What are the key future employment trends? How are these influenced by demographic and economic developments or by the intensification of automation processes and robotisation at the workplace? Cedefop Skills Forecast, a unique dataset providing estimations of demand and supply of skills by sector, occupation, and qualification level, can help to provide answers. The 2018 Skills Forecast, which has just been released at a high-level event in Brussels, produces projections for each EU Member State, for the period up to 2030. It is based on a single methodology that uses harmonised data sets that are comparable across countries.
Over the forecast period, the EU is expected to show relatively low growth rates recovering from the legacy of the crisis but being supported by global growth, and China in particular. Over the medium term, the GDP will stabilise at lower levels mainly because of the demographic trends. Turning to how GDP growth will be translated into sectoral employment, there are two main factors driving it. First of all, ageing of the population will lead to less consumer expenditure on goods and more on health-related services, and less on leisure. At the same time, government expenditure is also expected to increase to accommodate these needs. Second, the penetration of automation will lead to fewer jobs being created in manufacturing but new jobs in supporting sectors. However, the assumption made is that workers will keep their jobs when robots are brought in. The above factors will lead to a changing GDP composition towards less consumption of goods, and more government spending, which will impact the employment patterns.
Turning to future trends of employment by sector of economic activity, the Skills Forecast suggests that the orientation of employment towards the service sector will continue. Hotels and catering, health and social work are among the sectors where the most employment growth is expected. In contrast, manufacturing, public administration and agriculture are expected to decline. The Figure 1 below groups the main sectors of economic activity by their expected growth in employment up to 2030.
Figure 1 Employment growth by sector of economic activity to 2030 in EU
However, even though basic manufacturing is expected to decline in employment, some high value added sectors will experience an increase, as for example optical and electronic equipment, and motor vehicles.
One of the current debates on the future of work is about the impact of technology on employment. Figure 2 below shows the relationship between output growth (measured by gross value-added) and employment change, and how this will be mitigated by technology. In particular, it shows three sectors which are impacted heavily by technological change: electrical equipment, printing, and computer programming. And two that, even though make use of technology it is the workforce that makes the difference, are affected less: research and development, and sports activities.
Figure 2 Output growth and employment change to 2030 by
As can be seen, in cases where technological change is strong, output is expected to grow but this growth will not be accompanied by a positive employment change. For example, event though the output for electrical equipment is expected to grow by almost a quarter, this growth will come with a sharp decline in employment. In contrast, in sectors where technological change is not affecting the way of work, output growth will be accompanied by strong employment change. For instance, in order for research and development to achieve a quarter of growth in output, employment will have to increase by 40%!
An interesting case is that of the automotive industry which, even though the penetration of robots is particularly high, a strong increase in output will be accompanied by a small positive increase in employment. The automotive industry is highly penetrated by technology mainly due to the shift to electrical vehicles which require fewer assembly lines while existing ones become even more automated. However, the need for clean vehicles will create many jobs in R&D, such as material scientists, computer analysts, electrical engineers, and new skills due to the strong impact of technology on jobs.
Nevertheless, this is not only an industry issue as it depends on how each Member State will face the new challenges. For example, in Germany the share of highly skilled employment within the sector is expected to grow significantly in the years to come, as there is a move away from traditional workers easily replaceable by technology, such as craft and plant operators towards science and engineering, information and communication, and business professionals.
The answer to the question posed by the title of this blog article is not straightforward. On the one hand, automation will cease the need for many workers. On the other hand, however, it will create avenues for even more job openings. The main question therefore is how prepared is each economy to utilise technology for its advantage?
More information on the Skills Forecast, including access to the summary and detailed data, can be found at Cedefop webpage as well as the Skills Panorama. For any further information, please get in touch!