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The “post-pandemic” disruption has dramatically affected a seemingly stable employment’s basic fabric; modern political economy shall include in their strategies new trends in the evolving workers’ socio-economic issues. By developing new political and economic models, all already apparent and not so clear changes on employment and workforce’s issues affecting the labour market shall be taken into consideration. Complexities of the needed reforms involve the multiple effects of the digital and “green growth” transformations on present governance and decision-making.
Dramatic transformations in workforce through the present pandemic have become a serious problem for the governance and the humans. Both are facing with an unprecedented task, i.e. to accommodate the age-old quest for job with the “meaning of life”, the sense of community and new growth pattern; and all that under disruption by the post-pandemic outcomes…
For a proper understanding of the labour market changes, the “social actors” and decision-makers have to take into consideration at least two issues: a) generally new trends in the labour market, and b) consequential changes in the labour unions; both issues will be dealt with in the EII’s publications.
About the Institute’s research project concerning the “life after pandemic’s” issues in: https://www.integrin.dk/post-covids/. The first article in the series can be seen at:
https://www.integrin.dk/2020/09/11/post-covids-political-economy-facing-inevitable-changes/
Labour market: five things one shall know about modern transitional complexities
Since the beginning of the COVID-19 pandemic, the new trends in the employment structures and the labor market have shown the need for “accommodating” the old employment perceptions to new ones, requiring the need for changing approaches to education and training, with the attention to digitalisation, artificial intelligence (AI) applications, as well as to changes in corporate strategies and national growth priorities.
Besides, a novice labour issue has become of utmost importance in the “post-pandemic” area: the “working life has entered a new era”, which signified a historic-type transformation from a “farewell BC” (before coronavirus) to a “welcome AD” (after domestication).
Source: the Economist (28.05.2020/Bartleby), in: https://www.economist.com/business/2020/05/28/working-life-has-entered-a-new-era
Some trends are already visible in the perspective labour market transformations; among them are the following “five things”:
– “Labour image” is getting more personal and social: young graduates are being intensively looking for jobs in companies delivering on innovation, social responsibility and sustainable growth. In this way “new labour” could meet two ends – a personal carrier and corporate values; therefore in future, most young workers will stick to occupations connected to sustainable growth.
– Labour markets are affected by demographic changes: e.g. in the Nordic countries presently life expectancy reached 79 for men and 83 for women; that brings more seniors into employment. Although a retirement age is increasing in Europe, it is making about 25 years or so in active work to get a sufficient retirement.
– Flexible employment strategy enters national labour market policy with the apparent changes from a “fixed-for-life” employment to a kind of “non-typical” working conditions. It is becoming a common place to combining several occupations and a freelance employment (pro bono type) as part of “lose-structured” workforce. The long-term isolation during pandemic only signified the fact that some citizens would never return to their previous jobs, and that they would rather be “their own masters” and work from home…
– Increasing need for various types of digital skills: previous so-called “traditional functional competences” shall be fundamentally changed, and re-skilling shall be a “new norm” for most workers. That could also mean that through the employment career a successful worker shall be re-trained four-fife times. Besides, corona-epidemics have shown that the main direction in such re-training shall de along the digital science and technology transfers.
– Some new professions shall appear in teaching, training and proficiencies, e.g. dealing with the business technology, corporate social responsibility, and management processes using algorithms and other software means finding solutions through closer cooperation cross-functional teams with the customers. Greater role of artificial intelligence (AI) and robotics is finding way in the entrepreneurship culture and business technology: the ideal AI can help to rationalize and take actions to achieving better results as algorithms –in association with a human mind –can be best both in learning and problem-solving. Presently, the AIs include a number of “human-business abilities”, such as learning, reasoning, perception, behavior and decision-making, etc. being successfully employed in different industries including finance and healthcare.
Digitalization’s effect
In an effort to resolve a modern “digital vs. traditional work” dilemma, one has to remember that humans originally possess two kinds of “abilities” –physical and cognitive; the latter is connected to perceptions, awareness, emotions and judgment. Contemporary digital appliance and algorithms, including artificial intelligence (AI) and robotics outperform humans in an increasing number of skills and professions. Hence, the humans’ dominance in the labour market is under constant threat to be substituted by “wise & clever” machines. Modern science, however, has revealed that several so-called “sovereign” human abilities (i.e. emotions, desires, preferences and choices, to name a few) are nothing else than just bio-chemical reactions in human brains, which can be performed by AIs and even in a much better and efficient mode; hence, the appearance of such research directions as behavioral economics active “accumulation” of human perceptions by online advertising services, e.g. Facebook or LinkedIn.
It’s true: the neuron-physics and brain researchers have established that behind human decisions as consumers, for example, is the result of neurons combination’s activities, which can be in principle turned into biochemical algorithms. In this way the AIs can not only outperform humans in some kind of “emotions and intuitions”, but calculate options and probabilities and making human “work” obsolete by computing into algorithms human abilities, and making all that better, efficiently and quicker! That is another line of perspective research: combining ICTs with bio-technologies, which would outperform in future such previously regarded as unique the workers’ abilities of connectivity and updatability… Even such spheres of human dominance as music composition can be rather easily turned to AI: an appropriate algorithm can transform “input & output” into a computer program; using a person’s biometrical data, algorithms melodies “compose” a personalized tune.
It is obvious that some professions are more susceptible to AIs: e.g. physicians (in diagnosing known diseases and managing familiar treatments), pilots on local lines (by using drones), banking assistants and accountants, etc. showing a perspective trend of “cooperating” humans with AIs and algorithms.
With the help of AIs, it would be easier to create new jobs than providing a constant vocational retraining; the perspective that is already visible presently with unemployment and a shortage of needed skills. Besides, the “labour volatility” can make it difficult for labour unions to secure membership as many new jobs are taken by freelances and temporary workers; with professions which are quickly rotating once a decade, the unions shall be quickly adapting adequately… In a couple of decades “professions-for-life” would be useless, and jobs on one place for entire life even more improbable.
All the digital impacts, as well as that of AI and robotics, could be unpredictable for the workforce and socio-economic development; however, the positive outcomes would depend on both the cultural traditions and political environment: due to some reasons, even the most promising (visually) decision-making could be nevertheless blocked by political-economy’s interests and disruptions.
More in: Harari Y. N. 21 Lessons for the 21st Century. Spiegel & Grau, New York, 2018. Chapter “Work” (pp. 19-43)
Reducing youth unemployment
The problem is serious enough: youth unemployment in the EU states is twice as high as the general unemployment. The decision-makers have to realize that a quick and smooth transition into a first job is essential for young people’s careers and working lives. However, the economic recession as a result of COVID-19 has affected the younger generation in particular, disrupting their education and their entry into the jobs market.
Entry-level jobs have largely disappeared and recruitment processes are being delayed. Among the urgent issues are the ones to support effectively young people’s transition to work during the pandemic – and beyond – and contribute to a more inclusive recovery. With this objective in mind, the European Commission presented already in July 2020 a youth employment support package “A Bridge to Jobs for the next generation”.
Moreover, during the German Council Presidency in the second half of 2020, some key decisions were adopted such as the reinforced Youth Guarantee, the Skills Agenda, and a proposal for a Council Recommendation on vocational education and training.
It is recognized that implementation is the key to success; thus partners from a European “StartNet project” decided to share their experiences and feedback for improved policies and practices with a view to providing all young people with the opportunities they deserve. Four key issues are covered: social inclusion, orientation and career guidance, key competences, vocational education and apprenticeships.
Note: StartNet Europe provides a European platform connecting initiatives on young people’s transition from education to employment from Austria, Belgium, Finland, France, Germany, Italy, Romania, Slovakia, Spain and Switzerland. The aim is to exchange good practices, to learn how to overcome common challenges and to support collective goals and interests. Source:
https://www.start-net.org/en/startnet-europe
Changes in the labour market
During last two decades, i.e. since 2000, both spending on travel, food, and entertainment, as well as employment in leisure and hospitality (the large category including restaurants, hotels, bars and amusement parks) have been increasing three times faster than the rest of the labor force. Now the situation has changed dramatically: the rise of home-bound workers increasing more than anything else at the expense of other “sectors”. Most in business follow the old pattern: “travelling” from home to a workplace; now the pattern is changing as home has become a workplace…
Emptier offices mean fewer weekday lunches at restaurants, fewer happy hours, as well as fewer window shoppers, not to mention less work for office buildings’ cleaning, security, and maintenance services; just as it happened in retail: Amazon with e-trade has changed the old “shopping habit” for good. Curious enough, the UK’s government labour office is called now the Department of Works and Pensions!
Unemployment in the first half of 2020: In the euro area the unemployment rate increased for the fourth consecutive month, to 7.9%, with increases of 0.3 percentage point or more in France, Ireland, Italy and Portugal. The OECD youth unemployment rate (people aged 15 to 24) remained 4.9 percentage points higher than at the start of the pandemic but still more than twice as large as for the over 25-year-olds.
Many companies have discovered that their employees feel overworked and under-productive, emotionally depleted, and existentially exhausted. Although some of that is COVID-19 fallout, it’s also the case that people feel more alone in part because, literally, they are. Working from home has weakened both the connections to the office and to the world outside the offices.
Remote experiment through LinkedIn, Instagram and Twitter, to name a few, has weakened the bonds between workers within companies and strengthened the connections between some workers and professional networks outside the company. References to: https://www.theatlantic.com/ideas/archive/2020/08/just-small-shift-remote-work-could-change-everything/614980/
In short, a new entrepreneurship is born: with ambitious engineers, media makers, marketers, PR people, etc.; most are inclined to be on their own in order “to monetize on their independence”. Remote work weakens traditional workforces’ bonds; although the consequences of that are not yet fully known, the immediate side effect is clear –a lot of office premises are on massive lease!
For example, in the UK only 34 percent of office workers are presently working in their normal location (according to Morgan Stanley); in France, Germany, Italy and Spain the figures range from 70 to 83 percent. Besides, in London, nearly half of office staff is working from home five days a week, compared with just 20-30 percent in the financial hubs of greater Paris, Frankfurt, Milan and Madrid.
During the last decade of the digital technologies’ proliferation, e.g. artificial intelligence (AI), machine learning, cloud and blockchain, to name a few, a new sphere of research and analysis has emerged about the “employment’s future”. During several previous centuries “work” was largely understood in terms of the technological transformations with the appearance of such “workers’ categories” as blue-collar, white-collar, industrial, agricultural workers, as well as those in manufacturing, and services. Then, a dramatic “digital revolution” since the end of XX-century has revealed that the “work” can be completely different from what was known before: e.g. numerous internet-based service companies (e.g. Uber and Swiggy, to name a few) provided people with remuneration without even being formally employed on an expanded dimension.
That’s a new reality of “rethinking work”: e.g. with expanding “social contracts”, re-writing relationships between individual worker within a company and even a society, and shifting the corporations’ role in the rapidly transforming socio-economic systems to unexpected domain. Reference to:
https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_740893/lang–en/index.html.
As the pandemic resets major work trends, so the “human resource’s” leaders, so-called HRL, need to rethink workforce and employee planning, management and performance strategies. The coronavirus pandemic will have a lasting impact on the future of work in several key ways: the imperative for HRL is to evaluate the impact of new trends on the organization’s operations and strategic goals, identify which would require immediate action and assess to what degree these trends change pre-COVID-19 strategic goals and plans. Just an example: about 32 percent of organizations in developed states are replacing full-time employees with contingent workers as a cost-saving measure… More in: https://www.gartner.com/smarterwithgartner/9-future-of-work-trends-post-covid-19/
As a new trend, increased remote working has been apparent even before the pandemic, i.e. due to digital transformation; with the COVID-19, about half of the employees will work remotely versus about 30 percent before. Shift to remote work-pattern would force employees to get used to new type of work condition and circumstances, which would require fundamental retraining to be fully equipped for a “remote context”. Employers’ attitude would change adequately: from new technologies to monitor their employee’s engagements: e.g. through virtual “clocking” and tracking computer usage, to monitoring employee emails and/or internal communications.
As to “work expansion” versus cost-saving measures, companies would still expand the use of “contingent workers” to maintain more flexibility in workforce management in post-COVID and introducing new job models: e.g. “pay for a piece of work done” (replacing full-time employees with contingent workers with a new type of employment contract).
Some already predicted that within five to ten years up to 50 percent of the workforce will permanently work remotely; hence, companies’ leadership has to consider the inevitable changes and design the new workflows. As the pandemic subsidies’ increasing, there will be an acceleration of mergers and acquisitions (as well as nationalization of companies). At the same time, corporate entities would be forced to expand their geographic diversification and investment in secondary markets to mitigate and manage risk in times of disruption. This rise in complexity of size and organizational management will create challenges for leaders as operating models evolve. Source: https://www.gartner.com/smarterwithgartner/9-future-of-work-trends-post-covid-19/
On-going developments such as automation and digitalisation of production and services continue to reshape the labour markets. Job-to-job transitions are becoming more frequent and many young people shift between employment and unemployment or inactivity or are trapped in precarious non-standard forms of employment. In particular, young people are overrepresented in non-standard jobs such as platform or “gig” work, which may lack access to adequate social protection. Moreover, young people are at higher risk than others to lose their jobs to automation, as entry-level jobs tend to have a greater proportion of automatable tasks.
In addition, the broader European “twin transitions” towards more digital and greener economies will offer new opportunities as new jobs are likely to be created in these sectors. However, this requires that young people have the right skills to adapt to evolving job requirements. Digital skills, skills needed for the green transition alongside soft skills, such as entrepreneurial and career management skills, are expected to grow in importance.
Investing now in the human capital will help future-proof social market economies: an active, innovative and skilled workforce is also a prerequisite for Europe’s global competitiveness.
In particular, as over 90 percent of jobs today require already digital skills, the Commission proposes to assess the digital skills of all unemployed who register by using the European Digital Competence Framework (DigComp) and the available self-assessment tools, ensuring that, on the basis of gaps identified, all young people are offered a dedicated preparatory training to enhance their digital skills.
For example, the European “green deal”, as the EU’s new growth strategy to transform the states into prosperous growth paths along modern, resource-efficient and competitive economies with no greenhouse-emissions by 2050 and where economic growth is decoupled from resource use. It puts sustainability and the well-being of our citizens at the centre of our action.
On another side, the EU’s “circular economy action plan” with cleaner and more competitive economies has set out actions to achieve the decoupling of growth from resource use by, inter alia, placing a strong focus on the need to acquire the right skills, including through vocational education and training. The transition to a clean and circular economy is an opportunity to expand sustainable and job-intensive economic activity, thus supporting recovery. Given that the greening of the economy is shaping skill requirements in multiple ways, it is crucial for the states to draft policies that will support people in harnessing the new opportunities to complement skills needed for the green economy. The strategies for SMEs shall include sustainable and digital proficiencies as already at present an increasing number of SMEs is confronted with the challenge of finding the necessary skilled staff.
Source: Communication from the Commission “SME Strategy for a sustainable and digital Europe”, COM/2020/103 final.
Entrepreneurial education and training that enhances business knowledge and skills play a key role in making SMEs fit for the competitive markets; besides, young people can be offered a preparatory training to enhance their entrepreneurial skills using the tools and modules developed under the EU’s “Entrepreneurship Competence Framework” (EntreComp).
Changing “working habits”: work-from-home, WFH
For decades people were arguing that a lot of work done in large offices shared by many could be better done at home; with covid-19 these ideas seem to have a practical outcome. This does not mean that changes are quick to come and that WFHs are here already; but debates are going on, so both the corporate entities and decision-makers have to take the issue seriously.
However, the latest data suggest that only 50 percent of people in five big EU states spend every work-day in the office, while a quarter remains at home full-time (see table below). It also appears that working from home can make people happier: a paper published in 2017 –long before the pandemic – in the American Economic Review found that workers were willing to accept an 8 percent pay cut to work from home, which suggests that it gives them non-monetary benefits.
The Economist also mentioned that governments are taking efforts in encouraging people “back to work”, which means “back to the office”, the fact that office-working must be more efficient than home-based work both for firms and for workers. By this logic the success of a country’s recovery from lockdown can be measured by the number of people back at their desks (i.e. still only about 4 percent of full-time employees in the UK usually work from home). Before covid-19 the world may have been stuck in a “bad equilibrium” in which home-work was less prevalent than it should have been. The pandemic represents an enormous shock which is putting the world into a new, better equilibrium”, the Economist argued.
For example, Gitlab, a software company, has been “all-remote” since it was founded in 2014; with no offices, it managed to gather together 1,300 “team members” living in 65 different countries (at least once a year they get together for team-bonding). Several companies, such as Teemly, Sococo and Pragli offer “virtual offices”, which is making it easier to communicate with colleagues, rather than going through a complicated system of video conferences.
Source: https://www.economist.com/briefing/2020/09/12/covid-19
Labour issues in politics
Socialists and democrats (PES group in the European Parliament, EP) are the most vivid supporters of the perspective labour force in the EU: this group in the EP, e.g. strongly backed the Commission’s proposal on financial support for unemployment risks that workers could receive a needed help.
More than that, a specific “instrument” has been suggested, i.e. “Support to mitigate Unemployment Risks in an Emergency”, SURE was initiated at the beginning of the coronavirus crisis with the aim of providing about €100 billion to facilitate short time work schemes and prevent job losses during this period of economic uncertainty. Over 15 member states have already applied to SURE, amounting to €81.4 billion, demonstrating that this support is a valuable tool to meet the real needs of member states.
Thus the PES President argued that SURE was “a lifeline for member states and Europe’s workers” and that the money must reach workers and companies as soon as possible.
Socialists and democrats have been at the fore of the push for more support for Europe’s workers during this pandemic; the SURE program in the EU’s recovery plan was just a step towards a permanent European reinsurance scheme for unemployment benefits. The mechanism for preventing unemployment during the COVID crisis was included in the PES Recovery Plan, and European socialists and democrats pushed for a serious economic recovery package.