Over the terminal century, machines have replaced workers in many tasks. On balance, yet, applied science has created more jobs than it has displaced (Frey and Rahbari 2016). Technological progress has transformed living standards. Life expectancy has gone upwards; basic health care and instruction are widespread, andmost people accept seen their incomes rising. And yet, fears of robot-induced unemployment ofttimes dominate discussions over the future of work.

The Earth Bank's World Development Report for 2019 on The Changing Nature of Work (World Bank 2019) addresses these issues, analysing what exactly is changing and what needs to be done. The report argues that, on balance, concerns nigh robot-induced unemployment appear to be unfounded. Instead, the time to come of work is driven past the competing forces of automation and innovation, the other 'AI' (Figure 1).

Effigy 1 In the future, the forces of automation and innovation will shape employment

The ordering of the sectors in the figure should be understood as running from the most automatable to the least automatable, or from the low-skill and middle-skill jobs to high-skill jobs where there is a decline in the relative demand for some less educated workers.

Technological progress enables firms to automate, replacing labour with machines in production, and to innovate, expanding the number of sectors, tasks, and products. The pace of innovation will make up one's mind whether new jobs or tasks emerge to counterbalance the decline of old, routine-based jobs.

For example, recent show for Europe suggests that while engineering science replaces some workers, information technology also raises labour need. Overall, technology that replaces routine work is estimated to have created more than 23 million jobs beyond Europe from 1999 to 2016 (Gregory et al. 2016).

The written report casts its net wider than an try to predict the number of jobs that technology may create or destroy, focusing instead on the irresolute nature of the firm, its bear on on skills and the terms on which people piece of work, and how government policy should be reoriented in response.

The digital economy has expanded firm boundaries and driven a primal shift in the nature of firms. Physical presence is no longer a prerequisite to doing business: companies provide online services from away or profit from intangible avails such as software and intellectual property; digital platforms generate income from the capital of others. Firms in the digital economy can evolve much faster from local start-ups to global behemoths, often with few employees or tangible assets (Figure 2).

Figure 2 Recent technological advances advance the growth of firms

WDR 2019 team, based on Walmart annual reports; Statista.com; IKEA.com; NetEase.com

For governments, identifying where value is created in the digital economy—and capturing some of those corporate gains—is non always straightforward, particularly when it comes to user information. Under these circumstances, it has become easier for companies to locate avails (and subsequently profits) in countries with preferential corporate revenue enhancement frameworks. Digital markets also provide new risks in the contest context.

The changing nature of firms coincides with a shift in the demand for skills amidst workers. The demand for less-advanced skills that can be replaced by technology is declining. At the same time, the demand for advanced cognitive skills (Krueger and Kumar 2004), socio-behavioural skills (Cunningham and Villaseñor 2016), and skill combinations associated with greater adjustability are rising (Hanushek et al. 2017).

The rise of platform marketplaces is likewise changing the way people work and the terms on which they work, through the so-called 'gig economy'. Individuals and firms demand only a broadband connection to trade goods and services on online platforms. This 'scale without mass' brings economic opportunity to millions of people who do not alive in industrialised countries or fifty-fifty industrial areas (Brynjolfsson et al. 2008).

That said, the number of gig economic system workers remains small equally a proportion of the overall workforce. Data is scarce but, where it does exist, the numbers are nonetheless low. Data from Germany and the netherlands indicate that only 0.4% of the labour forcefulness in these countries is active in the gig economy. The report estimates that, worldwide, the full freelancer population is effectually 84 million, or less than 3% of the global labour forcefulness of 3.5 billion. A person counted as a freelancer may too have a regular salaried chore. In the US, for example, more than than 2-thirds of its 57.three million freelancers as well concord a traditional job, turning to freelance work to supplement their income (Upwork 2017). The all-time estimate is that, globally, less than 0.5% of the active labour force participates in the gig economy.

These changes in the nature of work have been more than pronounced in advanced economies, peculiarly Europe and Due north America where the uptake and penetration of technology aregreater and labour markets are more than developed. Correspondingly, the growth of the gig economic system has raised alarm bells in those parts of the world because it blurs the split up between formal and breezy work: in both cases, workers are typically in depression-productivity employment, with most labour laws unclear on the roles and responsibilities of the employer versus the employee. This group of workers frequently lacks access to benefits. There are no pensions, no wellness or unemployment insurance schemes, and none of the protections provided to workers in long-term, contract-based employment.

Governments have to invest more and improve in lifelong learning if workers are to stand a take a chance of adjusting to future labour markets—from early childhood development programmes and formal schooling, through to higher education and adult learning programmes. But rethinking social protection systems is just equally of import.

A formal wage employment contract is notwithstanding the most mutual ground for the protections afforded by social insurance programmes and by regulations which, for instance, set a minimum wage or severance pay. The German chancellor Otto von Bismarck is best-selling as the founder of social insurance—providing benefits for workers in the formal sector financed by dedicated taxes on wages. The organisation relies upon steady wage employment, clear definitions of the employer and employee relationship, and a stock-still retirement date. But this contributory arroyo is first to wait outdated as the changing nature of work disrupts these traditional norms. Technology shifts the demand for workers' benefits from employers towards straight demanding welfare benefits from the state.

Direct social help programmes too demand to exist revised to ensure that they baby-sit against growing labour market risks. The evidence is irrefutable that cash transfers make positive contributions to the health and instruction of electric current and futurity generations of people. They reduce stress and low, increase mental bandwidth, and foster more involved parenting. All of these undoubtedly make for happier, more than productive households. But at that place is generally depression uptake of social assist. In the EU, just about threescore% of social benefits are claimed (Eurofound 2015). This is due to a lack of information about such benefits, the stigma attached to them, and the bureaucratic hurdles required to exist overcome in order to receive them.

'Universal basic income' is the fashionable solution, but in truth, the world knows very little about how it would piece of work in practice. Studies suggest the fiscal implications would be significant. The cost of a universal bones income for adults set at the average poverty gap level ranges from 9.half-dozen% of Gdp in low-income countries to 3.5% of GDP in upper-middle-income countries (Figure 3). A simulation for four European countries shows that a universal basic income would cost (if set at a level equal to existing cash transfer programmes) 13.8% of GDP in Republic of finland, 10.1% in French republic, 8.9% in the UK, and three.iii% in Italian republic (Browne and Immervoll 2017). In each case, it was not always possible to offset the cost of the universal basic income simply past abolishing existing allowances. Other initiatives would accept to be cut or taxes raised to provide the necessary cash.

Figure 3 The cost of a universal basic income climbs as the income level of countries decreases