12th National and International Conference about

Lifelong Learning and Higher Education Expert Meeting

April 21, 2016

Corvinus University, Budapest

The Future of Higher Education in Times of Digitalization – The German Case

Joachim

Möller

2

Three quotes …

Till Reuter (CEO Kuka):

”For the current generation working with the computer is

normal. For the next generation it will be working with robots “

(Süddeutsche Zeitung, 11.06.2015, my translation)

© IAB 2016,

Carly Fiorina (vormals CEO HP):

„Everything that can be digitized will be digitized”

Richard Freeman (Harvard) :

“Robots, that is any sort of machinery from computers to

artificial intelligence programs that provides a good substitute

for work currently performed by humans, can increasingly

replace workers, even highly skilled professionals, and thus

reduce opportunities for good jobs and pay.”

3

Challenges for the economy …

© BA, IAB

Efficiency Time-to-Market Flexibility

• Shorter innovation

cycles

• Higher complexity

• Individualized mass

production

• Volatility of demand

• Use of energy and

resources

• Productivity growth

• Supply chains

Possible acceleration of structural change

Role of Networks, Digitization, Big Data

International competitiveness

as high-wage country

4

Ongoing technological development (1)

Cyber-physical (production) systems

“… concepts of robotics and sensor networks with

intelligence mechanisms proper of computational

intelligence …”*

Soft robotics

robots are leaving their enclosures and are

increasingly interacting with humans

Smart glasses

powerful device for enhancing workers’ abilities

*Source: https://en.wikipedia.org/wiki/Cyber-physical_system, 20.11.2015

5

Ongoing technological development (2)

Big data

Storage capacity of data doubles every 40 months, 90%

of data generated within the last two years

3D printing

Trends: more materials, lower costs …

Remote maintenance systems

Prosumers

FabLabs, design by costumer …

© IAB

6

Success factors for an economy

facing the new developments

A good “operating system”

‐ Property rights, legal certainty, data security,

effective administration, timely standardization

‐ Effectiveness of educational system and

continuing process of training (lifelong learning)

Fostering innovativeness

‐ Innovative milieus, entrepreneurship, risk capital

‐ Attractiveness for innovative people

‐ Diversity in solidarity

.

7

Consequences …

Increasing knowledge intensity of production

leads to faster and more complex work

processes

New possibilities in the man/machine

interaction

‐ High potential for more efficiency in

manufacturing and services

Extended substitutability of labour

‐ Not only routine jobs at risk

Increasing demand for flexibility

© IAB

8

Firms expectation of changes in requirement for labour characteristics

Source for data: Fraunhofer IAO 2013

0

10

20

30

40

50

60

70

80

90

yes indiff. no

Flexible working time Additional qualification

9

Effects on the labour market

10

Effects on the labour market

Aggregate labour demand

‐ Worker redundancies or shortages?

‐ Interference with demographic change?

Employment structure

‐ Qualification structure?

‐ Changes in tasks, professions?

Dynamic adjustments

‐ Matching problems

‐ Internal and/or external flexibility

© IAB

11

Changes in the structure of employment

Qualifications

‐ Changes in employment shares of high,

intermediate and low skilled

‐ Higher specificity of jobs

‐ More qualification within the firm,

training-on-the-job

Tasks

‐ Increase in creative, planning, steering,

communicative, socially interactive, decision

making and problem solving tasks – decrease in

routine tasks

© IAB

12

Consequences for labour relations, organization and workplace design

Chances …

Participation: higher self responsibility, self

development of workers

Humanisation of the workplace,

Inclusion of disabled workers

Challenges …

External determination, excessive control

Requirements …

Institutionalisation of a continuing process of

advanced training

© IAB

13

Qualifications

14

Changes in the demand for skill over time

1st Industrial Revolution:

Need of all kind of industry workers

2nd Industrial Revolution: ‐ High division of labour, assembly lines, Taylorism:

relative productivity gains of low skilled workers

3rd Industrial Revolution: ‐ Computerisation: increasing demand for high skilled

workers, low skilled workers falling back

4th Industrial Revolution:

‐ CPS, digitalisation: Likely increase in the demand for

high level engineering, IT knowledge, problem solving

competences

‐ Possible increase of productivity of low skilled through

knowledge-based assistance systems

© IAB

15

Since the mid-1990s: increasing wage differentials in favour of the high skilled

© IAB Source: SIAB – Own calculations.

90

95

100

105

110

115

120

125

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

Ohne Ausb.

Lehre

UNI

Low

Intermediate

High

(Index 1984=100, male full-time workers, aged 40, West Germany)

Real gross wages by skill level 1984-2010

16

Unemployment falls with the skill level of the worker

© IAB Source: SIAB – Own calculations.

Low skilled

Total

Inter-

mediate sk.

High skilled

Germany West

Germany

17

High-skilled workers clearly the winners in the last 25 years

Higher employment shares of high skilled

throughout the economy, low unemployment

Increasing skill differentials despite a higher

supply of high skilled workers

Unambiguous evidence for an increase in the

relative demand for high skilled

Will this process continue?

18

IAB-BIBB Industry 4.0 Scenario

Acceleration of structural change (more qualified

services)

Winners: IT-professions and teaching occupations

Losers: Manufacturing jobs, particularly steering of

machines and maintenance of equipment

Higher relative demand for high skilled

Less jobs with high share of routine tasks

© IAB

19

Tasks

20

Future demand for tasks and occupations

Is the demand for certain professions/ tasks/

occupations in 15, 20 or 30 years predictable?

Complex influences through …

… technical progress (substitution of workers)

… global competition (offshoring, re-shoring)

… changes in consumer demand, tastes …

© IAB

21

A conventional attempt: occupations 2030 vs 2010, winners and losers

Sourcee: Prognos, Darstellung IAB,

2010 2030

-34,2

-23,2

-21,1

-21,0

-16,7

-15,2

-14,1

-10,6

-9,1

-7,1

-4,4

-3,2

+2,8

+3,7

+4,3

+5,4

+6,0

+6,7

+6,8

+19,3

Anbauen, Züchten, Hegen, usw.

Fertigen, Be- u. Verarbeiten

Fahrzeug führen, packen, usw.

Maschinen einrichten und überwachen

Abbauen/Fördern, Rohstoffe gewinnen

Reparieren; Renovieren, usw.

Sichern, Be-/Überwachen

Ein-/Verkaufen usw.

Bewirten, Beherbergen, usw.

Schreib-, Rechen- und DV-Arbeiten

Reinigen, Abfall beseitigen

Messen, Prüfen; Erproben, usw.

Gesetze/Vorschriften/Verordnungen anwenden

Management-, Leitungstätigkeit

Erziehen, Ausbilden, Lehren

Beraten, Informieren

Gesundheitlich/sozial helfen

Künstlerisch, journalistisch tätig sein

Werben, Marketing, usw.

Forschen, Entwerfen usw.

1,3

6,6

5,6

5,8

0,1

3,2

2,0

10,3

4,9

14,3

5,3

2,5

3,0

4,6

6,6

4,7

10,0

1,3

2,1

5,7

1,8

8,1

6,6

6,9

0,2

3,5

2,2

10,7

5,0

14,3

5,2

2,4

2,7

4,1

5,9

4,2

8,8

1,1

1,8

4,5

Anbauen, Züchten, Hegen, usw.

Fertigen, Be- u. Verarbeiten

Fahrzeug führen, packen, usw.

Maschinen einrichten und überwachen

Abbauen/Fördern, Rohstoffe gewinnen

Reparieren; Renovieren, usw.

Sichern, Be-/Überwachen

Ein-/Verkaufen usw.

Bewirten, Beherbergen, usw.

Schreib-, Rechen- und DV-Arbeiten

Reinigen, Abfall beseitigen

Messen, Prüfen; Erproben, usw.

Gesetze/Vorschriften/Verordnungen anwenden

Management-, Leitungstätigkeit

Erziehen, Ausbilden, Lehren

Beraten, Informieren

Gesundheitlich/sozial helfen

Künstlerisch, journalistisch tätig sein

Werben, Marketing, usw.

Forschen, Entwerfen usw. 20102030

R&D Marketing Artistic matters, writing Health and social matters Consulting Education & training Management, Leadership Application of law Measurement/ testing Cleaning, waste disposal Writing, calculation, IT Hosting etc. Buying, selling Security Repairing Mining, resource Machine steering & maintenance Driving vehicles Producing, processing Cultivating etc.

22

Factors determining the substitution of task through technology and computerisation

Results of previous task-based approach:

High substitutability in case of

manual and cognitive routine tasks

Low substitutability in case of

Interactive tasks (simple or complex)

Knowledge intensive and creative tasks

New developments …

© IAB

23

The changing nature of computerisation

Carl Frey and Michael Osborne

“Following recent technological advances,

however, computerisation is now spreading to

domains commonly defined as non-routine.“

“Nonetheless, the trend is clear: computers

increasingly challenge human labour in a

wide range of cognitive tasks.”

(Frey, Osborne 2013)

24

The Frey, Osborne (2013) approach

25

Recent developments of the task-based approach

Frey, Osborne (2013)

Rapid technical development (mobile/soft

robotics, machine learning) leads also to

substitution of more complex (non routine)

cognitive tasks

More protected tasks are activities requiring

‐ perception and manipulation

‐ creative intelligence

‐ social intelligence

Calculation of the potential risk of replacement

for different professions

© IAB

26

Results of different studies using the Frey and Osborne approach

US: 47% of jobs at risk (Frey, Osborne 2013)

Finland: 1/3 of jobs at risk (Pajarinen,

Rouvinen 2014)

Germany:

‐ 59% of jobs at risk (IngDiBA 2015)

‐ 42% of jobs at risk (Bonin et al. 2015)

© IAB

27

An alternative approach

Tasks substitutable, not professions!

Significantly lower substitutionability

Germany:

‐ 12% of workplaces at risk (Bonin et al.

2015)

‐ 15% of workplaces at risk (Matthes, Dengler

2015)

© IAB

28

Risk of substitution by skill level (Matthes, Dengler 2015)

© IAB, Source: Matthes, Dengler (2015), own presentation..

29

Risk of substitution by profession group (Matthes, Dengler 2015)

© IAB, Source: Matthes, Dengler (2015), own presentation.

0 10 20 30 40 50 60 70 80

Production

Production Technology

Management&Organisation

IT and Natural Science

Business services

Agriculture

Transport & Logistics

Trade

Construction

Hotels & Restaurants

Medical & Health

Cleaning

Security

Social & Cultural Services

30

Conclusions

31

Conclusions

Transition to the knowledge economy and

recent technological developments will lead to

a rapid structural change

Predictions on the requirement of professions

in the future are not possible in detail,

however, there are stable trends in the

developments of tasks

Skill formation is crucial, especially because

qualification means flexibility

© IAB

32

For further information see: www.iab.de

33

Two quotes

Till Reuter (CEO Kuka):

„For the current generation working with the

computer is normal. For the next generation it

will be working with robots “ (Süddeutsche Zeitung, 11.06.2015, my translation)

Dave Brooks: “In the 19th and 20th century we made stuff:

corn and steel and trucks. Now, we make

protocols: set of instructions.“ (New York Times, 11.01.2010)

34

Relatively protected tasks (1) („computerisation bottlenecks“)

Source: Frey, Osborne 2013: 31.

Computerisatio

n bottleneck

O*Net

variable

Description

Perception &

Manipulation

Finger

Dexterity

Ability of making precisely

coordinated movements of the fingers

of one or both hands to grasp,

manipulate, or assemble very small

objects

Manual

Dexterity

Ability to quickly moving your hand,

your hand together with your arm, or

your two hands to grasp, manipulate,

or assemble objects

Cramped

Work Space,

Awkward

Positions

How often does the job require

working in cramped work spaces that

requires getting into awkward

positions?

35

Relatively protected tasks (2) („computerisation bottlenecks“)

Source: Frey, Osborne 2013: 31.

Creative

Intelligence

Originality The ability to come up with unusual or

clever ideas about a given topic or situation,

or to develop creative ways to

solve a problem..

Fine Arts Knowledge of theory and techniques

required to compose, produce, and perform

works of music, dance, visual arts, drama,

and sculpture

Social

Intelligence

Social

Perceptivene

ss

Being aware of others’ reactions and

understanding why

they react as they do

Negotiation Bringing others together and trying to

reconcile differences.

Persuasion Persuading others to change their minds or

behavior.

Assisting and

Caring for

Others

Providing personal assistance, medical

attention, emotional support, or other

personal care to others such as coworkers,

customers, or patients

36

The Frey, Osborne (2013) approach (1)

Estimation of probability of substitution for every

profession

Data base: O*Net 2010 Information on 903

professions and their typical tasks

Expert interviews to estimate the possibility of

substitution at the current state of technology

(for 70 professions)

Estimation of a statistical model for determining the

risk of substitution relying on typical task composition

of the different professions

Profession at high risk: substitution prob. >70%

© IAB

37

Conclusions (2)

Chances of Economy 4.0 outweigh the risks

A marked reduction in aggregate labour

demand is unlikely

It is important to ease the necessary

adjustments

( a role for active labour market policy)

Social partnership is an important requirement

to face the challenges of the future

development successfully

© IAB

38

Limitations of the Frey, Osborne (2013) approach

Share of tasks within professions taken as

constant; however, there are significant

changes of tasks within the professions over

time

Experts tend to overestimate the technical

possibilities ( e.g. Autor 2014).

Technical substitutability not identical to actual

substitution (e.g. legal restrictions, cultural

obstacles, business calculations)

© IAB

39

Is the fear of technological unemployment justified?

© IAB

Keynes (1930)

“We are being afflicted with a new disease …

technological unemployment. This means

unemployment due to our discovery of means of

economising the use of labour outrunning the pace

at which we can find new uses for labour.”

„Those countries are suffering relatively which are

not in the vanguard of progress.“

40

A reversal in the demand for high skilled in the US?

At least some scepticism in the US for the

future demand for skill

Beaudry, Green, Sand 2013*:

”…about the year 2000, the demand for skill

(or, more specifically, for cognitive tasks often

associated with high educational skill)

underwent a reversal.”

*NBER Working Paper 18901): The Great Reversal in the Demand for Skill and Cognitive Tasks