The digitization of work: toward mass unemployment or renewed prosperity? (Note)

1. A turning point due to Covid-19

Teleworking has been technologically possible for at least a decade. However, it was only a marginal practice until the Covid-19 pandemic struck, with only 5% of working days being spent outside the office. Since March 2020, it has become the norm in many skilled professions, and it is predicted that 20% of working days will continue to be carried out remotely after the crisis ends. Companies have put in place the necessary infrastructure to move professional interactions into the digital space and have invested heavily in technologies to automate tasks where possible.

2. Remote working improves the well-being of white-collar workers in the short term

Employee surveys reveal that most of the workers concerned are satisfied with remote working: the annual teleworking barometer produced by Malakoff Humanis reveals that 86% of French teleworkers in 2021 wish to continue this practice after the health crisis (49% on a regular basis and 37% on an occasional basis). Among the most frequently cited benefits are increased flexibility in working hours, reduced commuting time, and the ability to live further away from the workplace. These characteristics are particularly beneficial for women, as several studies have shown that work-life balance plays a more important role in their choices and can sometimes penalize them in terms of salary and career trajectory.[1] In the short term, most employees are still expected to be physically present at the office two to three days a week. It is therefore expected that many skilled workers will move to the outskirts of cities while remaining in the same employment pool, allowing them to afford larger homes that are better equipped for working from home.

3. The threat of mass unemployment in the medium term

In the medium term, the need for companies to hire local workers may decrease as new technologies improve the quality of remote collaboration. For example, new virtual reality tools are increasingly replicating the experience of face-to-face interactions, and improvements in translation software are reducing the need to hire workers who speak the same language. These innovations could encourage companies to relocate skilled jobs to other countries where labor costs are lower, as happened with manufacturing jobs in the 1980s and 1990s. Richard Baldwin has called this phenomenon « telemigration. » At the same time, recent advances in artificial intelligence have made it more efficient than humans in tasks that no one could have imagined just a few years ago. In particular,Artificial Intelligence(AI) is capable of quickly analyzing large amounts of data and detecting underlying trends, enabling it to formulate legal advice by reviewing case law, diagnose diseases by comparing symptoms with previous medical records, and make financial investments based on the predictive power of market indicators. These tasks were previously the preserve of skilled workers, who may soon face increased competition from both telemigrants and AI.

4. Public policies for renewed prosperity

However, this bleak scenario is not inevitable. Previous experience has shown that migrants and robots are not necessarily direct substitutes for local labor, but can be complementary in many ways. Many professions that are common in today’s labor market did not exist 50 years ago and were created in response to previous waves of technological change.[2]The biggest challenge lies in the fact that digital technologies are developing at an exponential rate and therefore require rapid adaptation on the part of society. Education systems need to be reoriented towards skills where humans will retain a clear comparative advantage over machines, and towards sectors where local knowledge and personal interactions matter most. Investing in higher education may no longer be enough to guarantee a prosperous future. Future generations must be trained in skills such as creative thinking, people management and care, and ethical behavior, for which robots are much less capable than humans, and geographical proximity is essential. The existing workforce must have access to good social safety nets and retraining programs that promote career changes. Finally, if large companies are going to move away from traditional employment contracts to a production system based primarily on technology and subcontracted labor, it will be necessary to implement a progressive tax system and new labor regulations to prevent an explosion of inequality.

Sources

Autor, D., Salomons, A., & Seegmiller, B. (2020). New Frontiers: The Origins and Content of New Work, 1940–2018. MIT Mimeo.

Baldwin, R., & Forslid, R. (2020). Covid 19, globotics, and development. VOX EU.

Baldwin, R. (2019). The globotics upheaval: Globalization, robotics, and the future of work. Oxford University Press.

Barrero, J. M., Bloom, N., & Davis, S. J. (2021). Why working from home will stick (No. w28731). National Bureau of Economic Research.

Batut, C., & Garnero, A. (2020). The impact of COVID-19 on the world of work: telemigration, relocation, environment. Le Grand Continent.

De Fraja, G., Matheson, J., & Rockey, J. (2020). Zoomshock: The geography and local labor market consequences of working from home. Available at SSRN 3752977.

Farré Olalla, L., Jofre Monseny, J., & Torrecillas, J. (2020). Commuting time and the gender gap in labor market participation. IEB Working Paper 2020/03.

Le Barbanchon, T., Rathelot, R., & Roulet, A. (2021). Gender differences in job search: Trading off commute against wage. The Quarterly Journal of Economics, 136(1), 381-426.

Malakoff Humanis (2021). Annual Telework Barometer 2021