Automation technologies and other forms of digitalisation make long-term unemployment and inactivity more likely across Europe, with older and less-educated workers most affected, a new study by the EU-funded Project WeLaR found. To respond, the researchers recommend targeted policies that promote lifelong learning and invest in workers’ skills and adaptability.
The study, “Aggregate Megatrends and the Risk of Labour Market Exclusion Across Europe,” examines how four key megatrends – digitalisation, globalisation, climate change, and demographic shifts – influenced labour market exclusion in the EU27 countries and the UK from 2009 to 2019. Labour market exclusion is defined as long-term unemployment and inactivity, conditions that marginalise individuals.
Among the megatrends analysed, digitalisation proved to be the most significant contributor to labour market exclusion. A 10% increase in automation-related patents corresponds to a 0.12 to 0.24 percentage point rise in long-term unemployment, the study found. Similarly, the implementation of advanced manufacturing technologies leads to a 0.22 to 0.79 percentage point rise in inactivity rates. Older, less-educated male workers are the most vulnerable to these changes, underscoring the need for tailored policy interventions.
“While digitalisation creates opportunities for highly skilled workers, it increases exclusion risks for lower-skilled populations,” says Fabio Lamperti of the University of Perugia, a co-author of the study. “Understanding how megatrends affect workers is crucial for effective policymaking.”
The other three megatrends – globalisation, climate change, and demographic shifts – show little direct impact on labour market exclusion when averaged across the population. However, closer analysis reveals that certain demographic groups are affected more than others. For instance, global value chain participation reduces employment opportunities for men, whereas foreign direct investment (FDI) helps lower long-term unemployment among women. The response to climate change, which drives extreme events such as floods, heatwaves and storms, temporarily boosts employment in sectors like construction and disaster recovery, reducing the risk of labour market exclusion for men.
“Our research highlights that megatrends create both risks and opportunities, and their impact varies greatly depending on factors such as gender, age, and education level,” Lamperti adds.
The researchers argue that policies that promote access to education, lifelong learning, and skills training are crucial to ensuring all workers can adapt to technological and structural changes. Addressing demographic disparities through targeted reskilling and upskilling initiatives is equally vital for safeguarding vulnerable groups and balancing the labour market.
“Empowering individuals through better education and skills will not only mitigate exclusion but also ensure that Europe’s workforce is resilient and inclusive as it continues to face new challenges,” says Davide Castellani of the University of Reading, co-author of the study.
Davide Castellani and Fabio Lamperti (2024) Aggregate megatrends and the risk of labour market exclusion across Europe, 2004 (Deliverable D4.1). Leuven: WeLaR project 101061388–HORIZON.
The paper is available here
