How is digital technology changing the world of work?

Carole ULMER

Director of studies, Confrontations Europe

The digital revolution is compelling us to rethink, and even reinvent, the way we work. Numerous in-depth and divergent debates have taken place about the number of jobs created or lost, the way jobs are changing and even the notion of “worker”. And they have led us to rethink capitalism. We are witnessing a Uberisation of the economy, a robot invasion and a growing number of self-employed workers and “slashers ”. How should we approach the emergence of this new economy which, although it has not materialised everywhere, is clearly occupying our thoughts? What are its characteristics? What questions does it raise in terms of regulation?

How many job losses
The first issue is the number of jobs threatened with extinction. According to a study conducted by Roland Berger Strategy Consultants, three million jobs will disappear in France by 2025 due to the rise in automation and the digitisation of our economy . On the other hand, argues Gunther Oettinger, the European Commissioner for Digital Economy and Society, many new jobs will be created. Today, while no-one agrees on the figures, there is a general consensus that adjustments will be needed across all sectors. So although the postal sector must overhaul its core business, it has more opportunities to diversify, thanks largely to digital technology. However, not all of these opportunities will create new jobs .
Repetitive jobs at risk
The second issue is the impact on the nature of work. The growth of Big Data and automation will not only affect “manual” jobs, but also highly qualified and intellectually demanding jobs. “In the digital age, the more repetitive a job is, the more likely it is to be automated. Insurance brokering is a good example .” According to David Autor of the MIT, machines also make abstract and creative work more productive. To put it plainly, robots could replace a good many solicitors and assist surgeons, but they could not be a substitute for hairdressers.
The employment contract in question
The third issue is the Uberisation of our economy. Work is becoming an object of trade, via digital platforms, and prices and volumes vary over time depending on supply and demand. The relevance of the employment contract – a pillar of our societies – has been called into question by the growth in self-employment. Freedom and entrepreneurship, proclaim some with delight; vulnerability and erosion of the welfare state, say others. While salaried work is still by far the most common , it is questionable whether it still sets the benchmark today. It could be argued that digital technology has eradicated the main advantage of salaried work, namely cost savings on transactions, which is the logic behind any business . Because of these changes, companies themselves are evolving. Business models based on sharing or on free access to goods and services are becoming more widespread. Data are the new black gold; they are more highly valued than many tangible assets. The market capitalisation of Tesla (0.02% of the global automotive market) is equivalent to that of General Motors! Such circumstances create a high probability of sectoral upheaval when the platform – through network effects and reputation – becomes the key market reference and makes a clean sweep (the winner takes all).
The very nature of capitalism is at stake
The potential impact is considerable, in terms of both volume and quality. The debate is legal, sociological, psychological and inherently political. There is widespread uncertainty as to how all these changes will pan out. Some fear there will be more losers than winners. But, as Martin Wolf points out: “A form of techno-feudalism is not what we wish for. Above all, technology itself does not dictate the outcomes. Economic and political institutions do.” In our digital age, it is the very nature of capitalism that is at stake. Politicians are facing a huge challenge because the impact on traditional areas of regulation, such as labour law, competition policy and taxation, is so high. (Oct 2015)

Middle classes facing digital transformation”, Roland Berger Strategy Consultants, October 2014
See the summary of the Digital Lab Workshop hosted by Confrontations Europe on 9 July 2015, www.confrontations.org
Ibid 2
Salaried employment accounted for 90% of jobs in France in 2014 (source: INSEE)
“The Nature of the Firm”, Ronald Coase, 1937

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