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Suppose you work in a nice company and along with your colleagues you get a new employer: a computer. How does this strike you? Do you find this outrageous? Or even impersonal? After all, a computer is not like a person who gets to know you on a practical and emotional level. In this article, we discuss the rise of digitization and its impact on employment. IT is a very emerging phenomenon and more and more business activities are being automated. Therefore, it may be interesting to discuss different views and perspectives regarding digitization and employment.

An article by “How We Get To Next” writes that computers as employers may become a reality in the coming years. They use the findings of Frey and Osborne (2013) and state that 47% of the total population (in the United States only) is at a high risk factor for losing their job. On the positive side, computers do much of the dirty work for us that we often don’t want to do or even find boring. Also, these computers do work that can be complex. Perhaps the best argument of the article that digitization is on the rise is that our hourly wages are likely to increase while at the same time the number of working hours will decrease. While this development is very positive, there are also negative effects. The rise of digitization will make many jobs disappear that are currently performed by humans. To counteract this, workers should be trained for positions that do not exist at all today, however, there is a great chance that these trained people will still not be chosen because there are still others who are considered more suitable.

The effect of digitalization on employment

Frey and Osborne[i] find that in the coming century, technology will advance to the point where workers will need to be able to do mostly tasks that computers cannot. These are mainly tasks in which one must be creative and socially skilled. In addition to the research mentioned above, there are other studies that address the impact of digitization on employment. For example, Loebbecke and Picot[ii] have researched digitalization on employment in conjunction with data analytics. The authors define digitization as “the transformation from analog to digital information and processes from a technical perspective.” The characteristics of data analytics consist of a “focus on very large, unstructured and fast-moving data.” It is no secret these days that corporations want to collect as much data as possible. In addition, Loebbecke and Picot describe that the rise of networking via the Internet allows us to analyze so much data that fewer people need to be involved. This has a major effect on the focus corporations take. After all, we, the consumers, are their target audience and are exposing information to corporations for them to use. Corporations are adapting to this and as a result we are offered different products and service and/or service. Loebbecke and Picot further acknowledge that at the same time job growth is increasing in IT, productivity and technological innovation. However, in other areas, they agree with Frey and Osborne, writing that machines will replace people because of digitalization. Loebbecke and Picot experience different mechanisms than Frey and Osborne and disagree on the effect of digitization. Loebbecke and Picot identify that the effect of digitization and employment is mainly felt within organizations. The authors believe that only a few companies will remain in the market and a monotonous consumer demand off. Property rights of companies will also disappear according to the authors. Frey and Osborne, on the contrary, think that the effect is very much about the worker. This means that the employee must be creative and have social skills. Added to this is the fact that many people who previously had an advantage in their field because of the cognitive aspect will be overtaken by machines and thus less needed later. Decisions can be made better by machines than humans because of dealing with big data analytics. That is, computers learn faster from large unstructured forms of data about a given phenomenon (for example, changes in consumer preferences or workplace policies).

The impact of digitalization on employment

The advantages and disadvantages of digitization on employment are very similar and Loebbecke and Picot also find no emperical evidence for this. Evangelista, Guerrieri, and Meliciani[iii] do claim that the rise of digitization will have a positive impact on employment, provided the corporation has an affinity for ICT. This means that the impact of employment largely depends on the level and quality of ICT use. Although higher use of ICT products within a corporation has a positive impact, it must be balanced with the economic growth of the rural area. The authors looked at the use of ICT products among groups that are generally at a disadvantage such as the elderly, women and people who have been unemployed for a long time. Evangelista et al, find evidence that these groups can gain a significant advantage if they show a high affinity for ICT products. Although Loebbecke and Picot (2015) did not conclude what the actual impact of digitization on employment is, Evangelista et al., manage to generate a quantitative model indicating the correlation between digitization and employment impact. The limitation of this model is that it only works in the short term, so we will have to wait and see how it will work in the long term. So the question they also ask is whether a high affinity for ICT products among the disadvantaged groups but also overall, is going to work in the long run.

The results of various studies in this area vary widely, making it difficult to draw an unequivocal conclusion. It is therefore wise not to wait and see, but to take immediate action. A report by the OECD, as with Evangelista, Guerrieri and Meliciani, indicates that different skills are important to have a chance at the rise of digitization in employment. In addition, they must also have an affinity for ICT products. If one does not have an affinity for ICT products, the studies discussed and the OECD report recommend that one be engaged in this and learn it steadily. Today, a waiter must take his orders via an iPad or a factory worker must enter data into an information system. The OECD identifies four priorities to meet the challenge against digitalization in employment: 1) students should already be taught ICT skills in elementary schools 2) education and training systems need to better deal with changes in skills needed at that moment in the labor market 3) employers need to know the same skills that employees have in order to remain effective and competitive 4) workers need to be constantly retrained for the skills needed in a fast-changing economy.

The findings show that digitization has different effects and impacts on workers who have little affinity for ICT products. However, the impact of automation will vary by sector. From an IT perspective, more jobs will be created and from a manufacturing perspective, some tinkering will be required. Perhaps most important is how one deals with the change rather than the change.

[i] Frey, C. B., & Osborne, M. A. (2013). The future of employment: How susceptible are jobs to computerization? Technological Forecasting and Social Change, 254-280

[ii] Loebbecke, C., & Picot, A. (2015). Reflections on societal and business model transformation arising from digitization and big data analytics: A research agenda. Journal of Strategic Information Systems, 24(3), 149-157. doi:10.1016/j.jsis.2015.08.002

[iii] Evangelista, R., Guerrieri, P., & Meliciani, V. (2014). The economic impact of digital technologies in Europe. Economics of Innovation and New Technology, 23(8), 802-824. Doi:10.1080/10438599.2014.918438

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