The Technology/Jobs Puzzle: A European Perspective

Pierre-Alexandre Balland, Lucía Bosoer and Andrea Renda through the European University Institute, recently published a new report analyzing European approaches to good jobs as part of the work of the Markle Technology Policy and Research Consortium.

In recent years, the creation of “good jobs” – defined as occupations that provide a middle-class living standard, adequate benefits, sufficient economic security, personal autonomy, and career prospects (Rodrik and Sabel 2019; Rodrik and Stantcheva 2021) – has become imperative for many governments. At the same time, developments in industrial value chains and in digital technologies such as Artificial Intelligence (AI) create important challenges for the creation of good jobs. On the one hand, future good jobs may not be found only in manufacturing, ad this requires that industrial policy increasingly looks at services. On the other hand, AI has shown the potential to automate both routine and also non-routine tasks (TTC 2022), and this poses new, important questions on what role humans will play in the industrial value chains of the future. In the report drafted for the Markle Technology Policy and Research Consortium on The Technology/Jobs Puzzle: A European Perspective, we analyze Europe’s approach to the creation of “good jobs”. By mapping Europe’s technological specialization, we estimate in which sectors good jobs are most likely to emerge, and assess the main opportunities and challenges Europe faces on the road to a resilient, sustainable and competitive future economy.

The report features an important reflection on how to define job quality and, relatedly “good jobs”. From the perspective of the European Union, job quality can be defined along two distinct dimensions. First, while the internationally agreed definition is rather static (e.g. related to the current conditions of the worker), the emerging interpretation at the EU level incorporates the extent to which a given job leads to nurturing human capital, and thereby empowering workers with more skills and well-being over time. Second, job quality can be seen from a “micro” perspective, which only accounts for the condition of the individual worker; or from a more “macro” perspective, which considers whether the sector in which the job emerges is compatible with the EU’s agenda, and in particular with the twin (green and digital) transition. As a result, we argue that ideally, Europe should avoid creating “good” jobs in “bad” sectors, as well as “bad” jobs in “good” sectors. The ultimate goal is to create “good” jobs in “good” sectors.

The emerging European emphasis on the Industry 5.0 paradigm and the proliferation of initiatives such as the Pact for Skills, the Alliance for Apprenticeships, the New European Innovation Agenda, the Deep Tech Talent Initiative, the Net Zero Academies and many others show that EU institutions have embraced a vision of industrial policy that incorporates both the consideration of the quality of jobs per se, as well as a degree of directionality as to which sectors (or industrial ecosystems) should see the most significant growth of good jobs.

Yet, there is still significant room for improving policy coherence at all levels of government. The policy recommendations include the following:

• Both at the EU and at the local/regional level, industrial policy should couple horizon scanning and foresight with backcasting. This process should not merely look at technological developments, but also at how alternative futures for industry sectors can impact jobs and skills; how to ensure that the economy and the labor force remain resilient in light of possible unforeseen shocks; and how to use public policy and investment to increase the likelihood that the most sustainable and resilient of the alternative futures will materialize.
• The current emphasis on “deep tech” should gradually veer towards the creation of needed skills in those sectors in which the EU can claim a degree of technological specialization, as well as in those that it deems strategic.
• At the national level, resilience and recovery plans should ensure that investment in infrastructure and the modernization of government and industry leads to the creation of good jobs, and that education and life-long learning accompany this process by creating the specializations and professional skills that will be needed in the future.
• Rather than focusing merely on STEM or coding skills, in the future complementary skills (e.g. domain-specific competences coupled with IT skills) and critical thinking skills will have to be featured both in education paths and in training on the job.

Looking ahead, the findings of this report will be further integrated with economic analysis and field research, also with a view to supporting the new Talent for Growth Task Force between the U.S. and the EU, created in the context of the Trade and Technology Council. Understanding the differences, the relative technology specialization, and the complementarities in future job markets, and possibly coupling them with enhanced cooperation on education and R&D, may lead to the creation of a common space for good jobs across the Atlantic.