Digital transformation in Germany is creating more jobs than destroying
According to a recent study by the Centre for European Economic Research (ZEW), digital transformation in Germany is creating more jobs than it is destroying.
The Digitalisation and the Future of Work report notes that although more jobs are being created in the industry, the further implementation of digital technologies is changing employment structure.
The report evaluates on employment, unemployment, and wages in correspondence with digitisation, based on a survey on digital implementation and a model-based estimation of the relevant macroeconomic mechanisms.
Approximately 50% of German establishments feature Industry 4.0 technologies, which make up on average 5% of a facility’s means to production and 8% of its office and communications equipment.
Investments in the digital technologies have led to an increase of 1% on employment between 2011 and 2016.
“Though these technologies have a labour-saving effect, up until now they have created more new jobs than they have replaced,” said Dr Melanie Arntz, Head of the ZEW research department.
“The overall employment effect is therefore weakly positive.”
Jobs that involves routine tasks are dropping, whereas positions related to analytics, such as software development or programming are growing.
“Establishments that invested heavily in modern digital technologies early on are still among the leaders in their industry, while those who came late to the party are noticeably falling behind. This divide needs to be tackled in a targeted way,” Arntz added.
“High-wage professions and sectors are the ones that are profiting the most from new technologies in the form of higher employment and wage increases, while low-paid jobs and sectors, on average, are losing out.”
IMF: Variants Can Still Hurt Manufacturing Recovery
After a year of on-and-off manufacturing in the US, UK, and the eurozone, demand for goods surged early last week. Factories set growth records in April and May, suppliers started to recover, and US crude hit its highest price point since pre-COVID. As vaccination efforts immunise much of the US and UK populations, manufacturers are now able to fully ramp up their supply chains. In fact, GDP growth could approach double-digits by 2022.
Now, the ISM productivity measure has surpassed the 50-point mark that separates industry expansion from contraction. Since U.S. president Biden passed his US$1.9tn stimulus package and the UK purchasing managers index (PMI) increased to 65.6, both sides of the Atlantic are facing a much-welcomed manufacturing recovery.
Lingering Concerns Over COVID
Even as Spain, France, Italy, and Germany race to catch up, and mining companies pushed the FTSE 100 index of list shares to a monthly high of 7,129, some say that UK and US markets still suffer from a lack of confidence in raw material supplies. Yes, the Dow Jones has made up its 19,173-point crash of March 2020, and MSCI’s global stock index is at an all-time high.
Yet manufacturers around the world realise that these wins will be short-lived until pandemic supply chain bottlenecks are solved. If we keep the status quo, consumers will pay the price. In April, inflation in Germany reached 2.4%, and across the EU’s 19 member countries, overall prices have increased at an unusual pace. Some ask: Is this true recovery?
IMF: Current Boom Could Falter
Even as Elon Musk tweeted about chip shortages forcing Tesla to raise its prices, UK mining demand skyrocketed; housing markets lifted; and the pound sterling gained value. The International Monetary Fund (IMF), however, cautioned that manufacturing recovery won’t last long if COVID mutates into forms our vaccinations can’t touch. Kristalina Georgieva, Washington’s IMF director, noted that fewer than 1% of African citizens have been vaccinated: “Worldwide access to vaccines offers the best hope for stopping the coronavirus pandemic, saving lives, and securing a broad-based economic recovery”.
Across the globe, manufacturing companies are keeping a watchful eye on new developments in the spread of COVID. Though US FDA officials don’t think we’ll have to “start at square one” with new vaccines, the March 2021 World Economic Outlook states that “high uncertainty” surrounds the projected 6% global growth. Continued manufacturing success will in large part depend on “the path of the pandemic, the effectiveness of policy support, and the evolution of financial conditions”.
Mathias Cormann, secretary-general of the Organisation for Economic Co-Operation and Development (OECD) concurred—without global immunisation, the estimated economic boom expected by 2025 could go kaput. “We need to...pursue an all-out effort to reach the entire world population”, Australia’s finance minister added. US$50bn to end COVID across the world, they imply, is a small investment to restart our economies.