New technologies and the labor market: robots or humans

The consequences of technological progress for the labor market is a topic of great and growing interest both in the political and media environment and in the expert research community. In particular, due to fears that shortly new technologies will lead to a significant reduction in the number of jobs and mass unemployment. Regardless of the changes in the labor market, the vast majority of people will be in search of a job and need high-quality resume writing services that can be used online.

Modern labor markets are indeed undergoing significant transformations caused by new technologies. Nevertheless, most researchers agree that expectations of mass technological unemployment as a result of the Fourth industrial revolution seem impossible or at least exaggerated, as shown by analysis of studies on the impact of technological progress on the labor market and public policy in this area.

Industrial revolutions and the threat of mass unemployment

The world has already experienced three industrial revolutions, each of which generated its wave of fears of mass unemployment. Their results were far from such concerns. The decline in the number of people employed in agriculture as a result of technological innovations was offset by growth in industry and the service sector.

The concept of a new, fourth revolution was formed based on the Industry 4.0 report presented by the German government in 2011 and dedicated to the more effective application of new information technologies in the industry. The World Economic Forum 2015 became an active popularizer of the term “fourth industrial revolution”. According to the experts of the economic forum, the fourth industrial revolution can be described as the emergence of “cyber-physical systems” that include completely new opportunities for people and machines. Although these opportunities depend on the technology and infrastructure of the Third Industrial Revolution, the fourth Industrial Revolution represents completely new ways in which technology is introduced into society and even into our bodies. Examples include genome editing, new forms of machine intelligence, new materials, and special management approaches that rely on cryptographic methods such as blockchain.

The technologies mentioned above are still too expensive and not widespread. Nevertheless, according to Klaus Schwab, head of the World Economic Forum, this time everything will be different: technologies will become more efficient and cheaper, so people employed in most of the currently existing jobs will not be able to compete with robots.

It is often possible to automate only many tasks performed by specialists within the same profession. Subsequent studies using a similar methodology, but taking into account such criticism, showed significantly lower risks: only 9% of jobs in the United States are fully replaceable, and about the same in OECD countries. According to a study of the employment structure of the 56 largest economies in the world conducted by McKinsey, this share is generally even lower – less than 5%.

Ideas about the incredible speed of current technological changes are also questioned by experts. A study by experts of the Information Technology and Innovation Foundation (ITIF) shows that in the United States, the total volume of jobs appearing in new industries and disappearing in traditional ones in 2000-2015 was significantly lower than in the 1950s-2000s and earlier.

Nevertheless, all the above studies agree that 40-50% of the currently existing jobs have a significant proportion of processes amenable to automation, this entails a change in job responsibilities in these professions in the future, but not necessarily their abolition.

Polarization in the labor market

As the experience of three technological revolutions shows, changes do not cause unemployment, but significant shifts in the employment structure. The growth of labor productivity leads to an increase in wages, but the latter can be uneven, and some groups of workers benefit significantly more than others.

Currently, the labor markets of developed countries are going through a period of large-scale structural changes caused by the third technological revolution. Since the beginning of the 1990s, there has been a growing demand for jobs with the highest and lowest levels of remuneration: on the one hand, managers and specialists; on the other hand, unskilled workers and workers engaged in public services and trade. At the same time, the share of jobs with national average earnings decreased: office workers, industrial workers, equipment operators. This phenomenon has been called “polarization of the labor market.”

Such structural changes in the labor market of most developed countries are mainly explained by the theory of technological progress proposed by David Autor and colleagues, aimed at displacing routine labor through automation and mass introduction of computers (routine-biased technological change, RBTC). According to this theory, technological progress since the 1970s and 1980s has led to the displacement of workers performing simple and routine operations that can be easily performed with the help of new technologies, that is, office workers and industrial workers.

Although most countries are currently going through this process, there are many exceptions. In China, due to the growth of the industrial sector and the active introduction of modern technologies in agriculture, the share of workers with average wages are growing. To a lesser extent, polarization is manifested in the states of Central and Eastern Europe, such as, for example, the Czech Republic, Estonia, Poland. They have another process associated with the flow of workers from low-paid industrial sectors to higher-paid service sectors. Similar processes with the countries of Eastern Europe are observed.

Spikes in unemployment in certain local and industry markets are quite possible, so government policy on the labor market should be aimed at minimizing the consequences of such spikes. To do this, it seems right to focus on the most effective practices of developed countries: more active cooperation of employment services with human resources departments, the provision of individual services for employees with a high risk of dismissal, the introduction of outplacement (employer participation in the subsequent employment of dismissed employees), etc. At the same time, it is necessary to strive for the development of continuing education systems and to improve the quality of the relationship between the needs of the labor market and the capabilities of the education system.

New forms of employment

Declining demand for many professions and changing work tasks are not the only consequences of technological progress. The structure of employment is being transformed, the share of so-called standard employment, that is, full-time hired work under an official employment contract with social guarantees will continue to decrease. Changes in labor relations in the future are one of the main topics for discussion not only in various national and international economic organizations but also in organizations such as NASA, IBM, Microsoft.

The consequence of the development of technology may be the growth of informal and non-standard employment. Firstly, the portrait of a successful company is changing: various organizations operating based on platforms, such as Uber, Airbnb, Cabify, which have turned into multinational companies with huge revenue in less than ten years, are becoming more and more effective.

Platform companies with only a small part of employees enter into standard labor relations involving the conclusion of an employment contract and social guarantees (annual paid leave, payment of insurance premiums, etc.). At the same time, the bargaining power of employees in platform companies is weakened due to the disunity of employees. The novelty of such labor relations, as well as its specific features, lead to weak social protection of workers.

Secondly, work in traditional companies is also changing: modern technologies make partial, irregular, and temporary employment more accessible and profitable for the employer. Most people who search for temporary employment require help with resume wording as well.