Jobs. World Economic Forum, 3-6. Retrieved from http://www3.weforum.org/docs/Media/WEF_Future_of_Jobs_embargoed.pdf
Störmer, E., Patscha, C., Prendergast, J., & Daheim, C. (2014). The Future of Work: Jobs and skills in 2030. UK Commission For Employment And Skills, 107-109. Retrieved from https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/303334/er84-the-future-of-work-evidence-report.pdf
