Offshoring and technological change are reshaping European labour markets, driving a significant increase in part-time, temporary, and other involuntary atypical jobs, according to a new study from the Project WeLaR.
The paper, “Offshoring, Technological Change, Labour Market Institutions, and the Demand for Typical and Atypical Employment in Europe,” examines how the expansion of global supply chains, offshoring, and the diffusion of new technologies (robots; information and communications technology; and databases) impact employment in the European Union. Using data from 2009 to 2018 across EU countries, researchers found that atypical work, defined as temporary or part-time employment, is becoming increasingly prevalent in both manufacturing and services.
“While offshoring and technological change enhance productivity and global competitiveness, they also erode job stability for many, shifting the burden to workers who often have fewer protections in the labour market,” says Sandra M. Leitner, Senior Economist at the Vienna Institute for International Economic Studies (wiiw) and one of the study’s co-authors.
Offshoring was found to increase the number of atypical jobs in the short term across the economy, while reducing total and typical employment in the manufacturing sector over the medium and long term. Technological change, especially advances in communication technologies, has boosted overall and atypical employment. But robotisation has displaced typical jobs over time, with more pronounced effects in the older EU15 member states than in the EU13 countries.
“Policymakers should pay particular attention to the service sector, where atypical employment was more prevalent to begin with and has expanded even more because of offshoring,” says Piotr Lewandowski, chairman of the Institute for Structural Research (IBS) and another co-author.
The findings also highlight the vulnerability of specific groups, with women and younger workers disproportionately affected by increases in involuntary atypical employment due to automation.
“This is a wake-up call,” says Sandra M. Leitner. “Our findings show that technological advances and globalisation are not neutral forces: they interact with existing inequalities, and unless we act, they will deepen these divides.”
The study also underscores the critical role of labour market institutions, such as employment protection legislation (EPL) and trade unions, in shaping how these trends play out. For instance, strong unions can mitigate the negative effects of automation by protecting workers from displacement. Stricter EPL, while protecting some workers, can amplify negative outcomes for others, such as those in typical jobs, particularly in countries with strong temporary contract protections.
To address these challenges, the researchers stress the need for bold policy interventions. They call for enhancing protections for atypical workers, promoting lifelong learning initiatives to help workers adapt to technological change, and strengthening trade unions to give employees a stronger voice in shaping working conditions.
Policies should focus on simultaneously increasing employment and reducing non-standard jobs, particularly by enhancing access to adult education, which strengthens workers’ bargaining power and reduces atypical employment, the authors said. They found that training in digital and AI-related skills is critical, as AI impacts not only routine but also non-routine tasks, requiring educational initiatives for both middle- and high-skilled workers.
Sandra M. Leitner, Piotr Lewandowski, Alireza Sabouniha and Wojciech Szymczak (2024) Offshoring, technological change, labour market institutions and the demand for typical and atypical employment in Europe (Deliverable D4.2). Leuven: WeLaR project 101061388–HORIZON.
The paper is available here.
