A WRITTEN REPORT ON

AUSTRIA:
Challenging the perception of technology as an end in itself

Saint Louis University

Bachelor of Science in Nursing

Submitted by:

ALPUTAN, Irish May

FLORES, Jovir Glenn

GESLANI, Julia

ORIA, Jahzeel Dayve

PINEDA, Millicent Thrizia Jade

QUINDIPAN, Rizalyn

RAMOS, Michael

Submitted to:

Clarenz B. Magsakay

March 14, 2019

INTRODUCTION

Broader application of ICT and new digital technologies such as data analytics, artificial intelligence (AI),
3D printing, cloud computing, Internet of things (IoT) and robotics are changing the labour markets.
These applications of ICT, combined with the new forms of employment, have added fuel to the debate
on the future of work, which is often referred to as ‘Work 4.0’. Previous industrial revolutions led to
clear welfare gains and more jobs. It is currently unclear whether this will also be the case for the digital
revolution.

Overall, digitalisation has become a topical issue again not only because of its labour-saving potential
and the ensuing fears of job loss, but also as a process that is set to disrupt economic structures, labour
relations and ways of working with a focus on particular challenges of employment policy,
precariousness and quality of work in Austria. It addressed how the fourth industrial revolution will
redesign production processes and alter the relationships between work and leisure, capital and labour,
the rich and the poor, the skilled and the unskilled.

EMPLOYMENT: WILL ROBOTS TAKE OVER OUR JOBS?

Automation anxiety has been a recurrent theme ever since the first industrial revolution. Power looms
replaced hand weavers, telegraph and telephone networks made many middlemen obsolete,
automated teller machines made bank tellers redundant and industrial robots replaced plant workers.
Yet, employment in affected sectors generally continued to increase as innovations complemented
existing jobs and productivity increases spurred aggregate demand for products (Autor, 2015).

 Nagl, Titelbach and Valkova (2017) argue that 9% of workers in Austria undertake tasks which
have a high potential of being substituted by machines. The authors posit that for 80% of all
people employed there is a 30–70% risk that their job will be automated.
 Arntz, Gregory and Zierahn (2016) find that on average 9% of jobs in a selection of Organisation
for Economic Co-operation and Development (OECD) countries, and as many as 12% of jobs in
Austria, may be automated in future.

So far, the employment rate has continued to increase in Austria. It rose from 67% to 71% between
2005 and 2015 (OECD, 2015). This development was backed by a growing share of highly-educated
workers, who are more likely to be employed than less-educated workers. Furthermore, older workers
stay longer in the work force, as pension reforms have reduced pathways to early retirement.

In contrast, employment of the least educated tends to decline. In particular, young to middle-aged men
with below upper secondary education saw employment rates fall by approximately 10 percentage
points over the same period. Rapid technological change induced by digitalization also means that skills
become obsolete much faster than before. This emphasizes the role of life-long learning to bridge age
gaps and keep the skills supply up-to-date and inclusive. The share of Austrian workers participating in
continuous education and training is slightly below the EU 2020 goal of 15%.
Arntz et al. (2016) relax the assumption that entire occupations are automatable and focus instead on
the share of automatable tasks for each occupation. Rapid progress in artificial intelligence and
machine learning is increasingly affecting non-routine tasks, including abstract ones that require
problem-solving, intuition and creativity. On the other hand, tasks related to creative intelligence and
social intelligence are less likely to be automated in the near future.

It is observed that even occupations dominated by automatable tasks require other tasks that are hard
to automate and vice versa. As a result, the fraction of jobs at risk, defined as those whose automatable
task content exceeds 70%, is much lower – 9% on average across OECD countries. However, a large
number of additional jobs will be affected as many occupations risk being radically transformed owing to
a high share (50% to 70%) of automatable tasks. For Austria, the results suggest that 12% of the jobs are
at high risk of automation, which is the highest share among all countries, although not very different
from Germany. A further 29% are likely to experience a significant change in tasks.

OTHER POINTS:

There has been an emergence of new jobs, business models and whole sectors, which had not been
foreseen in the debates that made assessments of the potential effects of automation on employment
inaccurate in the past.
 1. The starting point differs from how things were in the 1980s or the 2000s, when similar
discussions regarding the disruptive potential of new technologies on jobs also took place.

In Austria, according to the national employment data (Statistik Austria 2017), more than 9% of all
workers are currently unemployed or in training courses offered by the public employment service.
According to Boheim (2017), there is also an increase in unemployment after 2011 that was
predominantly caused by a rise in the number of unemployed (especially younger) men. This was mainly
due to pronounced segregation where a large proportion of men work in manufacturing and industry
(about 40%), which were more severely hit by the crisis than the service sector, where women tend to
work (about 80%).

This high level of unemployment means that the country desperately needs more jobs and cannot afford
to lose more of them – be it 9%, 12% or more.

2. To compensate for job losses, emerging new products and services and higher growth rates
than current levels are required.

The record levels of inequality reduce demand and stifle job creation. Today, the richest 1% in Austria
own 41% of all assets, while the poorer 50% own only 2.5% of all assets (Ferschli et al. 2017).

In 2015, men in the lowest quartile earned less than 75% and women some 80% of what these groups
had earned in 1998, taking inflation into account (Rechnungshof, 2016). Thus, real income has fallen
considerably for those who have low wages and a high propensity to consume. As a consequence,
people’s purchasing power is lower, leading to weaker private demand for new products and services.

3. The automation of tasks is only one factor that can potentially lead to job losses.

Digitization actually makes it easier to relocate jobs to lower-cost economies. While Austrian labor costs
are lower than those in some EU member states, there is a large wage differential between Austria and
neighboring CEE-countries, and an even wider wage differential between Austria and countries in Asia
(see Saxer this volume). We have observed the movement of jobs from Austria to countries with lower-
cost bases in the IT sector, in clerical work and in customer service services since the mid-1990s.
Restructuring within transnational corporations, business process outsourcing or, more recently,
crowdsourcing may have further and considerable effects on Austrian employment.

4. We are witnessing a blurring of the boundaries between paid and unpaid work.

Self-service is no longer limited to the retail sector but, given the new opportunities afforded by the
internet, has gained currency in sectors as diverse as finance, travel and public administration. What is
more, ‘prosumption’ – where consumers of a good or service also help to produce it – is an important
trend that draws consumers or amateurs such as bloggers into value creation in new ways, which
thereby reduces the costs of certain jobs in fields such as data entry, design and journalism.
There has been no attempt to reduce weekly working hours in Austria since the 1980s. In view of further
potential automation of jobs, the relocation of jobs and the replacement of some paid work by unpaid
work, Austrian employment policy needs to better distribute available work among those who want it.
One way of doing this is to introduce a 35- or 30-hour working week.

PRECARITY BROUGHT BY DIGITALIZATION

Main Points:

1. Austrian labor market is considered highly regulated but more and more employment relationships
fail to meet social and legal standards deemed to be the norm in the country, there is 8% of workers
that belong to the ‘working poor’ wherein their incomes fall below a given poverty line (Lamei and
Heuberger, 2017).

2. Intensified digitization increases opportunities for external restructuring, which leads in turn to a
fragmentation of employment, where people are increasingly employed under different sorts of
contracts and have different employers, although they carry out the same tasks and functions.

3. In the context of ICT-based restructuring, crowdsourcing involves particularly high levels of ‘precarity’.
One form of crowdsourcing involves outsourcing tasks over the internet to an undefined group of
potential contractors. The on-demand economy makes it easier for firms to outsource specific tasks with
a view to better match supply and demand, enables workers to supply labor flexibly and provides
customers with a wider range of services, often at lower costs.

There is high levels of precarity in creative industries, in particular among those workers who used the
platforms to get access to the relevant markets and to gain an occupational identity. Their income is
insecure, their working hours are unpredictable and can get out of hand, and they often have to be
prepared to undertake unpaid work in order to enhance their online reputation.

 From a firm’s perspective:

 The main benefits of crowd-sourcing are the reduction of idle production time, the
optimization of the task-related match between demand and supply of skills and the
reduction in regulatory costs associated with standard employment.
 The costs of crowd-sourcing include search and monitoring costs when hiring a crowd-
worker. Monitoring costs have been reduced substantially with the emergence of apps
and review-based reputation-building.
 In practice, the trade-off between costs and benefits will depend on the type of task at
hand, the quantity and quality of outside skills supply available in due time, the firm’s
existing work force and the preferences of the firms’ stakeholders.
 From a worker’s perspective
 The online platforms provide flexibility and broaden the potential market for their
services, but at the cost of insecurity. Indeed, the legal status of crowd-workers is often
somewhat ill-defined, notably with respect to longstanding labour laws and social
security, and workers may even seek to waive social protection in order to increase net
income
  From a legal perspective:
 These new forms of work present a formidable regulatory challenge as they combine
elements of standard employer-employee relationships with elements that typically
characterize independent contractors or self-employed.
 The intermediary (e.g. an app- or internet-based platform) has some hierarchical
relationship with the crowd- or gig-worker as it can set fees, decree standards and
remove the worker from the platform. As a result, the worker's legal status is often
determined case-by case by courts based on respective personal and economic
dependence.

QUALITY OF WORK

Main Points:

1. Research organizations and companies claim that “people become free for more creative tasks”
because of digitalization leading to improved working conditions. It is assumed that digitalization
promotes upskilling and higher levels of autonomy at work.

However, increased autonomy may be limited to particular aspects of the labour process, such as
temporal or spatial ones, the content of works and the skills associated with it, the dimension of
cooperation, and the need for emotional labour (Lohr, 2013).

A further aspect of socio-economic change that is brought about by digitization is the acceleration of
production and communication, which paradoxically does not lead to more free time and leisure for
workers, but rather goes hand in hand with an acceleration of the pace of life (Wajcman, 2015). The
internet and mobile ICT devices are often seen as contributing to information overload and to increasing
levels of stress and burnout. This is because the skills that are needed and often puts further pressures
on workers, for example, those relating to increasing demands from employers for flexibility.

Ensuring people have adequate skills is arguably one of the key policy challenges arising from
digitalization and the associated changes in the labour market. Requirements have not only shifted
towards higher and more technology-oriented skills, modern jobs also demand a higher degree of
adaptability and self-direction amid rapidly changing work environments, to wit the importance of
planning and organizing tasks alluded to in the previous section.

2. The improvement of the quality of work needs to be a deliberate aim of the development, adoption
and application of new technologies, and of the ways that workplaces are organized. Workers and trade
unions need to have a greater say in decision-making at work, and in the use of technology and work
design.

Key recommendation: Adapt labor law and social institutions to enhance representation and protection
of workers on the basis of ongoing consultations with social partners. Additionally, policymakers must
ensure the increase of the prevalence of high-quality jobs.
Main Source: Challenging the perception of technology as an end in itself. Austria. Jörg Flecker. Work in
the Digital Age, pp. 357-369

Additional Sources:

Arntz, M., T. Gregory and U. Zierahn (2016), “The risk of automation for jobs in OECD countries: A
comparative analysis”, OECD Social, Employment and Migration Working Papers, No. 189, OECD
Publishing, Paris

Autor, D. (2015), “Why are there still so many jobs? The history and future of workplace automation”,
Journal of Economic Perspectives, Vol. 29, No. 3, pp. 3-30.

Bowles, J., (2014), “The computerization of European jobs”, Bruegel, Brussels. Retrieved on:
http://bruegel.org/2014/07/chart-of-the-week-54-of-eu-jobs-at-risk-of-computerisation/

Ferschli, B., J. Kapeller, B. Schütz, and R. Wildauer (2017), ‘Bestände und Konzentration Privater
Vermögen in Österreich’, Materialien zu Wirtschaft und Gesellschaft, 167, September, Wien: AK Wien

Frey, C.B. and M. A. Osborne (2017), “The future of employment: how susceptible are jobs to
computerisation?”, Technological Forecasting and Social Change, Vol. 114, pp. 254-280.

Huws, U., N. H. Spencer and S. Joyce (2016), “Crowd work in Europe”, Foundation for Euopean
Progressive Studies, December.

Lamei, N. and R. Heuberger (2017), ‘Working Poor: Armutsgefährdet trotz Arbeit?’, Trendreport Arbeit
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OECD (2013), OECD Economic Surveys: Austria 2013, OECD Publishing, Paris.

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Rechnungshof (2016), Allgemeiner Einkommensbericht 2016, Wien.

Statistik Austria (2017), ‘Arbeitslose (Nationale Definition)’, https://www.

statistik.at/web_de/statistiken/menschen_und_gesellschaft/arbeitsmarkt/
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Chicago Press.