Robots hurt employment growth

The national economy

Together with other trends, digitization is fundamentally changing the world of work. The current focus is particularly on the question of how digitization affects the level of employment, the structure of employment and working conditions. There are various fears that machines and robots will largely replace human work. In a recently published report, the Federal Council therefore dealt with the effects of digitization on the labor market and the resulting challenges for the state. [1]

Although the technical possibilities of automation are constantly expanding, it cannot be assumed that overall employment will decline. Rather, technological progress in Switzerland has contributed to robust employment growth. With the introduction of new technologies, jobs were lost in certain areas, but these were always overcompensated by newly created jobs in other fields of activity. Over the past two decades, over 860,000 net new jobs have been created in this way. On the basis of current knowledge, it can be assumed that digitization will have a positive effect on macroeconomic employment growth, similar to the previous basic technological innovations.

New job profiles and working conditions

In recent years, employment in Switzerland has shifted to technology-oriented and knowledge-intensive areas. This applies above all to activities in which the majority of technologies are used complementary to human work. Advances in robotics or sensor technology or the increasing digital networking opportunities under the heading of “Internet of Things” enable the emergence of new fields of activity and interdisciplinary professions such as “data architect” and “bioinformatics”.

The changes within the occupations were even more pronounced than the shifts between occupations and industries. Progressive automation, especially in industry as well as in the commercial and administrative area, has resulted in the employees' areas of responsibility increasingly shifting towards cognitive and interactive non-routine tasks. Accordingly, activities in the areas of communication, leadership, planning or consulting became more important, while repetitive tasks, which can be carried out according to a recurring scheme, increasingly faded into the background (see Illustration). This development is likely to continue in the future. The changed job profiles also resulted in an increased demand for qualified specialists at secondary and tertiary levels.

Employment shares by job profile (1996 and 2015)

Source: FSO / Sake, Besta, calculations by Rütter Soceco / Die Volkswirtschaft

The technical possibilities of digitization not only change the production and sales processes, but also allow increasing flexibility in working conditions - both in terms of time and location. Home office and flexible working hours are already established in many companies.

In addition, the new technologies also enable new business models to emerge. For example, internet-based platforms such as Upwork, Uber and Airbnb make it easier to outsource and network activities. The spread of these platform-based employment opportunities is still low in Switzerland - as in neighboring countries. There is also no evidence that they have led to an increase in “atypical, precarious” employment relationships. [2] Furthermore, the wage and income development is still balanced in an international comparison.

Education is at the center

The developments in connection with digitization hold not only opportunities but also risks. Since this is an ongoing process, the effects of digitization on the labor market cannot yet be conclusively foreseen. It is therefore important to keep an eye on the risks and to address them specifically if necessary.

In connection with the changing skills requirements, there are primarily challenges in the field of education. If you want to be in demand on the job market in the future, you have to be able to demonstrate the required skills. This means: The most effective prevention against unemployment lies in education geared to the needs of the labor market. [3] In addition to adapting the compulsory school material and the subsequent training courses, further training and lifelong learning will gain in importance.

The inventory shows that Switzerland is well equipped here too. In principle, the responsibility for forward-looking and targeted further training is the personal responsibility of each individual. In addition, the social partners and the state are called upon to make their contribution. For example, the Federal Council recently adopted a concept to promote basic skills in the workplace for low-skilled and older employees.

Regulation is basically sufficient

The current dynamics on the labor market are also putting the legal framework to the test. Do these enable a satisfactory regulation of innovative forms of work with growth potential, and are they still able to guarantee a consistently high quality of work? Basically, labor market regulation in Switzerland is characterized by a high degree of adaptability. The current regulation has so far made it easier to cope with a wide variety of challenges. For example, the relatively new phenomenon of teleworking can be regulated within the existing framework.

With a view to the current dynamics, it can be mentioned as an example that labor law enables different types of flexible work assignments with correspondingly graduated protection. At the same time, there is a targeted set of instruments, for example in health protection and in the fight against illegal employment. In addition, the current revision of the Data Protection Act takes into account the increased importance of protecting employee and employer data. Furthermore, the extent to which the labor law should be adapted to the more flexible working world is currently being discussed in parliament.

The social partners, who are now institutionally involved in all central labor market areas, play a key role in the structure of labor market regulation. There are tripartite committees for defining educational content in vocational training and for questions relating to the organization of working hours, unemployment insurance and labor market monitoring. According to the Federal Council, the social partners should continue to play this role in the future. If platform employment with the rather short and, in this respect, rather loose employment relationships were to prevail across the board, it would therefore have to be clarified, for example, whether certain legal adjustments are needed to safeguard employee interests.

In addition, questions arise in social security and labor law regarding the distinction between self-employed and employed work. Apart from the ongoing proceedings that are pending in the courts in this regard, it is worthwhile to make fundamental considerations. Internationally, there is currently a broad discussion about the extent to which the rigid distinction between self-employed and paid employment is still justified or needs to be further developed. It must be examined how the current regulations, for example in social security law, can be made more flexible in the interest of the emergence of new forms of work, without this being accompanied by a precariousness and a shift in burdens to the general public.

Social Security Challenges?

Against the background of new automation options and a changed way of performing work, the question of what effects the structural change in connection with digitization has on the social security system comes to the fore. Current analyzes show that the main challenges for social insurance, especially old-age provision, lie in demographic aging and not in technological development.

There are currently no negative effects of digitization on the social security system. Neither the development of unemployment nor that of the recipients of social assistance suggest that the social welfare works are being more heavily burdened as a result of the current structural change. The opposite is more true, especially since the growth in employment and wages in recent decades has also led to higher contributions to social security. How digitalization and the other drivers of structural change will affect the social security system in the future cannot be foreseen in detail - like the development of employment. In this context, too, it is crucial that the differentiated social security system has so far proven to be very adaptable.

Overall, Switzerland is in an extraordinarily good starting position to successfully cope with the challenges of the current structural change. There is currently no fundamental need for action at the legislative level. Rather, the focus is on adapting the educational content to the new requirements as well as selective further development of the framework conditions. In addition, the development of employment relationships and working conditions must be closely monitored, and it must be continuously checked whether the applicable legal regulations continue to meet specific needs.

  1. Effects of digitization on employment and working conditions - opportunities and risks, Federal Council report of November 8, 2017. []
  2. See the article by Michael Mattmann, Ursula Walther, Julian Frank and Michael Marti in this issue. []
  3. See the article by Johannes Mure and Barbara Montereale in this issue. []