Author:Scarpetta, Stefano

The Organization for Economic Cooperation and Development (OECD) analyzes the impact that digital transformation will have on jobs and skills and the challenges that automation, robots, or artificial intelligence pose to workforces. The Journal of International Affairs spoke to Stefano Scarpetta, the Director of OECD's Directorate of Employment, Labor, and Social Affairs, about evidence on the scope and depth of changes, and necessary policy adaptations.

Journal of International Affairs (JIA); Mr. Scarpetta, as the Director of OECD's Directorate for Employment, Labor, and Social Affairs, how do you see each of those interrelated policy areas developing in the context of rapid technological and demographic change?

Stefano Scarpetta (SS): We are seeing that our economies are undergoing a number of deep and rapid transformations, related to interrelated megatrends: globalization, demographic change, and digital transformation, as well as climate change. These can lead to imbalances. There are projections about how economies will evolve. Some degree of speculation is needed here, since there is a lot of uncertainty about the depth and pace of that digital transformation. To enable individuals and communities to fully grasp the many opportunities that these transformations will bring, while allowing them to address the main challenges, we need a whole-of-government approach that combines skill, labor, and social policies exploiting synergies and addressing possible trade-offs. We also need to bring social partners and other key stakeholders on board. Governments by themselves cannot provide a satisfactory response. We need more and better-targeted policies, including for employers, unions, and a more informed civil society.

There is a tendency to think about the Future of Work as something that is still to come, while in fact the transformations brought about by the megatrends have been happening for quite some time with very visible effects in the labor market. One important observation is that at least so far there is no evidence in the data of what John Maynard Keynes called technological unemployment, (1) either in the EU or any other OECD country. (i) Employment rates--the share of people of working age with a job--are back to the pre-crisis levels or above in most OECD countries. Still, we have to look beyond the aggregate numbers as we observe deep changes in the composition of employment. In most OECD countries and some emerging economies, we observe a polarization of the labor market, meaning that employment is concentrating in high-skilled non-routine jobs, as well as low-skilled non-routine jobs. This is leading to a hollowing out of the middle-skilled, routine jobs. Moreover, since the global financial crisis, wages have stagnated in many countries, including in those countries with a strong and long recovery. Wage stagnation has been fairly widespread if we exclude...

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