Interview “Digitalization, Immigration and the Welfare State” Dr. Mårten Blix

Interview “Digitalization, Immigration and the Welfare State” Dr. Mårten Blix


Q: You have given a lecture
in the ifo Institute on digitalization immigration and the
welfare state. You say the welfare state is undergoing big changes in the
future. What is going to happen with immigration and digitalization A: Well, we’re having two mega trends that are affecting the social contract. The
social contract is built on comprehensive welfare services and the
labor market, that has the job security. So what what happens with
digitalization is, that you’re getting the possibility to automate work. And you
can by work on these platforms so the security on the labor market is changing, it’s becoming lower. And then you’re also having immigration which is
increasing the competition for low-skilled jobs. These things together are changing
and the big challenge for the social contract in many countries. Q: You said we need to smoothen things – how do you think that this could happen? A: Well I think that education is the key. I mean if you look at past historical changes
– e.g. the industrialized revolution – this was a difficult period when real wages
did not increase so much over some time. So the way to do this, is to help people to find new jobs and to give them the training that they need. And I think we’re entering a period where standing still in the labor market
is becoming more problematic. Because technology is moving so fast so if you
stand still, or if you’re moving at too slow pace – I think that’s
gonna be problematic for people, that they will not be earning such a
good wage development. Q: You also said, that “Gig work” is coming now and that
it’s eroding the basis of the the social contract. What does that mean, what is Gig work and how does it undermine the
social security or the welfare state? A: These gig platforms don’t
see themselves as an employer. They can be in any country and they can
match a buyer and seller – either in the country or between countries. So if you buy a service from somebody outside your own country, then
typically it’s hard for the local country to tax that. And if that
increases in magnitude, many people buy these kind of services. Then there’s a
lot of tax revenue, that will be lost. And this is difficult for countries in
Europe, because such a large share of revenue for governments are coming from
tax on labor. Q: You also said, that we have to improve skills, especially for
immigrants. Why is that? A: I think this is the only chance of of helping immigrants
to enter the labor market. For immigrants, who have low skills, it’s
going to be very difficult. But there has been some research, that showed – for
example in New York – that Uber drivers, that this was a way to enter the labor
market – to get a foothold. And alternative might be to be completely outside. And to
get a foothold at a labor market, which could then later years lead to another
step. And perhaps then for the second or third generation to improve their
conditions further. So it’s like the hope of equality of opportunity. That’s what
we need to think about. That people who come to a country to have a chance
through work to improve their situation in life. Q: The Sandinavian way you said,
is to protect more the worker than the job. What does that mean? A: We have a Social Security system and then on top of that we have benefits that are
provided by the trade unions and the employer organizations. So they have
these funds that will build up over time. So let’s say that a firm goes into
bankruptcy. Then the workers that have lost their jobs, they get help to
find new work. They get retraining. Income insurance. And actually the experience is,
that most of the people find new work. Sometimes at even higher
wages, than they did in the past. So instead of holding on to something that
was lossmaking, the unions are very open to downsizing. Because they know
that people will get these new chances. Q: Is that an optimistic view on the world
that you’re having, or is it more or less a gloomy one? A: I think the point is that we need to deal with this. It’s coming, whether we like it or not. And I think
the challenge is, to try to adapt. And to make the best of it. And not
pretend, that it’s not happening. So we need to take steps to make it easier to
adjust. And to give the general protection for workers in conjunction with some way of retraining. I think that would be
essential ingredients. And trying to help change.

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