As more and more companies invest in technology, wage coordination mechanisms remain crucial in helping countries maintain job quality, a recent study funded by the Project WeLaR shows.
“As digitalisation progresses, it’s important to look beyond just jobs and wages to understand its full impact,” said Francesco Venturini, an economist at the University of Urbino Carlo Bo who co-authored the study. “Job quality matters too because it affects workers’ well-being and their ability to benefit from those technologies. By studying how technology changes job quality, we can work towards a fairer and more sustainable labour market for everyone.”
In the study “Bargaining Models, the Quality of Work and Rent Sharing in the Era of Digitalisation,” WeLaR researchers investigated whether technological change degrades job quality by pushing employees towards atypical employment, such as part-time and fixed-term contracts, thereby negatively affecting their financial security. They also examined whether rent-sharing mechanisms and the way workers are organised can mitigate the potential negative effects of technological change on employees.
To answer these questions, Venturini and his co-authors extracted data from databases including KLEMS, SES, and OECD, and analysed how investment in software impacted the share of part-time and fixed-term employees in 18 industries across 14 European countries between 2006 and 2018.
The study found that digitalisation does not impact the share of fixed-term jobs in total employment, contradicting the fear that more technology leads to an increase in temporary work. In addition, stronger wage coordination correlates with a lower incidence of fixed-term contracts.
The authors also found that industries with higher software usage, such as publishing, telecommunications and professional services, reported lower levels of part-time employment. This trend was even more pronounced in countries with strict wage-setting regulations.
“Our research suggests that when digitalisation takes place in a context of robust wage coordination, there is an even stronger increase in job stability,” said Sem Vandekerckhove, co-author of the study and researcher at HIVA KU Leuven.
The study’s findings emphasise the relevance of wage coordination in the digital age. While digitalisation alone may not improve all aspects of job quality, it can affect employment conditions positively. The study suggests that when paired with the right policies, digitalisation may enhance job stability rather than undermine it.
The paper is available here.
