The future of work: Trends, challenges and potential initiatives
As a result of the current Coronavirus pandemic and accompanying health and economic crises, certain trends and challenges have already been affecting the European labor market. Automation and digitalization are making rapid advances, artificial intelligence is becoming increasingly prevalent, and insufficient digital skills are posing challenges. Platform workers and other workers with non-standard forms of employment face additional challenges. Many of these changes will outlive the current crisis and generate in turn new challenges, which the EU and Member States will need to address.
Prior to the coronavirus pandemic and the subsequent containment measures, the employment rate of people aged 20 to 64 in the EU-27 was 73.1 percent, the highest recorded for the EU since 2005. Economic and technological changes (primarily related to digitalization, automation, and artificial intelligence) were redrawing the map of the world of work, with new jobs appearing and others becoming obsolete. The increasing use of industrial robots was causing job automation in many workplaces.
Generic digital skills were becoming a requirement for entry into many jobs. Despite relatively high unemployment rates, there was a shortage of digitally skilled individuals to fill job openings. The traditional pattern of full-time work and open-ended contracts were gradually being replaced by atypical work patterns. According to Eurostat data, the proportions of temporary and part-time employment have steadily increased in recent decades, affecting 14.8 percent and 18.3 percent of the EU-27 working-age population, respectively, in the fourth quarter of 2019.
Another long-term trend that had been evident for decades was the gradual aging of the EU's working population. Life expectancy was increasing, while fertility rates were decreasing. In 2019, it was predicted that one in every four Europeans would be over the age of 65 by 2030. The EU's working population fell for the first time in 2010 and was expected to fall each year until 2060.
Simultaneously, the old-age dependency ratio (those 65 and older versus those 15-64) was expected to rise further. Economic and demographic changes were already having an impact on the funding of healthcare, social services, and pensions, as well as posing financial challenges to the financial sustainability of social protection provisions.
The coronavirus outbreak and ensuing health and economic crisis have created a slew of new challenges for individuals, households, and businesses. Lockdown measures have disrupted supply chains, global recessions, limited social interaction, and school and childcare facility closures have all had a significant impact on the world of work. Workers in many sectors of the economy have been challenged in various ways and to varying degrees by temporary and permanent job losses, reduced or increased working hours, income loss, and significantly altered working conditions. According to a World Economic Forum report published in October 2020, the pandemic has accelerated and exacerbated tendencies, problems, and risks that were already present in the workplace, such as automation, and that this is already leading to the loss of livelihoods for millions of people, as well as structural changes in the economy. The impact of the coronavirus pandemic and the resulting economic lockdown has been worse for women's employment than for men's employment. According to Eurofound, with the exception of healthcare, where 85 percent of frontline workers are women, men are more likely to work in sectors considered to be essential economic activities, such as transportation, protection services (e.g. policing), farming, and maintenance and repair, which means they are better protected from unemployment during lockdown periods. According to the OECD Employment Outlook 2019, the necessity of the coronavirus pandemic has accelerated automation, technology-assisted division of labor, and algorithmic workforce management (for example, through online platforms), and has fundamentally changed production processes and the shape of the world of work and will continue to do so. Even in sectors that recover, the pressure to automate and digitalize is expected to increase as a result of the current shock. This will exacerbate technology-based job disruptions for workers who are not adequately prepared, with a particular impact on at-risk workers who do not have access to reskilling, upskilling, or redeployment support, contributing to the growing digital divide. Long-term unemployment and poverty are likely in sectors that do not fully recover, particularly in the absence of retraining, income support, or other active labor market policies. During the pandemic, the European Commission established the support to mitigate unemployment risks in an emergency (SURE) instrument to finance short-term work schemes with loans of up to €100 billion. In the long run, SURE will have to be replaced by a European unemployment reinsurance scheme (EURS), which is expected to be finalized soon.
According to the WEF study, assisting workers will necessitate unprecedented global, regional, and national public-private collaboration on an unprecedented scale and at an unprecedented pace, specifically on economic growth, revival, and transformation; work, wages, and job creation; education, skills, and learning; and diversity, equity, and inclusion.
The upcoming directive on fair minimum wages will be a significant step forward in this direction. This directive is intended to ensure that minimum wages are set at an appropriate level and that every worker in the EU can earn a decent living.
The Work-Life Balance Directive, which went into effect in August 2019, established a set of legislative measures to promote a better work-life balance for parents and caregivers, more equal parental leave sharing between men and women and to address women's under-representation in the labor market. This is a path that should be pursued further. Given the crisis's disproportionate impact on women, it is critical to find ways to improve women's employment conditions and financial stability, as well as to expand the right to flexible working arrangements for caregivers and working parents.