Several forces are revolutionizing the labor market: the most important are demographic and climate changes and advances in technology. The latter is one of the most powerful trends driving transformation, as digitalization strongly influences how the future of work is shaped. 

The rise in Internet access, Artificial Intelligence, Big Data, Internet-of-Things, and online working platforms are some of the factors that radically transform the way work is perceived. Job openings, the workplace, unemployment, and more will be significantly different in the not-so-distant future. 

Although new technologies, such as the ones responsible for automation, spark debates about greater job insecurity and inequality, they also provide opportunities for emerging economies to catch up in productivity, diversification, and complexity. Digitalizing employment services can improve transparency and reduce the friction present in the labor market.

Especially, the Covid-19 pandemic accelerated existing trends that were already underway, such as remote work, e-commerce, and automation. And some aspects of these transformations will be long-lasting. According to McKinsey, a consequence of the pandemic is that up to 25% more workers will potentially need to switch occupations, as some roles rapidly became unnecessary and the demand for technology roles increased. 

The dramatic increase in remote work is one of the most apparent effects of the Covid-19 pandemic in the labor market. As the world returns to a “new normal”, most companies shift to flexible workspaces, as remote working often resulted in positive experiences. Reduced costs are one of the main reasons companies choose to remain flexible. Also, as more tech companies offer services for cross-border payments and handling international teams, companies with employees working remotely will become commonplace.

In the future, digital labor platforms will continue increasing, but they will most probably be more regulated than they are now. Nowadays, they are often associated with unstable and irregular career paths for workers in vulnerable positions. Ideally, these platforms will be appropriately regulated and have the potential to provide decent working conditions.

Though the proportion of independent work conducted through digital platforms is still low, it is a number that will multiply because of the ease and efficiency it provides for workers. And on the following decades, services that are still face-to-face will be available on online platforms as well. Not so long ago, it would have been difficult to imagine having groceries delivered to our homes, and now it has become standard for families to order their monthly groceries through an app. 

The most controversial aspect of how technology is changing work is the development of automation, enabled by technologies such as robotics and Artificial Intelligence. Of course, these advancements will continue to bring higher productivity, reduced costs, and safer working conditions. But this change will, in many cases, drive unskilled workers to unemployment. 

My guess is that, in the future, the companies that manage to stay at the forefront of innovation while incorporating automation will be those that, instead of laying off workers, will reinvent their job positions. Take, for example, Amazon’s initiative “Hands of the Wheel.” With this project, Amazon trained employees whose work was being automated. The purpose of this training was to transfer them to more creative roles inside the company. Having worked in the company’s day-to-day operations, these employees had a unique perspective from which they could add value. This initiative proved to be highly successful, as a relocated employee ended up creating Amazon Go.

Going back to the skills gap in workers, it will only widen in the future if governments remain on the sideline instead of developing measures to close it. The market will continue to increase its demand for skilled tech workers significantly, and not every company that adopts automation will follow Amazon’s example. Unemployment and inequality will increase in the future if governments do nothing to reduce the polarization of opportunities in the labor market between high and low-skill workers.  

Educational systems have not kept up with the transformation in the labor market, and this is also a problem for companies: the lack of STEM professionals is evident. According to a McKinsey survey of young people and employers in nine countries, 40 percent of employers said lack of skills was the main reason for entry-level job vacancies. This issue is due to a lack of technical education and soft skills such as communication and teamwork. Automation and advancements in technology will have to be paired with a transformation in education and regulation if this change is to bring positive consequences for economies. 

One last significant transformation the digitalization of work will bring is the automation of job recruitment. This technology can improve job matching and tailoring of employment services to specific needs, optimizing and reducing the recruitment process for companies. In some advanced economies, public employment services are already using the data generated by jobseeker databases, vacancies in job platforms, and more to analyze the state of the labor market. And in the future, this trend will be replicated in more countries.

Some controversies have arisen concerning this technology, as in some cases, it has proven to replicate biases that humans have, automatically excluding certain jobseekers from the recruitment process. But, if technology construction is done correctly, it should do the exact opposite by leaving aside any unconscious biases that human resources employees may have. If used correctly, the automation of job recruitment will bring countless benefits in the following decades, as it can also widen the access to job opportunities for more people by creating job matches that otherwise would not have come about. 

The fundamental nature of work in the future will look nothing like it did ten years ago. Digitalization will continue to change how companies organize work, and how governments enforce regulations and create policies around education and employability. Whether governments, companies, and other institutions understand these shifts as opportunities rather than only challenges will dictate how this disruption impacts inequality, unemployment, and whole economies.

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