Germany: Effects of digitalisation on the labour market and working conditions

The opportunities and challenges sparked by the digital revolution have been highlighted in a Green Paper by The Federal Ministry for Labour and Social Affairs. The ministry has also invited social partners and the public to participate in a new forum, to identify solutions to the anticipated changes to the labour market.

New forum on the future of work

Federal Labour Minister Andrea Nahles (Social Democrats) published a Green Paper called Working 4.0: Thinking further about work in April 2015. It serves as a starting point for a new forum on the future of work. It highlights the trends in digitalisation and in ‘Industry 4.0’, the name given to production processes with fully integrated automated facilities which communicate with one another. It raises several key questions that are much debated in Germany.

  • How will technological changes affect different industries, their production processes and employment levels? How will they influence the location of businesses and what will be the consequences for affected workers?
  • Will future technical developments create a new understanding of what work is, and what constitutes a typical working relationship/contract? How will they affect workplaces and safety issues, employee availability and stress levels, working time concepts, co-determination rights and actual practice?
  • What kinds of qualifications are needed, and how will companies’ demand for certain qualifications be matched with available skills?
  • What will flexible jobs and flexible work organisation look like in the future? Is crowdworking the new norm and how will such work be anchored in the current social security system, and in labour legislation?
  • Can the social security systems and the related labour legislation cope with a new generation of workers and jobs? And if not, what needs to be done?

The newly launched dialogue forum works in two ways. First, academics, the social partners, welfare institutions and others will be invited to attend expert workshops and conferences. However, the ministry also wants to involve the public and has invited everyone to post comments and ideas on the forum’s website. Also, on the ministry’s Facebook page, anyone can follow Minister Nahles’ summer visits to tech start-ups or to companies already using digital work processes. The ministry also plans to organise a film festival in autumn 2015. The Green Paper promotes the opportunities offered by digitalisation and new forms of work organisation, but it also reflects the ministry’s aim of avoiding any detriment to employment levels, pay or working conditions. Evidence from research suggests that the effects of digitalisation are, and will continue to be, mixed.

Effect on employment of further technological advances

At the beginning of April 2015, the Boston Consulting Group (BCG) released an analysis of the future of manufacturing industries, the development of Industry 4.0 and its impact on German industries. Apart from productivity and revenue gains (varying by sector), the BCG analysis suggests that employment levels will grow by 6% within the next 10 years. For some skills, such as those of mechanical engineers, demand might be even higher. While low-skilled jobs involving repetitive tasks may be lost, higher-skilled jobs will become available for employees with IT and software skills. Overall, the BCG report predicts the creation of 390,000 new jobs within the next decade.

The BCG’s positive view of the future of manufacturing in Germany is not, however, shared by all researchers. An economic analysis by the bank ING-DiBa implies that 18.3 million workplaces could become redundant within the next two decades (in German, 115 KB PDF). In the study’s view, new technologies, a rising degree of automation and deployment of robotics might make certain jobs redundant. These include secretarial and office jobs, sales positions and low- or unskilled jobs in the postal, courier services and storage sector, in the cleaning sector and in the restaurant and catering industry. Managers, academics and creative workers are less likely to be affected by automation. Yet, while not indicating the scale involved, the ING-DiBa analysis also concedes that new jobs and job profiles will be created (particularly in the IT sector).

As the divergent results of these studies show, there is no consensus on how many jobs will be created or lost due to technological advances. However, the Cologne Institute for Economic Research (IW) recently published an analysis of how digitalisation is already affecting employees’ stress levels.

Digitalisation and stress levels

There is a continuing debate in Germany on how digitalisation, mobile ICT devices and changing work organisation blur traditional borders between working and private life. Constant availability is said to lead to higher stress levels and more mental illness.

Using data from the BIBB/BAuA Labour Force Survey, the IW shows that in 2012 every second employee reported frequently experiencing severe deadline and performance pressure. This share was even higher (nearly 59.3%) for employees at internet-based workplaces. However, deadline and performance pressure did not automatically translate into higher stress levels, as individuals react very differently to varying demands.

The research highlights the fact that employees at digitally networked workplaces did not feel more frequently stressed in comparison with other groups of workers. In 2012, only 4% of all employees working at such a workplace showed signs of increased stress risks. This was the case when high levels of deadline and performance pressure coincided with a lack of autonomy in dealing with the situation.

These findings are explained by the resources available to employees in digitally networked workplaces: Stress levels are countered by the support of superiors and colleagues as well as by workplace autonomy and appreciation of work done. Around 95% of all employees were very satisfied with their jobs, as long as they could plan their work themselves.

Social partner views

In June 2015, the German Confederation of Employers’ Associations (BDA) published a position paper on digitalisation (in German) which has been strongly criticised by the German Confederation of Trade Unions (DGB). The BDA argues that digitalisation and innovation will improve the competitiveness of German industry, create new business opportunities and provided better scope for combining work and private/family life.

In the BDA’s view, digitalisation is closely connected to the further specialisation of labour and more flexible forms of work organisation. If companies are to remain competitive in such an environment, fixed-term contracts, temporary agency work and working time accounts guaranteeing internal and external flexibility must not be regulated any further. However, the BDA calls for the introduction of a statutory maximum weekly working time (instead of the current maximum number of hours to be worked every day). Such a change would provide greater leeway for companies in allocating working time. On a related topic, the BDA holds that the occupational health and safety rules currently applied in offices and factories cannot be transferred to crowdworkers. As self-employed people, they are responsible for their own working time and conditions.

The DGB heavily criticised the BDA’s position as another ‘attempt to liberalise the labour market’ and disagrees on most issues addressed in the BDA position paper (in German). The unions particularly insist that the new forms of work organisation, such as crowdworking, need to be regulated. The concepts of ‘employee’ and ‘establishment’ need to be adapted and co-determination rights expanded to include these workers. In the view of the DGB, all forms of employment should be protected by inclusion in the social security system, and bogus self-employment needs to be avoided in digital work as much as in any other kind. In general, the DGB calls for employment protection, decent work in a digitalised age, adequate skills development and rules that protect employees’ health and safety.

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