The Digitalisation Effect: New Jobs in Swiss Businesses

Technological advances in the past have rendered human labour superfluous in many areas. That said, they have also created many new jobs, which is why we are still working today. This time, however, things could be different. Automation driven by digital technologies could destroy more jobs than it creates. In fact, a study published in 2017 concluded that 47% of all US jobs are under threat from automation.

How do things look for Switzerland? There are signs that, until now, the labour market has benefited overall from technological progress. In a study due to be published shortly, Martin Wörter (KOF) and Benjamin Balsmeier (University of Luxembourg) have investigated whether there is any correlation between investment in digital technologies and the creation or loss of jobs in Swiss firms.

The study examines two data sets: a survey of digitalisation by Swiss firms (2016) and the Swiss Innovation Survey (SIS, 2015). Both surveys are based on the KOF business panel, which makes up a representative sample of Swiss companies. Using these data sets, the authors studied whether investment in new technologies in the recent past has been associated with changes in employment levels at the companies examined. They then examined whether the employment effects differ depending upon the type of digital technology used.

The type of technology is crucial

It is clear that investment in digitalisation is closely related to changes in employment levels. The number of highly qualified workers rises, while that of unskilled workers falls slightly. Specifically, every additional 100,000 Swiss francs of investment in digitalisation by a company from the sample over the period covered by the investigation resulted in the creation, on average, of around 5.8 new jobs at that firm for highly qualified workers, as against a loss of 2.3 jobs for less skilled workers. Ultimately, considering all qualification levels, the study shows a net gain of 1.6 jobs per 100,000 Swiss francs invested.

In addition, the investigation shows that the employment effect is dependent on the type of technology introduced. The effect only arises for firms that use machine-based digital technologies such as robots, 3D printers or IoT (Internet of Things). If firms invest in non-machine-based digital technologies (ERP, CRM, social media, e-commerce), there is not any significant correlation. These results are consistent with the view that new technologies have an effect on employment in particular where machines can be made more productive by accessing data and computational and communications technologies. This is therefore the area in which technological progress has been strongest over the last few years.

The authors conclude that competition for skilled workers will become stiffer in future. They advise companies to dedicate more time and resources to the recruitment and retention of highly qualified staff. Indeed, a number of firms are already reporting a shortage of skilled workers – even in Switzerland, a country with a large number of highly skilled workers.

According to the authors, there is a risk that a fall in the number of jobs available for unskilled workers might increase inequality throughout the population at large. It is therefore essential to take action in order to minimise any potential negative consequences of such a development. Unskilled and semi-skilled workers should be supported in acquiring new skills that can enable them to work in the new jobs created through digitalisation.