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The future of work

Seldom offline, always on a leash

München, 12/04/2014

The relentless advance of digitalization is altering the contours of our working lives. Will digital piecework soon dominate the job market? Here, LMU economist Professor Arnold Picot discusses the role of digitalization in shaping tomorrow’s world.

Foto: william87 /

How is digitalization changing the working environment?
Picot: Technological developments have enormously expanded the versatility and complementarity of the tools we use at work, and they keep getting smaller and lighter. This brings with it a vastly increased potential for more flexibility and new freedoms. Many of us now have more freedom to choose our places of work, because we can take our working environment with us, no matter where we go. People don’t have to go out to work, the work can come to them. The economy has become “dematerialized”. Products and services are thus becoming more digitalized, and the creation of value increasingly takes place in virtual contexts. As a result, companies can use entirely different criteria when deciding where to locate their facilities. Auto manufacturers can, for instance, get their software – and a large fraction of their skilled workforce – from anywhere and everywhere.

How will this affect the future organization of work?
Digital media make it easier for employers to draw on the services of freelancers, even when the work involves the use of relatively complex types of data. Freelancing will become more prominent, partly because work content and workflows are now subject to such rapid change that firms can hardly predict what kinds of skills they may need next month. Instead of hiring people for the long term, they will seek the skills they need as circumstances dictate. This fluidity also means that part of the business risk is transferred onto the shoulders of freelancers.

And they can fulfil their work quotas wherever they happen to find themselves?
Worldwide integration and the virtualization of many tasks have significantly lowered barriers to entry into the job market. In many sectors, we already have what amounts to a global labor market. Workers and freelancers in Indonesia and in Bavaria compete for the same assignment. There are crowdsourcing platforms on the Internet that act as middlemen in allocating tasks to freelancers across the globe. Hundreds of thousands, if not millions, of people now find work in this way – even if many of them do so in order to make a little extra and not to earn a livelihood. Many observers see this as a return to Taylorism, to a highly fragmented division of labor, and indeed that is partly true. Many of these “clickworkers” collaborate on labor-intensive tasks that cannot be performed by machines.

What sorts of tasks do you mean?
The world of work is becoming ever more polarized. A whole series of cognitively challenging tasks remain restricted to humans. In areas such as the planning of complex undertakings, where experience, associative thinking and social interactions are required, automation remains unlikely. That is also the case for manual tasks that cannot be planned in detail beforehand, such as handcrafts or domestic services. The careers at risk are those that involve repetitive routines, such as sorting, searching or calculating. Fears of human job displacement due to the introduction of electronic data processing and IT surfaced already in the 1970s. Although it is very difficult to establish the overall effect of digitalization, history suggests that technical developments usually lead to more rather than less work. Technology relieves people of many strenuous and tedious tasks, but it also gives rise to new work processes and creates a need for new services. Twenty years ago, no one could have foreseen the advent of social media, let alone predicted how significant they would become. Now they form the basis of an entire industry. Digitalization will open up many other commercial opportunities and fields of activity that nobody has yet thought of.

What impact will this have on existing businesses?
They must adapt to the changes that digitalization brings about and must consider early enough how their business models and their products are likely to be affected. For example, door-keys will probably become obsolete over the next few years. We will lock and unlock our doors electronically by means of chip-cards or with the aid of biometric data such as fingerprints. The manufacture of keys, which was once a completely mechanical operation, will become the job of software and integrated systems. That will demand quite different skills, and foreseeing and reacting to such a development poses a terrific challenge. And this holds for many fields and trades that now seem to be well established and secure. Unfortunately, in some sectors, Germany has already lost ground – in computer technology, for instance.

What implications will all this have for vocational and professional training?
The kinds of qualification required are set to change significantly. Trainees will have to acquire capabilities that are not easily susceptible to automation, such as project management, coordination and communication skills. There is no point in training young people for occupations that will soon disappear. Computing power and rates of data transmission and storage will continue to increase exponentially. The technological advances taking place now promise to be far more disruptive than those that began 20 years ago. This will generate a constant stream of novel applications and support capacities, which will require equally rapid and flexible reconfiguration of vocational and professional training programs.

How do you expect the relationship between the spheres of work and private life to change? Many people already find it hard to resist checking work related e-mails in the evenings.
The sharp distinction between work and leisure is a relatively recent invention. It goes back to the emergence of factories in the 18th century. These new workplaces gave rise to the idea that work was something done outside the home, in a factory or an office. Prior to that, productive and non-productive tasks were closely intertwined, in agriculture, for example. We will have to learn to cope with the fact that work and non-productive activities are less clearly separated from one another – and that can’t be done simply by telling people not to write and send business e-mails on Sundays. The ability to autonomously determine how one’s work should be organized will continue to grow, and employers will have to acknowledge and accept that. It’s not very likely that people will work less as a result. On the contrary, nowadays everybody works on the go, in trains or at the airport, and this testifies to a high degree of autonomy and individuality. Studies have shown that many people actually welcome this kind of freedom and independence, and regard it as an essential element of how they live their lives.

But for lots of people instant accessibility and having to work anytime and everywhere just means more stress.
We must learn make sensible use of the freedoms and develop methods that enable us to distinguish the really urgent tasks from the less pressing ones. Just think of how we used to run to the phone every time it rang. Now we have voice mails, so that people can decide for themselves when to be accessible and when not. That will also happen with other new gadgets. It’s a question of adapting and perhaps an issue of generational change too.

Yet members of “generation Y” – those born since 1980 – apparently place great emphasis on job security and quality time with the family.
Generation Y is a chimera. This might be true for young people who work in areas in which demand is high, in auditing or in law firms. But large numbers of the well-educated young do not enjoy that kind of job security. More and more freelancers who work in the media industry, for instance, have to come to terms with the uncertainty.

How will our social security systems cope with the rise in freelancing?
Even if we disregard demography, the notion that the established pension system based on salaried employees in permanent posts can survive is illusive. In future employment will not exist in sufficient numbers. Other countries saw this coming. In Switzerland for example, all forms of income are subject to social-security contributions. In Germany freelancers are still expected to make provision for health insurance and pensions on their own. And if we want to avoid creating a swarm of digital day-laborers, the issue of the legal minimal wage comes up here.

Will our societies have to develop new correctives to cope with the consequences of technological change?Every phase in the future development of the work environment will need its own regulatory framework. Just as the era of factories and office workers led to the formulation of rules governing job security and wage agreements, the future evolution of economic relationships will require new regulatory mechanisms. For example, new technologies are creating an unprecedented degree of transparency, which greatly facilitates surveillance. In principle, everyone who sits in front of a computer screen is on an electronic leash, because it is perfectly feasible to discover when, where and how long he or she is actually working. Some crowdsourcing job sites already monitor performance in this way.

Based only on the technological developments you have touched upon, the world that awaits us will be very different from the one we know today. Is this cause for alarm or can we look forward with confidence?
History shows us that virtually all technological inventions have ultimately promoted human progress and extended our radius of action. After all, inventions and cultural advances are hardly forced upon us from outside. They are the results of human ingenuity. There has always been a tendency to focus exclusively on the associated opportunities or the risks. Both must be considered because the two interact. Since we will not be able to stop these developments, we should rather shape them to our benefit.

Professor Arnold Picot heads the Research Unit for Information, Organization and Management in LMU’s Faculty of Economics. He is the author of the study entitled Arbeit in der digitalen Welt, which he produced for the Federal Government’s IT Summit held in October 2014 .