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Digital Transformation vs jobs

Impact of various factors on jobs growth and loss in this and next decade. Credit: WEF

At the EIT Digital Italy Innovation day I was asked to share some thoughts on Digital Transformation and its impact on jobs.

This is a topic I have been addressing for quite a while and I also socialised here and there on this blog (just search for “jobs loss”). It gave me an opportunity to look at the topic in a fresh way and taking a broader view.

Many people, hooked up by news headers, tend to focus on the dichotomy “automation=job loss”. It makes sense of course. If we automate something, be it with a robot or with a software, we no longer need a human to carry out that job, i.e. automation leads to job losses. On the other hand, some are claiming that automation is actually freeing resources (both workers and money since automation decreases cost) and this leads to job creation.

Taking a broader view, as shown by a study published by the World Economic Forum, we can see that the work-scape is much more complex. Looking at what job impact factors are at play in the ten years between 2015 and 2025 we are in for some surprise (see the graphic).

The growth in demographic of youth people, particularly in emerging markets is going to fuel an increase of jobs opportunity, likewise the growing role played by women in the workspace. Growing urbanisation is also increasing the number of jobs. The first two factors derive from the drive of young people and women to be main actors in creating wealth, hence they create jobs in the process. The third one is a side effect of bringing resources (humans) in touch with effective infrastructures (the ones provided by cities that clearly better the rural ones).

Technology is also fuelling an increase in jobs opportunity, particularly the ones related to smart materials, nanotech, wireless communications, (big) data.

Automation and robotics are also creating some jobs but just marginally, 1.36%.

What might be surprising is that artificial intelligence is seen as a strong factor in job decrease as well as political instability.

Notice that this study is not saying that there won’t be job losses due to automation, it is just stating that in this specific period, 2015-2025, the number of jobs affected by automation will have a positive balance. It does not say, as well, that those people that will lose their jobs because of automation will be finding a new one.

Overall I am in synch with this results: speaking with several people in the manufacturing industry I heard over and over that the automation that tool place in the last twenty years has basically reached a plateau beyond which it makes little economic sense to go (still there is a -0.36% job loss foreseen as impact from advanced manufacturing and 3D printing). Hence the number of blue collars is bound to remain basically unchanged in the future and there will be more jobs to look after the progressive integration of robots.

On the other hand, the progress of artificial intelligence is undercutting the need for white collar workers. These have not been affected, in general, by automation in the last twenty years but are now going to feel the heat brought forward by AI. Notable, although more limited in its impact, is the negative effect of longevity and ageing societies since elderly people, like me, tend to stay more on the job hence limiting the access to younger people.

Quite significant, at least to me, is the negative role that political volatility can have on jobs, -2.69%.

What I think is important to highlight is that the Digital Transformation is the result of tech evolution (both performance and economic evolution) and its close ties with societal implication, each one feeding back on the other. Hence most of the factors presented in the WEF study are one way or another connected to the Digital Transformation. New labour opportunities stimulated by youth in emerging markets and women higher participation in the work market are strongly related to the lowering of entrance barriers resulting/fostered by the Digital Transformation, the improved urban infrastructures are fostered by the DT and so on. More of this tomorrow.

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the New Initiative Committee and co-chairs the Digital Reality Initiative. He is a member of the IEEE in 2050 Ad Hoc Committee. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.