More jobs in the end?

Back in 1946, the computer pioneers John Eckert and John Mauchly developed one of the very first computers. [1 https://www.tagesspiegel.de/wi...] They proudly presented it to the whole world – and everyone was thrilled. People were astonished at the things this machine was able to do. The possibilities it opened up were just mind-boggling. Yet even in their wildest dreams few people could have imagined then what a computer would actually be capable of doing in the future.

Over the following decades – in ways that many had not anticipated – technology became more and more sophisticated, and intelligent machines started taking over more and more tasks from humans. They no longer just calculated – they sorted, wrote and even organised. Nowadays, many tasks have already been taken over by computers and machines – and this trend is likely to intensify in the future.

How does digitalisation affect our work?

How much of our work will become digitalised? Which jobs can machines take over? Do they take people’s jobs away? Are they putting us out of work? Or are they possibly triggering a boom in the labour market? Many experts have already addressed these questions – and arrived at different answers.

Frey and Osborne: Machines destroy jobs

The only work that Frey and Osborne regard as incapable of automation is work that specifically depends on human qualities and skills. This sort of work includes activities that require empathy or social and creative intelligence. And, conversely, as far as they are concerned, the less these qualities are required, the greater the likelihood of automation.

Based on these criteria, the two economists looked at 903 different jobs on the basis of their standard descriptions to calculate the chances of their being taken over by machines. They came to a devastating conclusion, namely, that 47 per cent of all jobs in the US labour market were in danger of being taken over by computers – and this would end up eliminating nearly one in two jobs. [2 https://www.brandeins.de/magaz...] Their statistics seemed all the more worrying because they had not taken into consideration the simultaneous creation of new jobs.

German researchers: New jobs thanks to digitalisation

In 2013, Frey and Osborne’s figures caused quite a stir – and met with considerable objection. In 2015, for instance, economists at the Centre for European Economic Research (ZEW) in Mannheim pointed out that many jobs do not just involve a single task, but many different ones. It would be possible to have machines perform only parts of these diverse activities.

This would then enable people to work alongside machines, while continuously adapting and further developing their jobs – so even though jobs would change, they would not disappear entirely. Based on this new assumption, the ZEW researchers recalculated how many jobs would disappear on the grounds of automation.

They came up with entirely different figures: only about 12 per cent of German jobs, and only nine per cent of US ones, are potentially threatened by automation. They explain the difference between Germany and the US by pointing to the fact that a higher percentage of US jobs require a high degree of social intelligence – and the latter cannot be automated.

“Small net effects, large structural effects”

In a second study from 2017, ZEW researchers surveyed more than 2,000 managers in manufacturing and service companies. They wanted to know how far automation was progressing in the respective companies – and they discovered that some jobs had indeed been replaced by machines.

However, investment in machinery had ensured that demand for their products, and hence orders, was increasing – and this in turn had led to more employment than before. Employment was increasing by 0.4 per cent annually, and this brought with it higher wages and a falling unemployment rate. [3 https://www.econstor.eu/bitstr...]

But the jobs created by the new technology were different ones. “Behind the small net effects are large structural effects,” the researchers wrote, meaning that even as the number of jobs increased, the types of job changed – and so did the people who filled them. Those individuals who lost their jobs because they were not capable of carrying out the newly required work probably did not regard the 0.4 per cent increase in jobs as much of a consolation.

IAB: A completely digitalised working world

The Institute for Employment Research (IAB), the creator of the Job Futuromat, has also occupied itself with digitalisation and its effects on the labour market. In their study, the Institute’s researchers took into account the findings of their colleagues, keeping in mind that jobs are disappearing and that the specific requirements within jobs are changing, but also that entirely new tasks and products are emerging. The researchers developed a scenario in which Germany’s working world is fully digitalised.

This complete digitalisation would eliminate no more than around 30,000 jobs. Admittedly, an additional 1.5 million jobs would also disappear as a result of this change, particularly in factories and other manufacturing businesses. But, at the same time, 1.5 million new jobs would be created, especially in the “communication and information” and “education and teaching” sectors. There would be no complete substitution – that is, the replacement of human work by computers.

British experts from PricewaterhouseCoopers (PwC) saw things similarly: in a study published in February 2018 [https://www.pwc.de/de/digitale...] they concluded that while automation would be a major disruption to the international job market, and some jobs would be lost in the process, many new jobs would be created at the same time. The overall effect on the economy as a whole would be positive.

Threat or opportunity?

It is not yet possible to assess whether the researchers are right. To be sure, digitalisation has already begun and its effects are certainly visible: jobs in the manufacturing sector, for example in metal and plant construction, have been lost. At the same time, however, new jobs have been created in the IT sector, in the natural sciences, in the media, in teaching or in the catering trade.

If this development continues, those pessimists like Frey and Osborne who fear redundancies – that is, job losses due to digitalisation – would be proven wrong. Optimists like the ZEW or IAB researchers who believe in a compensating generation of new jobs – that is, in a direct replacement of the lost jobs – would be proven right.

For them, digitalisation is not a threat but a great opportunity.

Bibliography and sources

Frey, Carl Benedikt; Osborne, Michael (2013): The Future of Employment: How Susceptible are Jobs to Computerization?, Oxford Martin School (OMS) working paper, University of Oxford, Oxford.

Bonin, Holger; Gregory, Terry; Zierahn, Ulrich (2015): Übertragung der Studie von Frey/Osborne (2013) auf Deutschland, ZEW Expertises, ZEW – Leibniz Centre for European Economic Research, Volume 57, No. 123310.

Wolter, M. et al. (2016): Wirtschaft 4.0 und die Folgen für Arbeitsmarkt und Ökonomie, IAB-Forschungsbericht 13/2016, IAB, Nürnberg.

[1] „Rechnen mit Röhren“, Tagesspiegel, 9 May 2016: https://www.tagesspiegel.de/wi...

[2] „Das Reich der Freiheit…“, Brand Eins, 2014: https://www.brandeins.de/magaz...

[3] „Digitalisierung und die Zukunft der Arbeit: Makroökonomische Auswirkungen auf Beschäftigung, Arbeitslosigkeit und Löhne von morgen“, Zentrum für europäische Wirtschaftsforschung GmbH, 2018: https://www.econstor.eu/bitstr...