The rapid development of sophisticated digital technology is often described as revolutionary for the labour market. Robots and artificial intelligence are portrayed as the end of the traditional labour market, but completely new Nordic research on the labour market adds nuance to this view and, above all, cuts through all the drama.
Differences within the Nordic Region
“There is no paradigm shift as yet. Although technological development is changing the labour market, this change is continuous and not disruptive. We’re also seeing differences between industries, between the Nordic countries, and between the different labour markets that women and men participate in,” says Bertil Rolandsson, labour market researcher at the University of Gothenburg.
In a new report, he and a large group of researchers have gathered new knowledge about how digitalisation is affecting the Nordic labour market. The report is part of a three-year pan-Nordic research initiative on the future of the labour market.
Digitalisation has not resulted in fewer jobs
The researchers note that digitalisation over the past 30 years has not resulted in fewer jobs or lower job growth overall in the Nordic Region, despite the fact that several industries have taken a beating. Broadly speaking, the jobs that have disappeared in the manufacturing industry have been replaced by jobs in the service sector. The service sector accounts for 80 percent of all employment in the Nordic Region today, and it is primarily women who have benefitted from this growth.
Service sector continues to grow
“The service sector has saved us when it comes to job numbers, and we believe this trend will continue. At the same time, this is the part of the labour market where women often make up the larger part of the workforce,” says Rolandsson.
Jobs that involve some form of customer contact are difficult to do away with rationally, as are jobs requiring legal expertise, service development, and communication.
Polarisation on the way?
International labour market research tends to warn that digitalisation will polarise the labour market – more specifically, that it will create a labour market that consists of high and low-paid people, with no middle ground.
It is therefore thought that cleaners and other low-skilled jobs in the service sector will always be required, as will highly qualified jobs in product development, for example.
Meanwhile, the middle stratum of clerical jobs is affected, including administrative staff, some banking roles, and jobs in logistics and warehousing.
Trend of polarisation in Denmark
Among the Nordic countries, the report shows that such tendencies towards the polarisation of the labour market are clearest in Denmark.
In Finland, Norway, and Sweden, the trend is more towards upgrading, meaning that jobs requiring more qualifications are increasing in number. Conversely, jobs that require lower qualifications are declining.
“In the Nordic Region we have a tradition of major and broad educational initiatives. Many workplaces invest in skills development, and labour market partners are invited to participate in this work,” says Rolandsson.
Upgrading the service sector
The report shows that although this upgrade is occurring in the public sector and the manufacturing industry, the upgrading of skills and raising of salaries is occurring even in the service sector.
Researchers have looked in detail at how traditional service industries such as retail, elderly care, and the banking sector have been affected by digitalisation.
Common to all three examples is that digital technology provides better services, which increases the demand for them. At the same time, these improved services require higher qualifications among those working in these industries.
Where will those with low educational attainment get jobs in the future?
“The service sector has played a key role in employing people with low educational attainment and in raising the skills of the sector’s employees. It’s primarily the public sector that has done well in this regard.”
The continued ability of the service sector to include people with low educational attainment is one cause for concern for the future among researchers. As technological development will result in fewer jobs in the male-dominated manufacturing industry, continued high levels of employment in the Nordic Region will hinge on what happens in the service sector.
Challenges of digitalised commerce
“We will face a more worrying challenge if there is extensive digitalisation among simpler retail and logistics roles. In this situation, the service sector will struggle to pick up those who lose their jobs in the production of goods, and we’ll see increased polarisation in traditionally male-dominated industries.”
According to Rolandsson, the Nordic labour market model has helped the Nordic countries through a long period of digitalisation, but with fewer dramatic consequences than elsewhere in the western world.
Active policy ensures a calm transition
“This development has been more conflict-ridden and stop-start than in other countries. In the Nordic Region, we’ve managed to help people get through the transition by way of education and active labour market policy. This creates an understanding among people that change is needed if we’re to maintain the levels of welfare we’re used to,” says Rolandsson.