The impact of the digital revolution on the labour market: an interview with IAB Director Joachim Möller conducted by Hannah Ormerod Hannah Ormerod: Professor Moeller, I’d like to talk to you about the so-called digital revolution. The digitalisation of work and production is a major theme in many advanced economies, not least in Germany. Many experts indeed call it a digital revolution. But technological change is nothing new. Why are we specifically talking about a revolution here? Prof. Joachim Moeller: Whether it is a revolution or not – that, I think, can be decided upon in twenty or thirty years from now. But what can be said: it will really cause deep changes in working life and for the society. Of course, we had technical changes over the decades, which also were very profound. Think of the revolution in agriculture during the 1950s and 1960s. After the end of the WWII, more than 25 per cent of the population in Germany was working in the agriculture. Today, it is roughly one per cent or so. That is really a huge structural change. Or think of textile industries: they were among the major employers still in the 1970s. And today, there are only very few firms that are left over. Or think of the steel mills in the Ruhr region – nothing left in some of the cities there. So, we had a lot of structural change also in the past. But this time, I think, it changes our attitude to work in a specific sense. In my opinion, the main topic is networking, which becomes important. The internet of things meaning that machines or other objects are communicating among each other. The networking between, say, firms and other firms – supply chains that become really-really effective. Another point that is also important is the network between the producers and the consumers, meaning that the consumer can decide what the product should look like – what is called individual mass production – it becomes more and more important. So, you can design your own table in a very specific way, for example, or equipment in your house, et cetera. This gives huge opportunities. What will be changing is the working life itself. Just think of the collaboration of robots and humans in a typical work process. Ten years ago if you went to automotive production, you saw robots within a cage. Today, robots are increasingly more often leaving the cage – they are cooperating directly with humans. And this will become very normal, in my view, in production, but also in services, where robots are digital robots within the communication system, within a computer or the internet. So, this will become entirely normal that we are interacting with robots, which, to my mind, will change the working life profoundly. Hannah Ormerod: To what extent is the digital revolution a job producer, and to what extent can we talk about it as a job destroyer? Prof. Joachim Moeller: It is always at the same time – job destruction and job creation. In the end – it is my opinion, but we also have some scenario studies on that – the total demand for labour will not change that much. Below the surface, we have a lot of turnover: there will be a structural change meaning that some firms are closing down, others are opening up – and this will be accelerating. There is a very nice article, by the way, by John Maynard Keynes – an article from 1930, where he introduces the notion of technological unemployment, and he argues that technological unemployment is only valid for the period of adjustment. If the technical development is faster than our ways of finding new use for labour, then, for a certain time, it can happen that technological unemployment takes place. Yet in the past, we always found new ways of employing people and finding new tasks for them. We have some studies on the substitutionability of labour through robots and other techniques, and what comes out is that, typically, the professions do not disappear, but the tasks within a profession will be changing. Take, for example, a chimney sweep: what he or she is doing has changed a lot. Twenty years ago, it really was manual work: cleaning of the chimney; but today, it is a sort of specialist in measurement of pollution, or gives advice on heating systems, et cetera. So, the tasks within this profession have completely changed. This is also true for a lot of professions. Take a secretary: they are not typists anymore; they are organisers, meaning that the tasks within this profession have changed. Hannah Ormerod: What needs to be done to ensure that we profit from this revolution, and how can we minimise the risks associated with it? Prof. Joachim Moeller: Let me come back to John Maynard Keynes. In his article, he has a very interesting sentence where he is arguing that those firms, or those regions, or those countries that are in advance of the others, they will profit from the new technical development. Those who are behind – the latecomers – they will perhaps suffer. In my view, it is an argument one should take really seriously. There is no sense in hindering the new technical progress – it will come one way or the other. Yet, on the other hand, I would also argue that it is not a deterministic process that cannot be altered by humans. It can be shaped by, for instance, social partners within the firms; the employers and employees should work together to try to shape this new development and find compromises, because the interests of both sides are of course affected. But if there is a well-functioning system between the social partners, I think, compromises can always be found. Labour Minister Andrea Nahles has coined the notion of flexibility compromise in this context, which is a really useful notion: we need to consider the interests of both parties, and there are so many possibilities of shaping the new development that it is in the end to the benefit of people.