Automation and the digitalization of work are having significant effects on the German labor market and are challenging policymakers to modernize the existing and proven instruments of Germany’s distinctive “social market” economy. The COVID pandemic has accelerated the pace and scope of these technological changes and intensified their effects on work and the labor market. To inform the modifications in policies and institutions necessary to achieve the goals of Germany’s social market system it is necessary to understand these effects.
This report focuses on how automation, broadly defined to encompass a variety of technologies including robots, software, digital systems and platforms, and artificial intelligence, is changing the size and composition of employment, the level and distribution of wages, and the educational and skill requirements for different kinds of work. The report is based both on research by German and international scholars and organizations and on interviews with economists, policy-makers, and business and labor leaders in Germany.
When possible, the German experience is compared with the experiences of other advanced industrial countries that have access to the same automation technologies but that differ in their labor market policies and institutions. Like all technological progress, automation technologies have the potential to increase productivity and economic output, lift living standards, improve conditions and returns to work, and enhance health and longevity. But whether nations realize this potential and how they share automation’s “bounty” or economy-wide benefits among their populations are not technologically determined—they depend on policies, institutions, and choices.
