Discussion Paper

No. 2018-28 | March 22, 2018
The future of work: how G20 countries can leverage digital-industrial innovations into stronger high-quality jobs growth
(Submitted as Global Solutions Paper)

Abstract

A new wave of innovation is beginning to disrupt industry on a global scale. It constitutes a tremendous opportunity for faster productivity growth, but also a potential disruption to a number of economic sectors and to job markets. Academic research and the public debate have focused mostly on the threat that innovation poses to jobs and wages. This paper instead suggests that (i) these same technological disruptions make human capital more important than ever for companies’ strategies; (ii) greater attention needs to be devoted to new forms of complementarity between new technologies and human capital. While some jobs will be displaced, the greatest impact of innovation will come in the way that many jobs will be transformed; the evidence to date supports the authors’ view that innovation will once again result in more and better jobs—but much work needs to be done to optimize the transition. In particular, more effort should be devoted to (i) understanding what new skills will be needed, and how existing jobs will change; (ii) upgrading education and professional training schemes; (iii) reforming labor market institutions to support a future where a larger share of workers will change jobs and employers more frequently, and more people will work independently in a crowdsourcing or “gig economy” framework; (iv) reforming social benefits systems and bolstering social safety nets to smooth the economic transition and cushion the impact on the worst-affected workers. As innovation disrupts a growing number of industries, human capital strategies will need the collaboration of companies, educational institutions, governments and multilateral policy agencies. This paper presents an analysis of the challenges, addresses the key areas of action, and puts forward some specific proposals, including policy actions, industry initiatives, and further research projects. The authors argue that the G20 could and should champion a comprehensive approach to leverage digital-industrial innovations for faster job creation and growth, with measures to re-align demand and supply of skills, labor market reforms, redesigned social safety nets, measures to promote digital innovation and facilitate the adoption of skills-augmenting technologies. Private sector companies should strengthen training programs. International cooperation, standards harmonization and interoperability will be essential to maximize the benefits and minimize the disruptions—the G20 can therefore play a key role.

JEL Classification:

J20, J23, J24, J62, J68, O32, O33, M5, I28, E24, D24

Assessment

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Links

Cite As

Marco Annunziata and Hendrik Bourgeois (2018). The future of work: how G20 countries can leverage digital-industrial innovations into stronger high-quality jobs growth. Economics Discussion Papers, No 2018-28, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2018-28


Comments and Questions


Anonymous - Overall topic
April 25, 2018 - 10:55

Digitization is a threat to employment opportunities. Robots are likely to take up the traditional works done by the humans.The topic is interesting.


Anke Schulz - Ludwig-Maximilians-Universität, Munich - Referee report
April 27, 2018 - 21:46

see attached file


Marco Annunziata and Hendrik Bourgeois - Response to report
June 18, 2018 - 10:28

First of all, we would like to express our thanks for the very thoughtful and perceptive referee comments. We have strived to address them all in the attached revised draft, and believe they have substantially strengthened and improved the paper. Here we would like to offer just a few words ...[more]

... of explanation in response to the referee report.
• We have tried to clarify our stance that while the existing literature has made important progress in showing how innovation will disrupt a growing number of occupations through the automation of specific tasks, more research is needed to better understand the ultimate impact on jobs, and in particular to identify steps that individuals, firms and governments can take to better manage the transition—in line with the referee’s suggestion, on which we fully agree
• Concerning the Frey and Osborne study, we did not mean to suggest that we had chosen to adopt a simplistic interpretation of the study. Rather, we meant to say that the simplistic interpretation has dominated the media and public debate on the issue. We have tried to clarify this, including by rephrasing and rearranging the arguments along the referee’s suggestions. We do feel, however, that too often the researchers themselves play into the hands of the simplistic interpretation, as it is an affective attention-grabbing strategy; this is just our personal view, however, and we have kept it out of the paper.
• We have provided additional detail on the key findings of the McKinsey studies and how they relate to the literature.