What will the effect on Employment be?
In this new age of AI and digitisation, will there actually be an effect on workers and the workforce, and if so what can we expect that effect to look like?
There’s definitely a perception that workers will be replaced by robots in increasing numbers within modern industrial workplace settings. 65% of Americans expect that a robot or an intelligent algorithm will be doing their job within 50 years. Individual jobs will disappear partly or completely, and new types of jobs will come into being, especially in the service sector. That the service sector will be affected can particularly be seen in the insurance and financial branches, where intelligent algorithms are replacing human employees by automatically carrying out traditional back-office tasks, answering client questions via chatbots and presenting financial planning or insurance policies.
Once again we asked Keith Beekmeyer of Newpoint Capital Ltd, for his thoughts on this point. Keith says “Digitisation is already playing an important role in our industry, which is especially important for customers who expect constant communication with Newpoint Capital Ltd in this digital world. To adapt to this environment, we have utilised up-to-date communication structures and technology, which allows us to communicate with clients and partners anywhere and at anytime.”
A typical example of a new type of job created in recent years is crowdworking. Freelancers represent the typical worker of ‘Industry 4.0’ because they work at any time and in any place. Thanks to the Internet, international borders and time differences also no longer play a role. Owing to the digitalisation and internationalisation of the online platforms on which crowdworkers offer their services, the choice of applicable law is usually uncertain. More precisely, the challenges are how to define ‘crowdworking’, how to establish working conditions for compensation and how to determine which tax regime, social security and welfare rules apply.
Predicting how the workforce will change overall is difficult, however, we can make some reasonable assumptions and offer up some ideas as to how the working world will change over the coming years.
It is certain that both blue and white collar sectors will be affected to the same extent. In the medium-wage sector, routine jobs will be eliminated. Up to one-third of the jobs that require a bachelor’s degree may be replaced by a machine or intelligent software in the coming years – again, however, this will be very sector-specific at the start of the AI age. At the same time, it is expected that new jobs will be created in the service sector, ranging from data analysts to software programmers.
The role of humans within the world of work is changing. Employee organisations have realised that new challenges are in store for employees from all professional and social classes because of robotics and the computerisation of the workplace. Trade unions will pay particular attention that no ‘lost generation’ is left behind and that there are no mass dismissals caused by the introduction of AI. Unions will advocate further training, advanced training and retraining of employees.
Trade unions will remain the main player when it comes to fighting for employees’ rights, and they will expand their constituency by also representing the increasing number of freelancers. Finally, legislators will have to introduce new forms of employee representation structures to avoid their slow decline caused by a decrease in trade union memberships and fewer employees in a company, due to which the required thresholds for works councils can no longer be reached.
Companies will focus on their core competencies and will outsource other activities in a cost-effective manner. It is a global trend that ‘Work 4.0’ will take place outside traditional employment structures, with a rise in self-employment. Even in European countries, the so-called platform economy is becoming more and more common, and larger companies use external workers instead of hiring new employees. Some highly qualified young employees enjoy their independence and will focus their work on the development of creative solutions for a changing client base. The demand for social security is no longer as high, but freedom with regard to working time, the place of work and the choice of clients is more important to so-called ‘Generation Y’.
Professional connections between companies, clients, competitors and external providers involve some risks of exposing business secrets, especially if companies create open innovation models or use ‘prosumers’ (who consume and produce media) to develop their products. Particularly in big companies, hierarchy levels will be eliminated, and smaller organisational units will be necessary. An automatic supply chain connection between the company’s systems and the systems of its external providers will be the basis for success in the digital world.
Classic employment can be detrimental to the business owing to the high wage costs in European countries. An employee is primarily characterised by the fact that he or she is subject to the authority of the employer to issue instructions regarding the job assignment. The borders between the employee’s professional life and private life become blurred. If the place of work, in addition to working time, becomes more flexible, and if employees are granted more powers to work independently, it becomes harder to distinguish between an employee and an external freelance worker or a worker provided by a third-party company.
The introduction of intelligent algorithms and more independent production robots will create new risks for employees and employers. At the moment, spatial separation between robotic and human workers characterises production facilities. In the future world of work, human workers will have to collaborate with robots and intelligent algorithms. Work will be characterised by the use of connected technical wearables (eg, data glasses or fitness trackers). In the production sector, risk analyses will be carried out in advance.
In addition, software faults can come into consideration as potential safety hazards relating to autonomous systems and assistant robots. Recently, the European Parliament voted for a resolution concerning the introduction of legal standards for robots and intelligent algorithms (eg, electronic person) and compulsory insurance to compensate for damages caused by the systems.
Self-employed contractors are not released from liability. If an independent contractor destroys the principal’s property while working for the principal, he or she must pay full damages, whereas the employee’s liability is limited in most cases.
In the future, employees and employers will agree on the flexible management of working hours. The breakdown of the boundaries for working hours also makes it possible to implement working lifetime models that are beneficial to the ‘work-life balance’. In most European countries, the maximum working hours or rest periods are exceeded in everyday practice. National and European lawmakers should create frameworks offering more flexibility and less strict regulations to avoid this legal uncertainty (eg, daily rest periods).
Some (older) alternative working-time models will become common, especially for the younger generation. Examples are home office, job sharing, on-call work, zero-hour contracts, employee-sharing, sabbaticals or reduced working time models for older employees. However, there are individual legal risks concerning the contractual design of every alternative working time model. In most cases, negotiations with employee representatives will be necessary.
These changes will, however, happen slowly and gradually – we will not suddenly wake up in an environment where we each work from home on a dedicated internet server linked to our companies; rather it’s simply the case that we seem to be at the beginning of an inevitable march towards such a working environment.