Three main factors have predominantly shaped European labour markets in the past decades and are likely to continue to influence them in the future: technological change, international trade and industrial transformation. Radical technological change has a disruptive effect the organisation of work, the composition of industries, the tasks required to produce goods and services, the skills associated with the changing tasks, and may eventually threaten the social fabric by exasperating income inequality. International trade increases competition, especially for easily replicated, less sophisticated products and services. Recent research suggests that trade causes extensive job losses in industries competing with imports in high-wage countries. Finally, technological change, in the form of the adoption of new automation technologies, varies depending on the composition of industries (industrial transformations) and the functional specialization within industries.
While technology and international trade are the triggers of change in the labour market, workers’ skills are the main channel mediating their impact: PILLARS will study all aspects together to understand the mechanisms through which these three major drivers affect labour markets directly and indirectly through skills.
The public and policy makers need to be able to forecast changes in labour markets with some degree of certainty. In particular, this means determining what kind of (new) skills will be in demand and how education and training systems need to be adapted to create the opportunities to acquire these skills.
Another important factor is how labour mobility and migration can be (de)regulated and facilitated so that workers can migrate along with industries while avoiding the increasing inequalities between regions. PILLARS focuses especially on the interrelations between the EU and China and Latin America.
PILLARS addresses these challenges and aims to develop a three-pillar framework:
• Pillar 1: Past
The first pillar quantifies the impact of technological change and structural transformation on labour market outcomes (employment, wages and mobility) caused by the mismatch between demand and supply of skills. Therefore, pillar 1 aims to provide a comprehensive and empirically solid account of the combined effect of (i) past waves of automation technologies, (ii) recent trends in international fragmentation of production in Global Value Chains (GVCs), and (iii) industrial transformation of European regions on EU labour markets in terms of employment restructuring, skill mismatch and migration.
• Pillar 2: Future
The second pillar studies future trends in emerging automation technologies; functional specialisation along GVCs; industrial transformation; and skill requirements. The aim of this pillar is to obtain quantified predictions of the direction of change of three major determinants of labour markets and how they will affect the demand for skills and jobs in the near future. Therefore, pillar 2 includes a comprehensive set of forecasting scenarios based on the impact assessment in pillar 1 and the projection of (i) industries’ future exposure to emerging automation technologies; (ii) EU regional industrial transformation and (de)specialisation; and (iii) the functional reallocation of workers along GVC and migration flows; and (iv) potential skill mismatch resulting from projections of skill demand and supply.
• Pillar 3: Present
The third pillar provides a systematic evaluation of the effect of recent innovation, training and migration policies on labour markets, allowing the identification of areas of success. Related scenarios for the future of labour markets are then calculated, taking into account predictions about emerging automation technologies. This will lead to proposing a coherent and cohesive policy roadmap that includes a range of measures in different policy areas (innovation, trade, education and training) to achieve Pathways to Inclusive Labour Markets.
