18/02/02 The impact of new technologies on the labour market and the social economy

According to the European Parliament study on the impact of new technologies on the labour market and the social economy, machines are taking over tasks as soon as they become routine, such as office tasks that are now automatized, putting low – medium-skilled jobs at risk. This indicates that in future, labour will most likely undergo a reorganization that favors platform work; project structures with an increase in tasks contracted and performed over platforms outside a firm. Technological change tends to favour high-skilled, non-routine or low-routine occupations, while it reduces employment opportunities in low-skilled and routine occupations. 

Policy options
There are several policy options that could be implemented in order to negate any negative consequences of these digitalization trends in employment: Investment in education and re-skilling the workforce; Focus on research and development (R&D), as it helps firms build up competences and is therefore a driver of competitiveness and employment growth; Entrepreneurship as a policy; European ecosystems have not yet generated an equivalent to Amazon, Facebook or Google; Upgrades for the Internet network infrastructure, currently there is still an imbalance between Western and Eastern European infrastructure, equal access to connectivity needs to be ensured.

Tax overhaul
The options for policy change in our current tax systems include: shifting from labor to taxation of capital and value added; Taxing the super-rich or implementing a universal basic income are other options, although both options remain controversial; ‘Flexicurity’: Employment regulations will also need to adapt as there is already strong demand for flexible labor markets, yet security for employees.

Digitalization is set to revolutionise societal structures, as swathes of employment comes under threat from automatization. Nonetheless, there are numerous policy options to steer the process, by investing in education, infrastructure, and R&D, and adapting labour legislation and tax and social security policies to digitalisation. Perhaps most important is to think of digitalisation not as a threat, but as an opportunity to increase welfare and social cohesion for all European citizens.