Technological change has not lead to fewer jobs

Economic Commentaries, News Technological change means that some jobs disappear. At the same time, however, new jobs are usually also created. The Economic Commentary “Technological change and the labour market” shows that total employment has not fallen due to new technology.

Technological change has increased global competition in that more jobs can now be performed digitally. It has also raised fears that more jobs may disappear as automation and digitalisation increase.

For example, research shows that automation has led to the disappearance of some jobs but that new ones have simultaneously been created in other parts of the economy. There is no support for the claim that total employment has so far decreased as a result of technological change.

At the same time, demand for labour has become polarised. The number of jobs has increased in low- and highly-paid professions, while it has decreased in professions with average salaries. Certain groups are being hit harder by the development as their knowledge and abilities are no longer in demand on the labour market. There is a risk that this may lead to increased division on the labour market.

The rapid technological change is placing demands on the labour market’s ability to adjust. Education, training and continuing professional development could mitigate the negative effects. Some regulation of new, less secure forms of employment may be needed, alongside the adjustment of social insurance and the tax system to these.

Effects of a structural transformation are noticed more on the labour market during downturns, when more businesses shut down at the same time as it becomes more difficult for those who have lost their jobs to find new ones. Consequently, there may be a particular need for resources to help the realignment of the labour market in the next recession.


By Iida Häkkinen Skans, who works at the Monetary Policy Department of the Riksbank.

Updated 02/10/2019
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