The WESO 2017 report claims that innovation is a major source of competitiveness for enterprises, as well as a key driver of sustained growth and development. What about job creation? Does innovation create or destroy jobs?
There are no simple answers to this question which has been at the core of most discussions around the future of work with the prospect of what some people called a “jobless future”. Clearly, a better understanding of how innovation affects jobs, workers and firms is essential to provide better policy solutions, and our report provides elements of replies.
Previous research already shows that over the long term, technological progress has created more employment that it has destroyed. However, in recent years, in some regions (for example transition and MENA economies) considerable job losses were recorded in non-innovative low-technology firms, highlighting the risk of job loss among low-skilled workers in the manufacturing sector. Obviously, the pace and scale of technological changes have amplified fears for those workers. On the contrary, our report points out that innovative firms tend to create more jobs, employ more workers, in particularly, skilled and female workers, and be more productive.
What about the quality of jobs that are being created?
There is certainly some concern in that area. The fact is that both the labour market benefits and social benefits of innovation are not evenly distributed. In some cases, innovation has led to more intense use of temporary workers, especially among female workers. For example, firms implementing product and process innovation tend to employ more temporary workers than non-innovators by over 75 per cent.
While some argue that this shows a need for more flexibility in firms that are likely to innovate, there are also concerns regarding the quality of such jobs, especially in terms of social protection coverage, occupational health and safety, training, among others. Less secure types of working relationship can also lead to possible effects on income inequality. Also, temporary workers are rarely offered training. This might not only prevent them from improving their skills but it might also affect innovation itself in the long term.