Issue #22: The labor market is in the middle of a disruption
Covid, demographics and digital trends shape the future
Note to self: Don’t forget your glasses!
But I did forget them and therefore couldn’t finish this newsletter on time. Sorry about that!
In this week’s issue, I decided to focus a little more on the significant shifts in the labor market. I believe we’re in the middle of a considerable change which partially is fuelled by Covid but primarily by digital advancements and demographics. With more people leaving the labor force while the economy grows, there will be more and more job vacancies.
Facebook announced to create 10,000 jobs in Europe, but it’s not only in high-end sectors where talent is lacking. This is a global trend, and it could have political and societal implications affecting migration, income inequality, and the economy's strength.
Take care,
Alice
Headlines you shouldn’t miss
THE VERGE Facebook is planning to rebrand the company with a new name: Facebook wants to change its appearance with a new name that emphasizes its work on the metaverse (see below). The Verge’s Alex Heath believes that Facebook could move in a similar direction to Google/Alphabet. The parent corporation will receive a new name, and the blue Facebook app is becoming merely a single product among many.
INFORMATION AGE How the Government of Estonia is placing AI at the heart of operations: Ott Velsberg, chief data officer for the Government of Estonia, describes how the Baltic country puts AI first: Citizens shall experience the benefits of AI in their daily lives, e.g., by talking to voice systems navigating through bureaucratic processes or being reminded to visit a doctor. Additionally, the unemployed might receive AI assistance when applying for jobs.
BLOOMBERG LAW Morgan Stanley’s Robot Libor Lawyers Saved 50,000 Hours of Work: Analyzing Libor (“London Inter-Bank Offered Rate” is an interest-rate average calculated from estimates submitted by the leading banks in London, according to Wikipedia) is time-consuming and complex. Financial institutions are gradually turning to AI to do the job. Morgan Stanley announced that the algorithms they use saved 50,000 work hours worth $10 million in attorney fees.
AXIOS The AI Pharmacist: Developing new drugs is costly and can take up to ten years. During every development step, mistakes can occur that would stop the progress. AI can boost drug development and prevent errors. Experts are hopeful regarding the increased pace of pharmaceuticals.
FAST COMPANY The future of jobs in the era of AI: Humans worry about AI’s impact on employment. However, they should not ask whether their jobs will disappear, but how humans can interact with machines in the most meaningful way. Emotional intelligence, creativity, and problem-solving will remain crucial skills for humans. Chances are that working with AI will become a natural process if humans are ready to embrace the progress.
FOREIGN AFFAIRS The Technopolar Moment: Political scientist Ian Bremmer suggests that Big Tech is reshaping global order and controlling certain domains of societies that used to be dominated exclusively by nation-states. With people living their lives increasingly in a digital space, the decisions tech juggernauts make are impacting politics and society.
Wrap-up of the week: Global labor market disruptions shake up the economy
👔 The Covid pandemic, demographic change, and digital advancements have been disrupting the labor market across the world. On the one hand, the “Great Resignation” indicates that many people in high-paying jobs are fed up with their work lives and find the courage to leave. On the other hand, employers are desperately searching for workers.
👩⚕️ In Germany, the Bureau of Labor announced that 1.2 million qualified workers are missing. While experts in the STEM professions are in demand, most openings are in the social and care sectors: 18,300 social workers are missing. Additionally, care workers are in demand. Germany faces a massive challenge: Due to Covid, 60,000 apprenticeships remained vacant in 2020 — one of the primary sources for the German economy to generate talent.
💻 In China, the semiconductor industry is going through a massive labor shortage. 300,000 scientists and engineers are missing. The number of vacancies has doubled since 2015. Facing a lack of talent, China is lagging behind its ambitions to become a semiconductor superpower.
🍟 It’s not only skilled labor that’s missing. In the restaurant industry, business owners desperately seek waiters and waitresses. The labor crunch has already forced some business owners to switch to robots and automation. While new robots can cook meals or serve dishes, humans can’t be replaced.
💪 For businesses, recruiting and hiring are becoming increasingly important. According to a study by the HSBC Bank in India, recruiting strategies are essential for recovery for 80% of the companies.
🌎 These trends could indicate several things: 1) The labor market is becoming more polarized with high demands in low-wage and high-wage jobs with middle-class occupations disappearing or less in demand. This polarization could affect the share of people classified as “working poor” — the top graph shows the development of this group of people in Germany. 2) Countries like Germany are seeking qualified foreign talent to close the talent gaps. This could fuel migration in Europe. 3) As expected, workers will notice the implications of the demographic change. With baby boomers becoming pensioners, there will likely be many job openings despite automation. However, businesses are likely to seek experienced workers with fewer entry jobs and junior positions. Especially young people could face a hard time finding the right job to acquire the necessary skill and experience level.
Quote of the week: Facebook plans to build the metaverse with the help of European developers
In a blog post, Facebook’s Nick Clegg, VP Global Affairs, and Javier Olivan, VP Central Products, announced that the tech juggernaut wants to focus on building the metaverse. The metaverse shall be a new type of internet users can experience via virtual and augmented reality. (Click here for my summary on the metaverse.)
The Facebook leaders announced that a crucial part should be developed in Europe.
So today, we’re announcing a plan to create 10,000 new high-skilled jobs within the European Union (EU) over the next five years. This investment is a vote of confidence in the strength of the European tech industry and the potential of European tech talent.
The announcement comes as a surprise. The European Union has been calling for more regulation for years and recently criticized Facebook after former Facebook employee and whistleblower Frances Haugen claimed that the company was knowingly damaging public discourse.
Number of the week: 10 robots for every human
In Amazon’s newest warehouse in Delaware, robots outnumber humans. In the five-story building, there are ten robots for every human selecting, moving and carrying objects for delivery: 1,000 humans complement the work of 10,000 robots.
Does this mean that Amazon paves the way towards humanless production and logistics plants? Not quite. The service is growing and Amazon is still hiring people. Last year, Amazon employed 1.3 million people — 500,000 more than the year before.
However, with plans to automize transportation via drones and other autonomous vehicles, the number of job openings could drop. Considering that Amazon has been facing criticism for its work conditions and salaries, at one point, it could be cheaper to replace many human workers.
In Delaware, Amazon provides jobs in a region bleeding out in the wake of the GM plant closing. Yet, Amazon doesn’t pay the same salaries as the car manufacturer did.
Recommendation of the week: Ian Bremmer’s GZERO podcast with Kai-Fu Lee
Political scientist Ian Bremmer talks to AI expert Kai-Fu Lee about the disruptions artificial intelligence will bring. Will the technological advancements displace many workers, or will the future be utterly different from we expect? Listen here: Podcast: The future of artificial intelligence with tech CEO Kai-Fu Lee (gzeromedia.com)