How new technologies are changing the labor market

 How new technologies are changing the labor market

How we work will change significantly in the coming decades. In the first part of our weekly series on the labor market of the future, we show what role technology will play in this.

Smoke rises from the chimneys of the factories, carried away by the wind. Lights are still burning in the windows of the halls, they are reflected in the Weser. Bremen is a Hanseatic city and not primarily known for industrial romance. But the industrial revolution has also fundamentally changed people's everyday work in the north. The scene can be seen in a historical photo showing the Bremen wool combing mill. Raw wool was processed here by machine, made possible by technological achievements such as the steam engine. The company was founded in 1883 as a stock corporation and for a long time was the workplace for several thousand people. Production stopped in 2009.

Since industrialization, the labor market has changed significantly several times, and according to forecasts, the next major change is imminent in the next few decades. It is primarily influenced by three phenomena: globalization, demographic change, and technological progress. Exactly how this happens is the subject of this series.

 

In recent decades, companies have outsourced their production to low-wage countries, for example in the textile industry. The trend towards globalization is still there but has been weakening for some years. Demographic change, on the other hand, is only just picking up speed: When the baby boomer generation retires, this can have far-reaching consequences for the labor market and the German social security systems.

Technological advances will also make great leaps in the coming decades. In the 18th century, it was the loom and the steam engine that ushered in a new era – today the drivers of change are digitization, robots, recognizing social intelligence (AI). There is talk of the fourth industrial revolution. It is intended to automate factories more and more and ensure that they can be operated largely without people.

However, there are different views on how much the world of work will change. The scientists Michael A. Osborne and Carl Benedict Frey from the University of Oxford caused a sensation in 2017 with a study. Every second job in the United States is at risk from digitization, they wrote. Other scientists do not see it so dramatically, and according to a representative survey by the industry association Bitkom, a majority (62 percent) of Germans also see AI as an opportunity rather than a threat.

According to Enzo Weber, the fear of mass unemployment as a result of the new technology is not rational. Weber is Professor of Empirical Economic Research at the University of Regensburg and heads the Forecasts and Macroeconomic Analysis research department at the Institute for Labor Market and Vocational Research. "Many jobs that people did 100 years ago are now being taken over by machines - according to this logic, we should all be unemployed by now," he says. It is common for jobs to disappear and new ones to be created. However, this involves considerable effort. Finally, employees must be prepared for the new demands of the labor market.

Weber cites the years of the economic miracle of the 1970s as an example of such an adjustment. At that time, the largest group in the German labor market was that of unskilled workers, most of whom had no professional training. “Millions of these jobs have disappeared over time, and higher-skilled workers have emerged,” he says. "Nevertheless, unemployment among the low-skilled rose enormously back then, to over 25 percent." That was a problem of the lack of adjustment, but not the number of jobs. According to Weber, in order to master the changes that are now imminent, continuous support is needed for qualification.

EDUCATION AS THE KEY TO SUCCESSFUL CHANGE

That could look very different. Some employees could change within their industry, then there would be no need for new vocational training. If you do a new apprenticeship anyway, qualifications from your previous professional life can be recognized. But larger breaks such as retraining as a nurse are also conceivable, says Weber. The Federal Employment Agency promotes this with programs. That has already happened on a relevant scale, says Weber, so that positive effects on the labor market could be proven. According to Weber, there cannot be a general recommendation. "It's a question of individual careers advice, you have to look at the individual case." In addition to the training and further education offers, advice and financial support are important to successfully manage the change.

According to Weber, jobs in the manufacturing industry, such as material processing or the operation of machines, are particularly affected. "But office and commercial service jobs such as finance or accounting are also affected, combined with a high proportion of routine tasks that are comparatively easy to program." Jobs in IT, science, and teaching, on the other hand, would increase, as would jobs that are difficult to automate, such as in the social sector.

Some industries are changing more than others due to new technologies. In a photo series, we show where promising inventions are already being used today and what part Bremen is contributing to their research: