Digitalisation rewards may see rise in labour market inequalities

Digitalisation, such as the automation of tasks, digitisation of processes, and coordination through platforms is transforming the way in which people in Europe work. While this is not associated with decreasing levels of overall employment, it is changing sectoral and occupational profiles, skills requirements, work organisation and working conditions. Many workers and businesses stand to gain from these ongoing changes, but some will lose out – potentially heightening labour market inequalities.

Eurofound’s new online resources and associated flagship report on Automation, digitisation and platforms looks at the impacts of rapid technological change on the EU economy and labour markets - with nearly one-third of EU workplaces now categorised as highly digitalised - and offers insights on how to manage this process to bring maximum benefit for businesses and workers alike. Among the conclusions of the research is that, although much focus has been given to whether digitalisation will increase unemployment, it is likely that the most evident implications will be on skills required, how work is done and working relationships.

Digitalisation is progressing in the EU, but it is uneven across countries, regions, sectors and types of organisations and has significant potential for further development. 28% of establishments with at least 10 employees are highly digitalised while 27% have limited digitalisation. The financial services sector has the highest share of highly digitalised establishments, while this is least common in the construction sector. Overall trends show that there is a tendency for digitalisation intensity to increase with establishment size, and that the COVID-19 pandemic is accelerating the adoption of digital technologies in the EU.

Job loss is not the key labour market issue with digitalisation, but rather a deepening divide between those whose working lives benefit from it, and those who do not. More than 70% of employees in the EU need at least basic ICT skills to satisfy job demands, but about 30% of them are at risk of falling into the digital skills gap. Digitalisation may also increase involuntary atypical forms of employment, including less secure employment relationships (such as shorter fixed-term contracts or part-time employment with fewer hours), subcontracting and outsourcing, and the categorisation of workers as self-employed who in-fact have limited autonomy in how they do their work due to the way in which digital processes and platforms operate.

Teamwork is notably more prevalent in highly digitalised establishments (84%) than in those with limited digitalisation (55%). Data generated by monitoring the workplace and workers using automation technologies can improve understanding of workflows, processes and procedures, and this information can be used to reorganise the workplace to achieve better productivity, workplace practices and working conditions – albeit with privacy risks when not done correctly and in line with legal requirements. These should be regularly reviewed to ensure they remain relevant to new workplace realities.

Speaking on the publishing of the new research and resources, Eurofound Executive Director Ivailo Kalfin said ‘It is important that Europe is well-positioned to reap the benefits of digitalisation and minimise the risks, to ensure this policymakers should explore pathways to further support digitalisation of European businesses and digital skills development, including making full use of state support linked to the European Commission’s Recovery and Resilience Facility and meaningful engagement with social partners on the issue. Small and medium-sized enterprises, as well as sectors and countries struggling to adapt, should be prioritised in these measures.’

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