ELMI conference: Navigating Digital, Green and Social Transitions in European Labour Markets

The Network of European Labour Market Research Institutes (ELMI) held its first conference in Luxembourg on 30 and 31 October 2023. The event brought together leading national and international researchers in labour economics and social sciences to address the challenges of the digital, green and social transitions for the labour market, society and education.

The new network ELMI promotes the deepening of multidisciplinary research collaborations and fosters the exchange of best practice in data management and data access. Another key objective of ELMI is the discussion with policy makers and stakeholders in order to reinforce the dialogue between science and the different national practices.

This year’s conference presented work by internationally renowned researchers who analysed the future changes that digitalisation and robotisation will entail and addressed the theme through a range of perspectives in six workshops.

In addition to researchers from the co-founders of ELMI, the Luxembourg Institute of Socio-Economic Research (LISER) and the Institute for Labour Market Research (IAB), speakers from numerous other leading European research institutes shared their results at the conference venue in the Halle des Poches à Fonte in Esch-sur-Alzette.

Professor Christina Gathmann, PhD, Head of Labour Market Department at LISER 

Professor Christina Gathmann, PhD: The use of artificial intelligence is more widespread in economic sectors than the use of robots

In her opening speech, Professor Christina Gathmann, PhD, Head of the Labour Market Department at this year’s host institute, LISER, presented a new method for measuring robot- and artificial intelligence (AI) usage through an automated evaluation of patent-data based on machine-learning.

The patent-data are then linked to labour-market data for Germany, in order to examine the effects of robots and AI at professional-, firm-, regional- and individual levels. The results show that the use of AI has increased significantly since 2015 and occurs across a much broader range of sectors than the use of robots. Due to its productivity-increasing effect, AI-use stimulates demand for work, but it also replaces routine activities and jobs which require a medium level of qualification. Overall, the results indicate a strong automation effect of AI, which can also increase productivity and thus the wages of remaining employees.

Nicolas Schmit, European Commissioner for Jobs and Social Rights

Nicolas Schmit: Skills are this year’s key issue

Nicolas Schmit, European Commissioner for Jobs and Social Rights, opened the conference with a video statement. He underscored the lack of skilled workers in the European labour market as the most pressing issue of the year. He added that the rise of AI and green skills are already having a significant impact on the European labour market, which is only set to continue.

Professor David Hémous, PhD,  Associate Professor of Economics of Innovation and Entrepreneurship at the UBS Center for Economics in Society at the University of Zurich

Professor David Hémous, PhD: How can the direction of innovation shape labour- and energy markets

In his keynote speech, Professor David Hémous, PhD, from the UBS Center for Economics in Society at the University of Zurich raised the question of how the direction of innovation could influence and shape labour- and energy markets. He showed that the direction of innovation is endogenous and is formed by policy incentives – although he also underscored that a highly directional, policy-based approach to innovation may be inefficient.

The welcome- and keynote lectures were followed by panels focussing on various topics such as migration, employees, skills-matches and the impact of skills on businesses.

Professor Bernd Fitzenberger, PhD, director of the IAB

Professor Bernd Fitzenberger, PhD: Skill shortages: demographic change, educational choices and matching in the vocational education and training market

The presentation of Bernd Fitzenberger, Director of IAB and Professor at FAU Nuremberg, addressed the mechanisms behind the long-run decline in entries into firm-based vocational training in Germany. Between 2009 and 2021, the number of individuals starting an apprenticeship declined by 16 percent and this trend has been associated with a stronger fall of applicants compared to the number of vacancies for an apprenticeship. Demographic changes resulting in a decline in cohort size play a large role, but also the growing share of adolescents with an upper track school degree and a fall in the entry rate into apprenticeship for a given school degree contribute to the trend. In addition, he presents evidence that the matching efficiency in the apprenticeship market has fallen over time, implying that it has become less likely over time that an apprenticeship offered is filled by an applicant for a given occupation in a given region.

Panel: The Economic and social implications of skills gaps and mismatches

Dr Peter Spittal form the University of Bristol presented a new empirical measurement of worker-specific labour-market opportunities. With this approach it is possible to measure the degree to which workers are able to move into different lines of work, depending on how well their employment experience fits with different types of jobs. Thus, it is possible to identify key skills which enable or inhibit mobility in the labour market.

Hiromi Yumoto, Researcher in labour economics, urban economics and economics of migration at the University of Birmingham

Hiromi Yumoto of the University of Birmingham presented novel findings regarding the impact of firm-specific pay premiums on refugee-native pay gaps. Her research reveals that refugees earn approximately half of the wages earned by native workers. Whilst individual characteristics are predominantly driving these pay gaps, an intriguing finding is that firm sorting (i.e. gaps between firms) account for 14 percent of the native-refugee pay gap. This highlights potential discrepancies between refugees’ skills levels and their wages, due to their limited access to higher-paying firms. Since for a given skill level, refugees are more likely to work in firms with lower overall pay-levels. Hence, refugees could earn higher returns to their skills if they had better access to higher paying firms.

Dr Susanne Forstner, Senior Researcher at the Institute for Advanced Studies (IHS), Vienna

Dr Susanne Forstner of the Institute for Advanced Studies in Vienna talked about wage differences driven by expectations and attitudes to work – in particular, more pessimistic expectations of the job-market in regions of eastern Germany, compared with west-German regions. Employees in eastern Germany tend more frequently to believe that they could lose their jobs and would not be able to find new employment. Due to this fear, wages may be lower and fewer jobs may be created. In Forstner’s opinion, a more positive or even realistic view on personal chances and opportunities could increase workers’ overall income over their lifetimes.

Dr Fabien Petit, Research Fellow at the University College London, Centre for Education Policy and Equalising Opportunities

Panel: Firms’ skills demand and technology adoption

Dr Fabien Petit of University College London presented a new method for evaluating the number of online-job offers associated with digital technologies across Europe.

Dr Terry Gregory of LISER presented findings from his research panel, which show that the overall reduction of routine jobs in Germany is driven by digitalisation and the adoption of new technologies. He also showed that the largest of the most advanced companies drive the transformation of work across sectors as a whole due to their use of further training and other adjustments.

Dr Boris Ivanov of the IAB showed with Microcensus data starting from the 1970’s that employees frequently do not adapt their way of working to the evolving demands of the labour market. This lack of adjustment can make it difficult for individuals to find their back into the labour market if they lose their job.

Dr Boris Ivanov, postdoctoral researcher for the department of  “Migration and International Labour Studies” at IAB

Panel: Emerging artificial intelligence and skills demand

Dr Michael Stops of the IAB shed light on the early phase of AI adoption in Germany. He showed that establishments with AI skills demand in 2015 reveal a slightly larger employment growth of highly complex jobs until 2019, compared with establishments without AI skills demand. He also found for the same observation period that establishments with AI skills demand reduced their demand for other than AI skills to a larger extent.

Dr Eduard Storm, PhD, of the Leibniz Institute for Economic Research spoke about a later phase of AI adoption in Germany, from 2017 to 2021. He concluded that wages are larger in regions with a larger demand for AI-related skills.

Dr Aida Garcia Lazaro of the University of Bath discussed descriptive evidence on the diffusion of skills demand related to AI technologies and Cypersecurity in the United Kingdom, particularly for the Manufacturing sector with findings that confirm positive trends.

Outlook

The ELMI network will continue to investigate the labour market effects of the digital, green, and social transitions and the skills needed to meet these challenges. Skills, for example, will be the focus of next year’s ELMI Conference. On 1 and 2 October 2024, the ELMI institutes will come together in Brussels and present the latest policy relevant research on ‟Securing Skilled Workforces in Europe” to policy makers and representatives of the European Commission. The next ELMI event will, by contrast, look at a different topic: on 31 January 2024, the ELMI Policy Round Table will discuss “The Labour Market Integration of Ukrainian Refugees.” The online event will bring together findings from various European countries. For details, please have a look at the ELMI website.

DOI: 10.48720/IAB.FOO.20231127.01