The Effects of Digitalization on Employment

Concern that technical progress and structural change destroy jobs is not a new phenomenon. Although experience shows that, on a national scale, the effects on employment are positive, forecasts which emphasize the potential of digitalization to advance rationalization are currently attracting considerable public attention. However, initial analyses of the IW Human Resources Panel results suggest that Germany need fear no detrimental effects on employment in the foreseeable future. A full third of companies which have already extensively digitalised their operations are planning to increase their payroll in the near future, while only 10 per cent of such digital pioneers want to reduce jobs. Even among non-digitalized companies an expansion of the workforce is more likely to be on the agenda. These expansion plans, from which fully trained and highly skilled workers will benefit most, continue to predominate into the medium to long term. However, this will be the case regardless of the degree of corporate digitalization. In companies where digitalization is seen as an opportunity to standardize work processes or to introduce crowd sourcing, staff cuts, particularly among the low-skilled, are significantly more frequently on the agenda. Yet these enterprises are clearly in the minority: First impressions suggest that digitalization merely advances the trend to highly skilled jobs which has been observable on the labour market for years.