Wednesday, March 11, 2015

11/3/15: The looming computerisation of European jobs

Two and a half years ago (, I highlighted the research by Robert J. Gordon on the secular slowdown in economic growth awaiting the global economy, linked to the 'flattening out' of returns to technological innovation hypothesis.

Recent research from the Bruegel Institute (see: attempted to provide some estimation of the related topic: the topic of jobs displacement via technological innovation.

This represents a very important and interesting piece of work, quantifying risk exposures across the European economies to computerisation, robotisation and automation trends. The map Bruegel provides clearly shows the link between lower value-added sectors activity share of country GDP and the risk of jobs displacement due to technological innovation. However, even at the lower end of displacement scale, 47-49 percent of jobs are at risk, and this is a significant number. Worse, as authors correctly (in my view) suggest, the impact will be more pronounced for lower quality jobs, more reliant on labour and less related to human capital and complementarity between human capital and technology. In other words, already sizeable economic impact is likely to be magnified by an even larger social impact.

This topic is one of the key ones to focus on when thinking about the future economic, social and political developments. Just to give you a taster for the thinking ahead of us: in the majority of peripheral economies and indeed across the EU, jobs losses during the recent crises - the Global Financial Crisis, the Great Recession and the Sovereign Debt Crisis - were relatively concentrated in lower skills end of jobs spectrum, although this concentration was not as high as the bias expected for exult from technological displacement of jobs. Still, the relatively benign polarisation of the employment markets during the crises produced a prominent backlash in political sphere across the EU, with strengthening of the extreme political forces. Now, imagine the effect a much more socially concentrated disruption will cause to the traditional political systems.

Note: some links to related research

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