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, STUDY ON DIGITIZATION AND EMPLOYMENT: Six scenarios for Germany’s labor market

Digitization is already turning the labor market upside down. What might the general situation look like for people, companies, and politicians if this trend keeps stepping up its pace in Germany? Labor market experts and experts from the digital economy have outlined six potential scenarios.

When it comes to the question of how digitization will change the labor market in Germany, optimists and pessimists dominate the public debate. One side expects the elimination of ever more jobs due to robots and algorithms, while the other side regards “Industry 4.0” as the next major engine of growth and employment.

How the German labor market might develop between these two extremes was the subject of a study jointly conducted by stiftung neue verantwortung and the Bertelsmann Stiftung. A group of 24 technology and labor experts developed six scenarios that draw a very nuanced picture of the impact of digitization, ranging from Germany as a globally successful exporter of digital industrial goods which grants citizens an unconditional basic income, to a country with few job opportunities outside of the strongly interconnected major cities, all the way to a labor market offering sufficient work but where everyone is on his or her own.

Digitization, a major construction site

“All scenarios clearly show one thing: Labor 4.0 will become the next major political construction site of digitization in Germany,” says Dr. Juliane Landmann, the study’s project manager. More flexibility for people in performing their job, faster changes in skill requirements, and a potential drop in demand for labor necessitate a rethinking process in key areas of the social security systems and the labor market. “The pressure to change on employees, employers, and the welfare state will mount considerably – in line with the degree of success with which German industry is going to handle the transformation toward a software- and service-intensive economy,” Landmann explains.

Politics should carefully examine the potential changes in the labor market to avoid surprises. Increasingly digitized and interconnected production processes or platform-like business models such as Airbnb or Uber will not remain isolated phenomena but impact ever larger shares of the working population.

“However, either/or thinking which claims either that digitization will destroy a vast number of jobs or that it will be the engine of new, attractive employment conditions is not helpful,” says Dr. Stefan Heumann, who is in charge of the project study. “If we want to shape the technological transformation in Germany politically, we must examine a number of potential scenarios in between these extremes.”

Recognizing political challenges

The scenarios were developed for planning departments of ministries and parties, for union organizations, and for company managers. In a process of strategic forecasting – or foresight –labor market and technology experts developed six different scenarios over the course of twelve months. The point was not to predict the future, but to present an array of conceivable scenarios for a labor market impacted by digitization. It was the objective of this method to recognize challenges concerning actions which politics has to take and which are indicated in all six scenarios. Government, unions, and businesses should examine these issues in good time, independent of conventional limits of competence and responsibility.

This is a cooperation project with the stiftung neue verantwortung. Contact person for concept development and organization at the stiftung neue verantwortung is Dr. Stefan Heumann.

An overview of the scenarios: