On 15 January 2016 the European Economic and Social Committee released an exploratory opinion on the effects of digitalisation on the services sector and employment.

Whilst acknowledging that the innovative services and business models that digitalisation makes possible can enhance productivity and consumer choice, the opinion highlights considerable potential consequences for employment including income disparities and reduced access to social security systems.  

The driver for the opinion is the realisation that the role of the services sector has been changed dramatically by the internet and liberalisation of telecommunications services. These changes include new skill requirements; “labour-shedding” investments as technology is taking over tasks that were previously reserved for human labour leading to lower demand for labour in traditional industries; and declines in the demand for higher-skilled labour. The opinion  references studies that roughly 50% of today’s jobs are at risk of being replaced by digital technology in the next 20 years.

The opinion notes that the strong growth in new, non-standard forms of employment that is caused by digitalisation implies that a growing share of the workforce does not contribute to or benefit from established social security systems such as public unemployment, health and pension insurance. This will negatively impact tax revenue and, combined with declines in overall employment rates, may erode revenue for welfare regimes that depend on high rates of standard employment.

What will be the political response? The opinion recommends that the employment effects of service digitalisation warrant political attention and management, with the employment effects of digitalisation being addressed within the Digital Agenda for Europe and the Digital Single Market initiative.