By Daniëlle Bruel and Sandra Mathijssen
Today’s world is marked by unprecedented complexity and uncertainty. Escalating geopolitical tensions and the digital transformation driven by artificial intelligence (AI) have placed the European Union (EU) at a pivotal moment. The shifts in technology and globalisation are already having major consequences on skill demand and equality. How can the EU navigate the threats and seize the opportunities to ensure a prosperous future? What strategies must policymakers consider to address labour market challenges and combat inequality effectively?
Importance of foresight: Prepare for the future
While the future cannot be predicted, we can prepare for it. Foresight is about anticipating and getting ready for future possibilities. A foresight study with scenario analyses equips policymakers with options to proactively address future challenges. It utilises collective intelligence to explore and anticipate possible developments. The likelihood of the scenarios described below becoming reality varies; by 2030, we might see a blend of these scenarios rather than a clear-cut instance of any single one.
Scenarios: Four possible futures to explore the impact of digital transformation and globalisation
To construct scenarios, we focussed on two primary dimensions: digital transformation and globalisation that combined create four distinct futures or scenarios:
- Empowered by Technology: Digital transformation accelerates while globalisation recedes. Economic blocs create tension and affect global technology supply chains. Trade restrictions impact the global economy, but strengthen internal ties.
- Techtopia: Both digital transformation and globalisation accelerate, leading to a
highly connected and technologically advanced future. The economy grows and industries across countries and continents become more specialised.
- Economic Minimalism: Digital transformation stalls and globalisation diminishes, leading to a more insular and technologically conservative world. Labour productivity and global trade decreases, triggering broader global economic struggles.
- Analog Alliance: Digital transformation stagnates while globalisation persists, slightly stalling economic growth.
The impact on skills and inequality across scenarios
The scenarios illustrate the dynamics between technological advancement and globalisation, affecting skills demand and inequality. Each scenario unfolds unique dynamics affecting skills demand and inequality:
- Skills demand: Across all scenarios, there is a high demand for reskilling to keep up with the pace of the evolving labour market. Technical skills are particularly emphasized in digitally accelerating environments, like in the scenarios “Empowered by Technology” and “Techtopia”, where the need to learn new skills is the greatest. Cutting-edge technologies, such as AI, require both complementary technical skills and soft skills. In globalising scenarios like “Techtopia” and “Analog Alliance”, soft skills such as communication for global trade, are even more crucial, suggesting that a balanced skill set remains crucial. In the scenarios “Economic Minimalism” and “Analog Alliance”, the demand for new skills is significantly lower due to the minimal advancement in technology.
- Inequality: The study suggests a potential trade-off between economic prosperity and inequality: as economic prosperity increases, inequalities may also increase. Globalisation may also contribute to more equality in disadvantaged areas as seen in“Techtopia” and “Analog Alliance”. “Techtopia”, in which both prosperity increases and globalisation accelerates,shows the most significant disparities. Low-skilled workers, women, and older workers face challenges adapting to new market demands, resulting in broader employment opportunity gaps. Men and higher-educated benefit more from technological and economic growth, exacerbating inequality. Inequalities in job opportunity slightly decrease in the scenarios “Economic Minimalism” and “Analog Alliance”.
Policy implications; navigating opportunities and challenges
Each scenario presents both opportunities and challenges for achieving shared prosperity. They highlight the need for individuals and companies to develop skills and talent for a productive economy and a more equitable society. Despite their differences, all scenarios point to a common challenge: inequality. Labour market integration and skill development, particularly upskilling and reskilling, require policy action. Vulnerable groups – those with disadvantaged socio-economic backgrounds, women, older people and migrants – will likely face greater difficulties accessing these opportunities. Building a resilient economy and adaptable workforce necessitates a comprehensive policy approach at regional, national, EU, and global levels.
Proactive policymaking is essential, focusing on collaboration, integrating diverse perspectives, and engaging stakeholders. With this context, we identified four key policy areas for action:
- Enhancing Skills and Job Quality: Modernising education, incentivising industry-specific training, and enhancing employment services. Promote upskilling and reskilling to meet labour market demands.
- The Welfare State: Adapt welfare policies to support labour market changes and support for digital infrastructure and adaptable social protection systems to ensure resilience and future prosperity. Pay particular attention to vulnerable groups and SMEs.
- Promoting Gender Equality: Ensure equal job opportunities and working conditions for men and women, particularly in STEM (science, technology, engineering, and mathematics)
- An EU Strategy for Openness: Maintain openness to support growth, mitigate supply chain risks, enhance energy efficiency, foster technological innovation, and develop new trade partnerships.
Customised policies for a resilient economy
The scenarios highlight different potential paths and outcomes. While the future remains uncertain, this study points to four key policy areas. Policies should be adaptable and flexible, tailored to the specific challenges, opportunities and needs that arise in each scenario. By doing so, policy makers can anticipate to changes and foster a more resilient and inclusive economy.
Note: This blog post summarizes the key findings of our booklet ‘Mathijssen, S., Bruel, D. M. M., Hulsegge, G., & van Veelen, R. (2024). Popular booklet. What does the future hold? The impact of technology, globalisation and migration on skills demand and inequality. GI-NI research. In press.’ The policy guide can be found here.
This blog is also based on the research of Hulsegge, G., van den Tooren, M., & Dhondt, S. (2024). Scientific paper: Globalization and Digital Transformation: Are Impacts in Four Scenarios Converging? Leiden: TNO (H2020 GI-NI D7.3). In press. and Kampert, P., Bruel, D., van den Tooren, M., van Veelen, R., & Hulsegge, G. (2024). Future challenges to shared prosperity: barriers, needs and opportunities. Scenario-based analysis on the future impact of digitalisation and globalisation on socio-economic inequality and skill demand. Leiden: TNO (H2020 GI-NI D7.4). In press.