In this blog post, we discuss recent patterns of occupational change in Finland. This discussion relates to our discussions on labor shortages in Finland and skills that are needed in Finland in the future.
We base this discussion on a recent research article by Tuomo Alasoini and Seppo Tuomivaara. It was published in the journal Economic and Industrial Democracy in April of this year.
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Why are we talking about occupational change?
In order to understand what skills employees need in the future, we need to understand the occupational structure of future societies. This influences decision-making at the societal level (what educational investments the society should make) and at the individual level (what should I study).
Alasoini and Tuomivaara explain that technology has been the most important factor driving changes in occupational structures of different countries during the industrial era.
There are, however, different theories as to how technological development changes occupational structures.
Technological development and occupational change
According to one theory, technological development leads to an overall increase in the skill level needed in the labor market. Therefore, the share of those working in high-skilled occupations will increase. Correspondingly, the share of those working in low-skilled occupations will decrease.
The other theory states that technological development will lead to the polarization of the labor market. In this, it’s the middle-skilled occupations that involve routine tasks that will disappear. Low-skilled occupations which include non-routine tasks but demand flexibility, judgment, and common sense will increase in demand. Such occupations include, for example, cleaners, housekeepers, and maintenance workers. Simultaneously, high-skilled occupations that require creativity and interpretation skills also increase in demand.
Aapo Stenhammar explains in his blog that this latter discussion relates especially to the polarization of wage differences in the US which started to develop in the 1980s. Up to that point, wages and living conditions had been improving across the board. In the 1980s, the wages of those less educated stagnated. The wages of highly educated workers, instead, continued to grow. Researchers needed to explain this development. And this version of the impact of technological development on occupational structure took hold.
Alasoini and Tuomivaara explain, however, that the evidence for such polarization is inconclusive. For example in Europe, this type of polarization can be seen in some countries while in others there’s no sign of it.
Occupational change in Finland
In their article, Alasoini and Tuomivaara set out to examine to which one of these groups Finland actually belongs.
But not only that, they also wanted to study the actual impact of computer use on occupations.
Both theories think that there are two ways in which the increasing use of computers can affect occupations. Computers can substitute human labor or computers can complement it.
The former obviously means the worker will lose their job to automation.
The latter means that the use of computers can free workers from time spent acquiring and crunching information. Instead, they can use their time interpreting that information and applying it. In this case, the increasing use of computers enhances creativity. Both theories believe that these effects of technological development affect different occupations unevenly.
Alasoini and Tuomivaara set to find out if there are differences in the degree to which occupations are impacted by computer use and in which groups the complementary effects are bigger. This, according to them, has clear policy implications for Finland.
Their article examines these issues for the period from 2013 to 2019. They use Statistics Finland’s Labor Force Survey where occupations are classified into different groups. They use the Statistics Finland Survey of Wage and Salary Structures as an additional method of classifying occupations into different categories.
To understand the impact of technological development on occupational change, they also Statistics Finland’s Quality of Work Survey data.
Their analysis shows that between 2013 and 2018 the growth in the number of employees in Finland concentrated almost completely on the three highest-paying occupational groups. So, instead of finding evidence for polarization, they found evidence for skill-biased change.
Alasoini and Tuomivaara cannot, based on their study, explain why there doesn’t seem to be a trend towards polarization in Finland although the phenomenon exists in some other countries.
They suggest, however, that the wide use of comprehensive collective agreements in Finland has prevented wage gaps from widening. Also, the large public sector in Finland has protected those in the middle of the wage structure. After all, a large part of those in the middle of the wage scale is employed by the public sector.
Their examination of computer use by people in different occupational groups revealed there is a clear digital divide among workers. The use of computers was more versatile in the highest-skilled occupations. They also benefited from the complementary effects of computers (use of computers to enhance creativity) more than others.
This division between highest and lowest-skilled occupations wasn’t, however, absolute. Nearly one-third of those in the highest-earning occupational groups said computers did not increase their creativity.
They emphasize that although the lack of complementarity doesn’t necessarily mean a worker is in danger of losing their job, it does mean that the job is in a more precarious position.
Alasoini and Tuomivaara’s findings thus confirm that workers in each skill and wage group are susceptible to the substituting effect of computers. Although those in high-skill occupations are less so than others. Those occupations in which computers enhance creativity, require social intelligence and other such skills computers do not have are more secure.
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