Global Spectator, by Andrés Ortega

An EU fund for adapting to the technological revolution

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An EU fund for adapting to the technological revolution. Rick's visuals from Talkaoke in Surrey Quays shopping Centre with Southwark Council (Rotherhithe, London). Photo: The People Speak! (CC BY 2.0).

Rick’s visuals from Talkaoke in Surrey Quays shopping Centre with Southwark Council (Rotherhithe, London). Photo: The People Speak! (CC BY 2.0).

Technological transformations of all kinds, but especially artificial intelligence (AI), so closely linked as it is to automation, raise the prospect of doing things that could never have been done before, and doing other things better, but could lead to –indeed are leading to– serious disruptions in the job market, with the social impact this entails. Globalisation too has been positive overall but has been responsible for profound changes. In order to offset them, at the end of 2006 the EU launched the European Globalisation Adjustment Fund (EGF), which, while modest and questioned by some, could provide a model in terms of measures against the socially negative effects of digitalisation. Initiatives of this sort may be worth considering as part of European strategies (announced by both the EU and its member states, the German one being the most recent), rather like a European Technology Transformation Adjustment Fund, or at least a reconfiguration of the EGF, to provide a response to such processes.

The EGF was set up with co-funding from member states to support workers who lose their jobs as a result of major structural changes in patterns of world trade stemming from globalisation (closure of large companies, relocations, etc) and, since 2009, due to the effects of the global financial and economic crisis. Its central goal was to help those who lost work to retrain for new paid employment. The self-employed, temporary workers and young people without qualifications have also been included since 2014.

Unlike the Structural and Investment Funds, the EGF focuses on temporary help that is personalised and of limited duration. At first, the Multiannual Financial Framework (2007-13) allocated it an annual limit of €500 million, and subsequently €150 million per annum for 2014-20, in other words 0.1% of the EU budget, which in turn accounts for only 1% of the EU’s GDP. By all measures it is a small amount compared to the Structural Funds and the Social Fund. Between 2007 and 2016 almost 150,000 people –and almost 150 cases in some 50 industries– benefitted from it. Spain has been one of the countries that has benefitted most from the fund, with 21 cases, although with a labour market reinsertion rate that has varied between 33% and 55%, compared with 49% in the EU as a whole. The European Commission is proposing that the EGF be raised to €1.6 billion for 2021-27 (not much compared to the €100 billion for the Social Fund over the same period), and that the effects of digitalisation and automation be taken into account. It will be part of the European strategy on artificial intelligence that is under way.

Despite the large number of studies, it cannot be said with any certainty how many jobs are going to be destroyed and how many are going to be created by digitalisation and automation. For example, the World Economic Forum (WEF) calculates that between 2018 and 2022 the technological revolution will have destroyed 76 million jobs in the world but will have generated 133 million new ones. As far as the McKinsey Global Institute is concerned, it is not so much the number of jobs as the fact that 60% of them could have 30% of their content or activity automated. Even so, there is still a transition problem, because the people who lose their jobs or see them transformed by technology will not be ready to take on a new one at an equivalent level and income. It will be necessary to fast track processes of reskilling, not only for those who lose work but also for those who seek to retain it. In a recent report, the WEF calculates that by 2022 no less than 54% of all workers will need to be reskilled and ‘upskilled’, with ongoing training to which everyone will have to devote 101 days per year. This requires a social, business and educational overhaul, for which a much more intense public-private partnership will be necessary. A fund of this type, or a bolstering of the EGF as is being proposed by the European Commission, could act as a catalyst and help create a dynamic at the European level and in all the member states.

A report by the Bruegel think tank proposes changing the name to the European Adjustment Fund and recommends changes in the EGF: stricter monitoring based on data that as things stand are still inadequate and a review of its programmes’ rules, which currently focus on unduly restrictive criteria –at least 500 workers fired in at least four months, or more in the case of restructuring by SMEs, or that have a marked impact on national, regional or local employment–.

The European Trade Union Confederation (ETUC) has insisted on the need for better coordination, or integration, of all the existing funds, and greater stakeholder participation in their management. In any event, the ETUC is becoming more and more concerned by the impact of technological transformations.

Whether with a new fund or by reforming the existing ones, it is clear that the EU and the member states need to get more involved in bolstering the positive and offsetting the negative effects of the Fourth Industrial Revolution, in what the WEF, currently meeting in Davos, refers to as Globalisation 4.0. The EGF –currently small, but a start has to be made somewhere– has had a low political profile, but this could change if it broadened its scope to include the technological revolution. It could be an issue for the forthcoming European elections, although –unfortunately and predictably– they look set to focus more on causes than on solutions.

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