The new generation of digital technologies in Spain
What are the employment prospects for after the crisis?
- 1The Spanish economy has not taken advantage of the economic reactivation to transform its occupational structure and create mainly jobs that require more complex and sophisticated skills.
- 2Emergence from the crisis has led to growing polarisation in the probability of access to employment according to the level of educational attainment: people with low or intermediate levels of education have a lesser presence among the occupied population.
- 3Although routine jobs are predominant in the Spanish economy, the need for manual skills, wage restraint and the absence of standardisation in certain tasks are protecting these jobs, at least temporarily, from being substituted by technology.
The labour market in Spain presents some specificities that have emerged with intensity during the economic reactivation of the last four years. The new jobs generated have consolidated a growing polarisation of employment according to levels of education: while occupations and profiles with higher qualifications are experiencing a substantial increase, at the same time notable growth is being experienced by types of occupation that involve routine tasks and low qualifications. This latter type of occupation, furthermore, has been prevalent among the new jobs created in recent years.
1. The interaction between technology and employment
The incorporation of new knowledge into production activity is one of the main factors of economic progress. The technological and scientific advances developed over the last century have had no precedents and their generalised application to economic activity has enabled technologically more advanced countries to obtain considerable gains in productivity.
In recent decades the digital revolution has accelerated even the pace of technological change, with the development of numerous innovations and applications that have transformed production processes, the technologies employed, the goods and services marketed and the very process of consumption, while perceptibly modifying the knowledge and skills required for jobs. New techniques are emerging, and new knowledge is being continually applied to economic activity, increasing the possibilities for production and consumption without aggregate levels of unemployment growing beyond the ups and downs linked to the economic cycle.
However, the consequences of technological change are definitely relevant with regard to the composition of employment. Its application increases the demand for better qualified jobs, while those that involve more routine and repetitive tasks are substituted.
Thus, and given that technology affects specific tasks rather than particular qualifications, classifying tasks according to the degree of routine and their manual or cognitive nature indicates to us in what way the application of technology can have an impact on them. Thus, routine tasks (whether manual or cognitive) have a high risk of automation and substitution by the use of technology.
As for the forecast impact on employment, the application of technology will probably increase the demand for non-routine occupations with a high level of cognitive content, which are those that require higher-level qualifications and are better paid. In contrast, routine occupations, whether cognitive or manual, will have a lower demand.
The dilemma emerges with occupations that, although not routine (and therefore difficult to substitute with technology), are predominantly manual and, therefore, have little need for qualifications. These types of tasks will perhaps not be overly affected by technology (or it may even have a positive impact with respect to job creation), although if employment growth is achieved based on them it is because they are the worst paid.
2. The labour market in Spain in the face of the new wave of digital automation
In order to analyse the perspectives for the labour market in Spain, we will focus on the evolution of the occupational structure during the recent period of employment reactivation (between the first quarter of 2014 and the fourth quarter of 2017), which occurred following the process of devaluation of costs and labour adjustment as a result of the financial crisis and the austerity policies applied.
The Spanish labour market presents some specificities that in the reactivation subsequent to the recent financial crisis have become consolidated. One of these is the polarisation of the employment created which, either implies high levels of qualifications, or alternatively very low levels, with intermediate levels being the least dynamic in terms of the creation of new jobs. In graph 1 it can be seen that the new employment generated following the economic reactivation has consolidated the differences in the probability of obtaining a job according to levels of education. At the same time that the most highly qualified employment has grown substantially, occupations requiring very low levels of qualification have also increased notably.
Analysing the types of jobs and professional profiles created will enable a better understanding of this recent evolution undergone by employment. The information contained in graph 2 shows notable growth, both of jobs that require a medium and high level of professional qualification (scientific and intellectual technicians and professionals, craftspeople, etc.) and of those others that are mainly made up of tasks and functions of a routine nature and, therefore, potentially more vulnerable to being affected by technological change (catering services workers, elementary occupations, etc.). This is an indication of the leading role, in the recent recovery, of employment in some economic activities with low added value and justifies a notable growth in jobs that require a high level of professional qualification as well as those made up mainly of tasks and functions of a more routine nature.
To interpret more accurately this behaviour of the Spanish labour market, it would be opportune to refer to a recent report from Eurofound (2016) regarding the tasks that are performed by European workers. The publication presents an alternative catalogue of tasks that overcomes the conventional dichotomy of manual versus mental. This new classification identifies the contents of the tasks performed (manual, intellectual, social), and also the role of workers in the organisation of their work and the required use of technology.
Table 1 presents the results of the profiles of tasks and corresponding jobs in the Spanish economy in comparison with the European Union average. Specifically, it indicates whether the relative presence of each type of tasks in employment in Spain is higher, lower or similar to what occurs in the set of EU countries.
We can observe that Spanish employment shows a greater relative intensity in tasks related with service and personal attention to customers, consumers or patients, and a greater degree of tasks of a routine and repetitive nature. In contrast, the presence of intellectual tasks, the use of digital technologies and work organisation based on autonomy or teamwork are comparatively lower than the European Union average. This scenario indicates that the impact of automation could be greater in the Spanish labour market than in neighbouring economies, because the quality of the jobs created is inferior and there are organisational improvements pending.
However, it is worthwhile reflecting on the contents of the catalogue of tasks before proceeding to its interpretation with a view to the substitution of work by technology. Although the form of organisation based on routine work is detected as more prevalent, routine has two dimensions: the degree of repetition and the level of standardisation in work processes. Once this indicator is broken down, the Eurofound study (2016) shows that, in the Spanish case, the level of repetition is much higher than in the European context. In contrast, the degree of standardisation of processes is much lower, which hinders their automation. This would be the case, for example, of many jobs related with the hotel and catering sector or with the care of elderly or dependent people. The content of this typology of tasks is not easily reproducible through algorithms; in other words, the use of technology cannot substitute these tasks easily.
Thus, if the results obtained are combined with data from Eurofound, it can be inferred that, paradoxically, despite the predominance of routine work in the Spanish economy, the need for manual dexterity, the absence of repetition in certain tasks and the difficulties in reproducing these skills through robotics would protect, at least temporarily, some occupations that require this manual and artisan expertise, even though they are generally exercised by low-qualified staff. Wage restraint due to the labour adjustment during the crisis, which disincentivises investment in technology, together with legislative changes in the regulation of employment contracts, which have increased flexible hiring arrangements, reinforce the protective effect over these types of jobs.
3. Structure of occupation according to required skills
With the aim of completing the analysis of the recent changes in Spain’s labour market, also used was the new international standard classification of occupations, ISCO-08 (ILO, 2012), which defines each job based on the skills required to efficiently perform the required tasks and responsibilities. In particular, four levels of skills are defined, linked to the different types of occupations:
Occupations related with level 1 skills require the performance of simple and routine physical or manual tasks. For their competent execution, primary education is generally sufficient.
Occupations related with level 2 skills correspond to the performing of tasks that demand relatively advanced numerical, reading and writing skills, as well as manual dexterity and competence in interpersonal communication. In general, the required skills are obtained in the first phase of secondary education, although for some occupations completed secondary education or even specialised training is necessary.
Occupations related with level 3 skills are associated with the performing of complex technical and practical tasks for which a broad base of practical, technical and procedural knowledge in a specialised area is necessary. In general, these skills are attained through higher education.
Finally, level 4 is related with jobs based on the performing of tasks that require decision-making and complex problem-solving capabilities. In general, these are associated with higher levels of qualifications.
Labour changes have been grouped according to the predominant skills in the different jobs created: basic (predominance of levels 1 and 2), intermediate (predominance of level 2 in artisan and qualified work occupations) and complex (predominance of levels 3 and 4).
In graph 3 it can be seen that, following the adjustment and reactivation of the labour market, and despite the magnitude of the new employment generated, the occupational structure has not undergone notable changes in terms of required skills, and the polarisation that already existed has been maintained, which highlights the resistance to change of the dominant production model. Also significant is the fact that the requirement of basic skills continues to be prevalent in the creation of new jobs in Spain. Graph 3 shows the skills that are requested for these new jobs.
4. Towards an increase in educational disparity
A complementary effect of this evolution of the labour market in Spain, with a growing prevalence of jobs that only require basic skills, is the disparity according to level of education, as shown by the data included in graph 4. Thus, data from the end of 2017 indicate that, despite employment with higher education being clearly predominant (42.8%), the demand for complex skills is much less important (32.6%).
In this context of high availability of workers with high levels of education and polarisation in job creation (in which occupations requiring higher qualifications levels are growing, but not as much as those requiring lower qualification levels, as has already been seen in graph 2), there is a growing displacement of workers with high levels of education towards jobs that require more simple skills and abilities, which had previously been occupied by less qualified workers.
We are barely starting to perceive the first manifestations of a process of growing automation of economic activity, which would have its main driving forces in advances in artificial intelligence and robotics. This new wave of technological change is presented as potentially disruptive and of a different nature to previous ones, because the emerging technologies have the capacity to substitute manual and cognitive skills alike and because advances in the aptitudes related with logic, calculation, information processing and machine learning are progressing very quickly.
The Spanish economy is not immune to the effects of the digital revolution. The growing polarisation of the labour market could suggest that the use of technology might substitute more jobs in Spain than in neighbouring countries. However, this influence on the labour market is qualified, at least temporarily, by the characteristics of the employment generated during the economic reactivation that is under way, which has prioritised repetitive jobs but not excessively standardised jobs. Other consequences of this process of polarisation – such as the reduction in average income due to the majority creation of jobs that require low qualifications, or the disparity between increasingly qualified workers and a lack of jobs to be found in line with their qualification levels – have indeed more clearly affected the Spanish labour market in recent years.
The majority creation of jobs that require limited levels of skills at one extreme and complex skills at the other, and deficits in the organisation of the labour market are warning us that adaptation to the challenges implied by the increasingly intensive use of technology is insufficient. The priority objective of public policies and business strategies should be accelerating this adaptation and implementing mechanisms to compensate digital technological change.
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