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Technological change and offshoring impact job quality in EU, WeLaR study finds

Technological change and offshoring affect the likelihood that workers in the European Union will be in atypical employment, although the effects of these trends vary by sector and over time, a recent WeLaR paper shows.

“The spread of non-standard forms of work is a cause for concern, as workers in this type of employment often have short job tenure and are more likely to move in and out of the labour market,” said Sandra M. Leitner, co-author of the study and an economist at the Vienna Institute for International Economic Studies (wiiw). “That increases the risk of low pay, in-work poverty and unemployment.”

The study, which used worker-level data from the European Working Conditions Survey and various industry-level datasets, analysed the impact of three factors: types of technological change (robotisation and various ICT assets), offshoring practices, and the mitigating role of trade unions on job quality as measured by the proliferation of temporary contracts and involuntary part-time work. The findings show that temporary contracts are the most common form of atypical employment, and their use varies from industry to industry and over time.

The analysis showed that while none of the tested factors proved significant in 2021, in 2015 an increase in total offshoring or IT (investment in computer hardware) was associated with a higher probability of atypical employment in the manufacturing sector.

Different technologies had different effects. In manufacturing, IT was linked to a higher likelihood of temporary contracts, while investment in telecommunications equipment and higher robot density correlated with a reduced probability of involuntary part-time work.

The study also highlighted variations in the impact of offshoring and technological change on workers’ self-reported skills mismatches. While offshoring was associated with a higher probability of over-skilling in the whole economy, technological change correlated with both over-skilling and under-skilling, depending on the industry. For instance, in manufacturing, investments in databases were associated with a higher probability of being over-skilled.

“Widening skills mismatches pose significant economic challenges, including wage penalties, reduced job satisfaction, and decreased productivity for firms,” said Ursula Holtgrewe, co-author of the study and a researcher at the Centre for Social Innovation (ZSI).

Despite the potential for trade unions to mitigate negative job quality outcomes, the research suggests a limited role for them: Still, their presence was linked to a lower probability of atypical employment. However, the impact of unions on self-reported skills mismatches was negligible.

“Our findings show the complex interplay between technological change, offshoring practices, and trade unions in shaping job quality in the EU,” said Ludivine Martin, co-author of the study and an economist at the Luxembourg Institute of Socio-Economic Research (LISER). “As technological advances continue and globalisation persists, understanding these dynamics are crucial for policymakers and stakeholders who are seeking to address labour market challenges” said Laetitia Hauret, co-author of the study and an economist at LISER.


Sandra M. Leitner, Laetitia Hauret, Ursula Holtgrewe and Ludivine Martin (2024) Offshoring, technological change and the quality of work in the EU: On the mediating role of trade unions. (Deliverable 5.3). Leuven: WeLaR project 101061388.


The paper is available here.

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