When companies adopt technological innovations, employees have lower levels of job insecurity. Surviving workers see innovation as a sign of the firm’s health and its commitment to preserving the activity. Mauro Caselli, Andrea Fracasso, Arianna Marcolin and Sergio Scicchitano write that decision-makers must consider these factors when framing the introduction of new technologies.
The economic literature has offered abundant evidence of how firm innovation, digitalisation and automation determine employment dynamics, with different and controversial conclusions. Technological innovation has varying effects on individuals, occupations, industries and regions. However, uncertainty regarding the impact on employment prevails, with one-sided negative narratives persisting among the general public. That’s why it’s important to explore the relationship between technological innovations and perceived job insecurity for those who have experienced them directly.
In our study, we investigate the relationship between technological innovation and the perceived job insecurity of “surviving” workers, those who remain in the firm after changes are introduced. We show that when new technologies reach the workplace, the job insecurity perceived by workers is lower. Two observations:
First, this result holds across different types of innovations. Technological innovation tends to be perceived by surviving workers as a signal that the firm is in good health and committed to preserving production and employment levels. We refer to this pattern as the “reassuring effect”. Our main finding carries through most types of innovation.
Second, the reassuring effect of technological innovation does not vary considerably across characteristics that are specific to individuals and occupations. While occupation-specific factors directly affect the level of insecurity, only the worker’s level of education acts as a significant moderating factor, which we explain below.
These findings have important implications for technological development policies.
Technology and job insecurity
Job insecurity can have a cognitive component that is associated with the individual’s assessment of the probability of losing their job in a given period of time. This assessment is independent from the concerns that this loss may raise. The emotional reaction to potential changes associated with job loss, such as fear of not being able to find work or to preserve a sufficient stream of income, is called the affective component.
The introduction of technological innovations is associated with a lower and declining probability that workers will declare high job insecurity, all else being equal. That applies to both cognitive and affective job insecurity. The probability that someone will feel totally secure is almost 20 per cent higher for both types of insecurity; the probability of being totally insecure is almost 40 per cent lower for cognitive and 20 per cent lower for affective insecurity .
Companies can innovate in the processes they use, or they can innovate with improved products. When they introduce both process and product innovation, the probability that workers will declare high job insecurity is cut by half, a larger reduction than when technology changes only process or only product.
Moderating factors
The relationship between the experience of technological innovations and workers’ job insecurity is moderated by worker and job characteristics.
Educated workers experience a relatively lower reduction in cognitive job insecurity after the introduction of technological innovations. One plausible explanation is that they recognise better the high uncertainty surrounding innovation, but are not concerned about not being able to find another job if they lose the current one.
The reassuring effect of observing a company’s tendency to innovate may shape how expectations are formed in the workers who survive the innovation spree. This may be due in part to the time lag between the introduction of the innovation and our survey. If a surviving worker changes occupation within the same firm after the innovation, their occupation at the time of the survey may not capture their exposure before the introduction of the technology.
However, while workers may change the composition of tasks and preserve their “nominal” occupation, changes in occupations within the firm are more difficult and may require a longer time span. Another empirical explanation for our finding is that neither the degree of routineness nor the exposure to robotisation summarise well the actual exposure of different occupations to the much broader set of innovations that the survey considers.
Policy implications
The introduction of new technologies, from the steam engine to digitalisation, has always brought fears of disappearing jobs and a rise in job insecurity.
Our work suggests that workers who have direct experience of technological innovation in the firm where they work tend to receive information that is reassuring. We maintain that the general public should be aware of this information, and our study contributes to convey the positive opinion of (surviving) workers, who observe the introduction of technological innovations in the workplace. In addition, a proactive approach to adapting to technological change in organisations may also be necessary. We demonstrate that what matters is why and how innovations are introduced.
Employers and trade unions should address technology-related issues by referring to a complete set of information. From the appropriate presentation of clear industrial plans, workers could be reassured in learning that prospective technological innovations are meant to strengthen, not downsize, the firm. While public investment in technology-related training and in improving workers’ skills is certainly of great importance, the authorities should also pay attention to the provision of a balanced narrative for such policy measures. This could improve considerably the quality of the political debate, likely with positive repercussions on industrial relations too.
Future research
Future research should focus on establishing the causal impact of the different types of innovation on job insecurity, possibly taking advantage of panel data based on the release of new waves of INAPP-PLUS. Moreover, in light of the recent episodes of attacks and aggressive behaviour towards artificial intelligence (AI)-enhanced robots, the analysis will benefit in the future from additional investigations on the interaction of more traditional technological innovations and AI.
- This blog post is based on “The reassuring effect of firms’ technological innovations on workers’ job insecurity”, International Journal of Manpower.
- The post represents the views of the author(s), not the position of LSE Business Review or the London School of Economics and Political Science.
- Featured image provided by Shutterstock
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