Digitalisation and new forms of employment: what’s happening under the surface?

On the surface it might look like the Nordic labour markets are enjoying a period of stability. 70 percent of people in work still have full-time jobs. Employment keeps growing. There is a lot of debate surrounding new forms of employment, exemplified by Uber, Foodora and other new service providers, yet these make up a small part of the total labour market. 

“Our project is mainly concerned with examining what is happening in the largest, traditional part of the labour market – where most people work,” says Jon Erik Dølvik. 

He is one of the main authors behind the largest research project on the Nordic labour market model for many years. It was launched in 2017, and is financed by the Nordic Council of Ministers. More than 30 researchers from universities and research institutions across five countries are taking part. The project is also part of the Nordics’ contribution to the ILO’s centenary celebrations in June this year.

The project will conclude in 2020 with a final report, but studies will be presented as they are ready. These will be summed up in shorter Policy Briefs and Working Papers aimed at decision makers in all countries.

Many unpredictable forces 

The labour market is impacted by many and unpredictable forces, however.

 “What does Brexit really mean, or the dispute over whether Chinese Huawei should be allowed to develop 5G networks in Western countries? A further growth in globalisation and international trade or another protectionist set-back will have profound effects on the Nordic labour market,” says Jon Erik Dølvik.

The researchers have focused their work around what they call seven pillars, ranging from digitalisation to labour law. Dølvik is one of the keynote speakers at the Future of Work conference in Reykjavik on 4th and 5th April. He will present preliminary results from three of the pillars.

The first one focuses on employment models. Anna Ilsøe and Trine P. Larsen from FAOS/University of Copenhagen have been looking at “Atypical labour markets in the Nordics: Troubled waters under the still surface”.

“They found that not much has changed since 2008 regarding the number of people in less permanent and stable employment, like those working part-time, for temping agencies or on digital platforms like Uber, on zero-hours contracts or as self-employed. On average, 70 % of the workers in the Nordic countries still have permanent full-time contracts. The number is slightly higher in Sweden and slightly lower in Iceland.” 

The graph shows the distribution between standard work contracts and atypical work contracts in the Nordic countries. Source: FAOS/AKU

Other types of employment make up 30 % of the labour market, including part-time work which is often considered to be normal in the Nordics.

The greatest difference is that fixed-term contracts – when the employer hire someone for a set amount of time or for a certain task – are far more common in Sweden. More than 15 % of that country’s total labour force work on fixed-term contracts. The number is lower in the other Nordic countries. In Denmark and Norway only 8 % have fixed-term contracts.

Part-term contracts is more common in those two countries, however. One in five employees work less than 15 hours a week. Temping agency workers make up only one to two percent of the labour market.

“The self-employed are mostly found within three groups: farmers, fishermen and artists.”

The differnt kinds of atypical work contracts and their distribution in the Nordic countries. Source: Fafo/AKU 

One of the other pillars is called ”New Labour market agents”. Fafo’s Kristin Jesnes coordinates the research related to this.

 “Platform companies employ only a few people, and have not seen growth since 2017. The taxi service Uber has not exactly had an easy ride in the Nordic countries,” says Jon Erik Dølvik.

Finland will soon introduce new legislation for taxi services, and the same is expected to happen in Norway before next year. The legislation is not coordinated across the Nordic countries, so conditions will vary between them.

Collective agreements

“It is interesting to note that certain platform companies have signed collective agreements, including Danish cleaning firm Hilfr which has signed an agreement with 3F, the United Federation of Danish Workers.”

The agreement is narrow and covers people working for more than 100 hours on commission from the platform company. This will allow them to become employees of Hilfr, who then assumes the duty to provide wages, pensions and holiday pay.

“Whether platform workers can demand protection through a collective agreement has been an important legal issue. Some have argued this would amount to a cartel, which would be illegal under EU law. 

“But a couple of recent legal cases have concluded that self-employed people under certain conditions can be part of collective negotiations under EU law. This is the case if they do not have any control over their working day because the platform company decides what work must be done, at what price and at what time.”

Upgrading or polarizarion?

Jon Erik Dølvik has himself taken part in a study led by Tomas Berglund at the University of Gothenburg, called “Changes in the occupational structure of Nordic employment: Upgrading or polarization?”

“We look at whether we are seeing upgrading, with more high-skilled jobs and fewer low-skilled jobs in the labour market in total, or whether there is polarization, where medium-skilled jobs are disappearing while there is an increase in both high-skilled and low-skilled jobs.”

It turns out that the development can be described as polarized in Denmark, while Norway sees the highest degree of upgrading among the Nordic countries.

“Sweden is somewhere in the middle. There is upgrading within the public sector, and polarization in the private sector.”

The research group is coordinated by Bertil Rolandsson at the University of Gothenburg. It is also currently interviewing trade unions and leaders of companies manufacturing advanced machinery in Denmark, Finland, Norway and Sweden.

 “In this trade you find a positive attitude to new technology, where the thinking is that ‘there is no alternative to the introduction of new technology anyway’. These industries have already been investing heavily since the 80s and 90s in digitally controlled milling machines, automation and ITC-based processes.”

Transition period

Digitalisation is meant to increase production and lower employment costs, yet it does not look like the latest wave of digitalisation has led to an employment reduction in this sector. Jon Erik Dølvik points out that the number of workers in Germany’s car industry has also grown, despite all the robots. The number is also stable in Sweden.

“This shows us that production is increasing. Yet we do not know how much of this is because you will have parallell production using different methods during a transition period, and whether employment will fall when the new technology has taken over fully.

“One thing is certain; the partners in the machine industry agree that you cannot introduce production-boosting changes without including the factory floor workers. Here, the micro-level of the Nordic model is very important. The clear, mutual respect between employees and employers is crucial if you want to succeed with restructuring that results in real increased productivity. When you introduce advanced welding robots, you also demand more from the industry workers tasked with looking after them.”

“In the past, engineers would come down to the factory floor and key in the instructions. Now the workers themselves are responsible for the programming, while the company leadership wants engineers to concentrate on research and innovation.

“Digitalisation of production is more than just replacing manpower with machines. It also means transitioning to a more team-based work process, where factory floor workers are given more responsibility, further education becomes key and the separation between workers and engineers is often erased,” says Jon Erik Dølvik.

 The Nordic labour markets might look calm on the surface, but changes that could create conflicts between different work groups are afoot. We are still waiting to see the effect of these changes, because this process is not yet fully realised.

 “The consequences of technological change are always impacted by political decisions, institutional and other conditions which slow down the spread of the technology to the many smaller Nordic companies. The major machine manufacturers represent a small and very advanced part of the industry after all, and most companies have yet to invest on a similar scale,” concludes Jon Erik Dølvik.