Effects of digitalisation on service industries and employment (own-initiative opinion)

Effects of digitalisation on service industries and employment (own-initiative opinion)

Digital technologies have reached a degree of maturity that allows their use across a wide range of economic sectors in manufacturing as well as in service industries. According to the 2010 edition of the European Working Conditions Survey (EWCS), more than 50% of the EU workforce use ICT in their daily work, with individual EU Member States reaching rates above 85%. Services sectors are identified as the heaviest users of ICT (for instance, more than 90% of finance employees using ICTS in their daily work), which is to be seen as a natural consequence of the increasing digitalisation of many services – such as eBanking, eCommerce, and online media. As shown in numerous CCMI opinions on European industrial and service sectors these continued processes of digitalisation challenge several areas, notably in the field of employment:


  • As new technologies require specific skills adapting vocational education and training, including lifelong learning, is an immediate policy challenge that needs to be met in order to support workers in adapting to digitalised forms of work.
  • The proliferation of digitalised forms of work implicates major transformations of work organisation – enabling practices such as telework and crowdsourcing, and facilitating freelance work. These developments challenge the traditional understanding of employment, working time and place, and companies and bring about specific health and safety hazards.
  • As digital technology is reaching ever-higher degrees of maturity, it becomes increasingly feasible to replace labour with digital technology. Recent technological advances have enabled the development of software that performs analytical, interpretative (pattern matching), and interactive tasks that are typical for work in many services industries.
  • Such breakthroughs may seriously affect employment rates in the EU: First assessments of the labour market effects of such technologies estimate that up to 47% of today's employment opportunities – the bulk of them in services – might become obsolete due to advances in digital technology.

Taken together these changes in work organisation and the overall number of employment opportunities may have considerable positive as well as negative consequences. On the one hand, they may constitute an opportunity to increase workers' autonomy and work life balance. On the other hand, they may put welfare systems and the quality of employment in Europe under strain by undermining existing collective bargaining practices, eroding revenues in tax and social security systems, and hollowing out worker rights and mechanisms of worker participation. As these mutations of work and employment are highly contingent on the way in which digital technology is transforming economic sectors, it is crucial to follow a holistic approach to forecasting the future of employment by assessing employment effects of foreseeable, technology-induced developments in specific sectors. This can be achieved by drawing on existing evidence of future developments in sectors that will be particularly affected by tendencies of digitalisation, such as commerce and finance.

Strategic policy-making is required to avoid the negative effects of such developments. The question is: what is going to be the European Union's response to these transformations of employment and work organisation? So far, the EU is failing to give these issues adequate weight in its relevant initiatives, especially in its Europe 2020 flagship initiative "Digital Agenda for Europe", which up to now has been practically silent on the employment effects of digitalisation.

This own-initiative opinion intends putting these issues on the agenda of EU policy discourse thereby addressing one of the Digital Agenda for Europe's blind spots – namely the labour market outcomes of digitalisation.