The Swiss labour market in the digital transformation

The research team collected novel survey data on employers and different groups on the labour supply side to document where they stand in the digital transformation and to uncover potential need for intervention. On the labour demand side, the research team studied how the digital transformations affects employment relationships, work processes and organisational architecture, and whether this benefits employees or firms. On the labour supply side, the research team studied skill mismatch among university students as future labour market entrants, and jobseekers as a potential risk group. The project also designed, tested and evaluated interventions that may help these groups to better cope with the digital transformation.

The digital transformation causes substantial shifts in the tasks associated with specific jobs and the skills and competencies demanded by employers. The extent of possible disparities this creates on the labour market crucially depends on how labour supply responds to these developments. Moreover, digitalisation disrupts entire management systems, creating both new opportunities, and challenges for the formation and design of employment relationships, work processes and organisational structures.

The project had three objectives. First, the research team closed important knowledge gaps by collecting novel data on different labour market actors in Switzerland. Second, the project identified risk groups with skill gaps on the labour supply side and success factors for employers on the labour demand side. Third, the research team provided important inputs for designing effective interventions to mitigate negative effects of the digital transformation on the labour market.

The findings for the labour supply side underline the importance of objective information on skill requirements of jobs and labour market returns as input for skill investment decisions. Moreover, it would be beneficial to develop standardised tools that objectively assess workers’ skills to help overcome biases in beliefs about own skills as potential deterrants to skill investments. At the same time, future research needs to study the sources and consequences of misperceptions regarding own skills and skill requirements in more detail. Firms, on the other hand, need to recognise that the adoption of new digital technologies requires simultaneous adjustments not only in the work processes, but also in the design of employment relationships and organisational structures to maintain future competitiveness.

The Swiss labour market in the digital transformation (SWISSLAB)

Three main messages

1. Digital transformation significantly affects employment relationships, hierarchical structures, and organisational architecture. Digital technologies enable more efficient and more cost-effective monitoring, prompting companies to increasingly adopt performance-based incentives. Technology-friendly companies use these incentives more frequently than their technology-averse counterparts. Additionally, the adoption of HR analytics is linked to more decentralised decision-making, which empowers employees. These findings suggest that some employees may benefit from the digital transformation.
2. The findings reveal strong evidence that female students are at risk of being left behind in the digital transformation. Compared to their male peers, they invest significantly less in developing digital skills. Three factors drive this gender gap: On average, female students expect lower returns from digital skills, underestimate the level of digital proficiency required in relevant jobs, and exhibit a considerable aversion to careers requiring strong digital skills. Addressing these barriers is essential to ensure women’s inclusion in the digital transformation and prevent widening gender inequality in the labour market.
3. There is a similar gender discrepancy in job seekers. Female job seekers consistently rate their digital skills lower than their male counterparts and are likelier to have potential skill gaps. A similar pattern emerges for older jobseekers compared to younger ones, reinforcing concerns that women and older individuals are particularly vulnerable in the context of digital transformation. Furthermore, the research team observed that jobseekers are generally reluctant to apply for positions requiring skill sets different from those in their previous roles, even when there is a significant overlap in required skills. They are also hesitant to pursue lower-paid jobs, especially male jobseekers. This limited flexibility regarding both skill requirements and wages poses a potential risk in adapting to evolving labour market demands, potentially hindering jobseekers’ outcomes both in the short and the long term.