Automation will transform jobs and income across Europe, but its impact will not be felt evenly, according to a new study by the EU-funded Project WeLaR. Countries with robust welfare policies are likely to see less inequality and a smaller decrease in disposable income, even in scenarios when automation advances quickly.
The research, “Automatisation and basic income: distributional implications for selected European countries,” explores how automation could transform employment across European countries by 2030. Using EUROMOD, the European tax and benefit microsimulation model, and data from the European Union Statistics on Income and Living Conditions (EU-SILC), the study simulates changes in employment, income, and inequality under two different scenarios of 1) slower uptake of automation and fewer job losses, and 2) rapid automation adoption and larger job losses.
The findings reveal that automation reduces average disposable income across all scenarios, with substantial national variations. France experienced the smallest income reductions—1.7% in the slow automation scenario and 2.8% in the rapid automation scenario—due to relatively modest employment disruptions. Conversely, Spain and the Czech Republic faced sharper declines of 3.3% and 3.6% in the slower automation uptake scenario, and 5.0% and 5.7% in the rapid scenario, reflecting larger job losses in high-risk sectors like manufacturing and machine operation. Romania saw the steepest drops, with disposable income falling by 4.2% in the slow automation scenario and 6.8% in the rapid scenario.
Authors also found that automation increases income inequality in all countries, as reflected by rising Gini coefficients. The smallest rise occurred in the Czech Republic and France, where inequality was already low. In contrast, Romania experienced the largest rise, reflecting its higher pre-existing levels of inequality.
“These numbers show that automation’s winners and losers aren’t determined by technology alone,” said Nizamul Islam, one of the report’s authors and a researcher at the Luxembourg Institute of Socio-Economic Research (LISER). “Strong welfare systems make all the difference in shielding workers from the worst impacts of technological change.”
The study also tested a policy experiment replacing existing unemployment benefits with a form of Universal Basic Income (UBI). This policy distributes a fixed benefit, equal to the average unemployment payout, to all unemployed individuals regardless of prior earnings. The study showed UBI reducing poverty and inequality in France and Romania, even in the rapid automation scenario, but having mixed impact in Spain and Czech Republic.
“UBI has a potential to simplify welfare systems and reduce poverty,” explained Jelena Žarković, a co-author and Professor at the Faculty of Economics at the University of Belgrade. “But its design must account for the structural characteristics of each labour market to avoid unintended consequences.”
The study also uncovered the effects of UBI on women workers. The reform in the Czech Republic and Spain decreased the number of single women participating in the labour market, particularly in scenarios involving rapid automation.
Nizamul Islam, Marko Vladisavljević, Jelena Žarković (2024) Automatisation and basic income: distributional implications for selected European countries. (Deliverable D6.4). Leuven: WeLaR project 101061388–HORIZON.
The paper is available here
