The future of work: preparing for automation and the gig economy

The increasingly digitalised world, the sharing economy, and the ongoing developments in automation and AI bring changes to the world of work. Several reports and studies released this month shed light on how these changes could look, how employers and employees perceive them, and what stakeholders can do to better prepare for the new world of work.

UK to adapt legislation to the ‘gig economy’

The so-called gig economy (or sharing economy) has brought new jobs, but also concerns about the rights and protection of people working in these new business models. Governments have started to pay more attention to these concerns, the most recent example coming from the UK.

In July 2017, a report commissioned by the UK government stated that the gig economy brings benefits to individuals (such as flexibility and control over how they work), but the employment legal framework needs to better protect them. Following up on this recommendation, the Good Work plan released this month proposes several measures for ensuring a balance between protecting the opportunities offered by ‘platform-based working’, and ensuring fairness for ‘those who work through these platforms and those who compete with them’. Among them is the introduction of the concept of ‘dependent contractors’ for gig-economy workers, and legal clarifications and practical tools to easily distinguish between employees and dependent contractors.

New insights into the impact of automation on jobs

Concerns about the future of work also come from ongoing technological advancements in automation and AI. Some worry that job automation will lead to significant unemployment rates. Others argue that technological progress will also generate new jobs, compensating for those lost, without significantly affecting employment rates.

PricewaterhouseCoopers’ latest study foresees three waves of automation in the next 20 years:

• Wave 1 – algorithmic (to early 2020s). Based on automation of simple computational tasks, this wave would see low displacement of jobs – around 3%.

• Wave 2 – augmentation (to late 2020s). A ‘dynamic interaction with technology for clerical support and decision making’ will affect more jobs.

• Wave 3 – autonomy (to mid-2030s). Up to 30% of jobs could be automatable.

Throughout all three waves, jobs automation is expected to vary significantly by industry sector, country, and type of worker. Overall, only around 20–25% of jobs in East Asian and Nordic economies are likely to be automated by the mid-2030s, while the percentage rises to over 40% in Eastern European countries. While transportation, manufacturing, and construction jobs are expected to be automated in a proportion of 40–50% by the mid-2030s, human health, social work, and education are less exposed. Highly educated workers will be faced with a lower potential of job automation, and women are likely to be more strongly affected by automation than men in the first two waves.

The report suggests several measures to ‘help people adjust to the new technologies’: education and (re)training, supporting job creation, protecting workers’ rights, and strengthening social safety nets. And, despite concerns about jobs being lost due to technological progress, governments and companies should support and invest in these new technologies. Otherwise, they will miss the opportunity to be at the forefront of technological progress, with negative social and economic consequences in the long run.

What do employers and employees think about AI at the workplace?

While many studies focus on predictions about the impact of automation and AI on jobs, there seems to be less insight into how this impact is perceived by companies and workers. Two studies published this month shed some light on this area.

According to a survey conducted by Willis Towers Watson in 38 countries, over half of the surveyed employers (57%) consider that the main goal of automation is to augment human performance and productivity (as opposed to replace humans to save costs). However, 38% of the employers surveyed declared themselves unprepared to identify reskilling pathways for people whose work is being affected by automation.

Employees seem to be ‘cautiously optimistic’ about the impact of AI on their work. A survey conducted by the Workforce Institute and Coleman Parkes Research in 8 countries found that only 34% of employees are concerned that AI would replace them at some point, while two-thirds would be more comfortable if employers were more transparent about how they plan to use AI in the workplace.

What next?

It is clear that digitalisation, automation, and AI will impact the world of work. So what measures should be taken, and by who, to ensure the future of work is a future we all want and can benefit from? The Global Commission on the Future of Work, established by the ILO, is one of the venues where such questions are being explored. It is likely that these issues will remain in focus for the years to come.

This post was originally published as an article in the February issue of the Geneva Digital Watch newsletter.