Wednesday, June 19, 2024

The Future of Work: Implications for Equity and Growth in Europe

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The Future of Work: Implications for Equity and Growth in Europe

This report examines the relationship between technology, economic growth, and equity. By analyzing the impact of technological progress on firm-level productivity, market concentration, and outcomes for workers with different education levels—we can gain insight into technology’s effects on the European Union labor markets.

DOWNLOAD Full Report | Overview | Executive Summary

The report demonstrates that while innovation and technological advances have increased productivity in Europe, they have also led to a rise in income inequality. Such technological advances promote market concentration, decreasing the share of total national income that goes to labor. In addition, individuals with university degrees benefit more from technology adoption in labor markets, while less-educated workers are more vulnerable to being displaced.

These dynamics are illustrated through three key findings of the report.

  • Small firms in the EU are slow to adopt new technologies.
  • In the EU, technology has increased productivity, the demand for university graduates, and market concentration.
  • Vocational education graduates do not have the skills to benefit from technological change.

How can governments promote technological benefits without amplifying societal divides?

Recommendations for Policymakers

Promote technology adoption. EU member states can promote technology adoption in small businesses through managerial training, regulatory simplification, access to finance, and human capital development, focusing on lagging regions.

Better adapt technology to meet society’s needs. Modifying tax incentives

can encourage investment in labor-intensive industries and the creation of high-quality jobs. In addition, EU institutions should invest in research and innovation to bring technological advancements that integrate labor into production processes.

Equip youth with the skills to adapt and reinvent themselves. Instead of focusing on

specific job skills, European education systems should provide all graduates with foundational skills that can be applied to any career path they choose. By providing this core set of skills, current students (future workers) can keep learning throughout their lives and adapt to changing labor market demands.

 

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