Digitalization and employment policies

The diffusion of digital technology in businesses and workplaces is reshaping the world of work, creating both opportunities and challenges. The digitalization of the labour market encompasses a variety of occupations from on-demand logistics services to highly skilled software developers working remotely and individuals (or ‘influencers’) earning via data transactions generated by social media channels and livestreaming services.

According to the ILO’s Global Employment Trends for Youth 2022 report, achieving universal broadband coverage by 2030 could lead to a net increase in employment of 24 million new jobs worldwide, of which 6.4 million would be taken by young people. At the same time, policymakers around the world are seeking to update public policies to address emerging gaps in worker protection and conditions for enterprises in various sectors.

The COVID-19 pandemic led to a further reconceptualization of the nature of work and the workplace, while accelerating the shift of government services and people’s livelihoods on to virtual and digital platforms. Consequently, many countries have made digitalization a key policy goal, though further efforts are needed to ensure that they are effectively addressed in national employment policies and strategies, backed up by relevant diagnostics and social dialogue.

Policy implications

A central focus of employment policy going forward will be on harnessing the potential of digitalization to contribute to employment generation and improving the quality and productivity of employment, while also addressing the challenges.

To support decent work creation for more “connected” populations and address potential job destruction effects, transformations in the labour market brought on by digitalization need to be addressed by comprehensive policies. Employment policies can play this role, while there are also opportunities to link stand-alone digitalization strategies to employment objectives.

Key policy areas to consider include:
  1. Digital inclusion: digital access is diverging amongst and between countries.  Technology access and use in urban areas far outweighs that in rural areas. Many groups are potentially left behind as digital divides grow, and the more privileged members of the population are able to benefit from digital livelihoods and income generating opportunities. One such group is refugees and other forcibly displaced who are often legally not allowed to work and suffer from the absence of adequate social protection and rights at work when engaging in online and remote work.
  2. Infrastructure: A key roadblock to more and better digital employment is a county’s capacity to provide universal, affordable and good quality high-speed internet (or broadband), which is dependent on a reliable electricity supply. “Mobile broadband internet,” is now the main channel through which population’s access the internet. However, access and use continue to be much lower in developing regions.
  3. Policy, regulation and international labour standards: Issues related to jobs and skills are often absent in regulations related to the digital economy. The recent exponential growth of digital economies means that appropriate employment policy and regulations have not been able to catch up, which will be a key challenge over the coming years.
  4. Digital labour platforms: workers are increasingly using platforms to gain employment and generate incomes. The growth in the platform economy and platform work, therefore, represents an opportunity for job creation and more flexible organization of production processes, but also a challenge in terms of fair competition among enterprises and achieving levels of employment protection and social protection for workers which are consistent with decent work standards and the international labour norms.
  5. Digital skills: Digital transformation means some jobs will be automated, new jobs will be created and existing jobs will be modified (through changes in tasks). An assessment of digital skills would help to classify skills and enable employers, education and training providers and individuals to assess the competency and proficiency levels that are required for different occupations and functions.
  6. Digital SMEs and entrepreneurs: In many countries, small businesses and independent workers are the primary creators of employment. Digitalization has the potential to help a business become more productive, access new markets and hire more people. Various tools such as digital payments and e-commerce can reduce transaction costs and bring services to hard-to-reach areas and marginalized populations, including for youth.