Economic consequences of artificial intelligence and labor automation:

employment recovery, transformation of labor markets, and dynamics

of social structure in the context of digital transformation

ANASTASIIA TOKUNOVA1*, VIKTOR ZVONAR2, DMYTRO POLOZHENTSEV3,

VALENTYNA PAVLOVA4, OLESIA FEDORUK5

"V. Mamutov Institute of Economic and Legal Research of the National Academy of Sciences

Academy, Rivne region, Ostroh

transformation and automation of labor markets in the example of the EU-27 countries for the period 2013-2022.

The structural-functional analysis was used in the academic paper to characterize and systematically study the

economic consequences of digitalization and automation in the labor markets of the EU-27 countries. The

functioning of the labor market in various EU-27 countries in the context of digital transformation is characterized

by several features. The EU-27 labor markets are characterized by rapid employment recovery, especially during

the pandemic and economic downturn in 2020, and employment revival in 2021-2022. In the Member States, a

stable level of employment is generally observed; there is a decrease in the share of people with 0-2, and 3-4

educational attainment levels, while the share of people with 5-8 educational attainment levels is growing, and

there is a stable growth in wages and incomes. Changes in the social structure of the employed by vocational and

educational levels and qualifications in favor of increasing the importance and role of higher education have been

1 Introduction

The globalization of the world economy, advances in

demands on employees in the context of the

permanent need to develop competencies. An

additional factor in changes in the EU regional labor

markets is the aging of the population, which has led

to the need to attract labor resources from other

countries as well as the need to develop a policy for

attracting human capital.

The foregoing indicates the need for studying the

following issues:

1. The impact of digital transformation and

markets (educational and qualification level,

professions, employment by type of activity).

2 Literature Review

In the research, the labor market will be considered

as a system of social relations related to the purchase

and sale of labor and the exchange of labor for

population on the conclusion of labor agreements

(contracts) on the quantity, conditions, and

remuneration of labor; between the population and

public administration bodies on ensuring the right to

carry out any economic activity, protection against

discrimination in the field of labor, assistance and

unemployment compensation” [2]. The labor market

is also interpreted as a system of labor relations that

reflects the level of social development and the

balance of interests achieved at a given period

labor recovery. Labor force recovery involves

providing the working-age population and the

country’s labor resources with jobs and their

employment.

The major factors in developing the labor market

are as follows: demographic characteristics of the

population, gender and age structure, professional

and sectoral structure of the labor force, development

of the labor market, labor motivation, and mobility of

employees. The labor market is influenced by

Various models are used in practice to explain the

structure and functioning of the labor market. The

most famous of them are the classical (neoclassical)

theory of the labor market, Keynesian, monetarism as

an alternative to Keynesianism, and the model of a

flexible labor market.

In the context of studying the digital

transformation of the labor market and the dynamics

of the social structure, it is expedient to consider in

more detail the model of a flexible labor market. This

forms of labor activity and employment), functional

flexibility (interchange of employees with different

professional skills) [5].

Digitalization as a process of digital transformation

of the economy and society influences the movement

of labor resources both within the country and on an

international scale. The development of the

knowledge-based economy and information society

due to the spread of digital technologies around the

world. Digitalization is a significant factor in the

modern transformation of labor and its mobility.

Digital technologies and infrastructure have changed

existing jobs and created new ones, and these

changes are occurring with spatial and temporal

transformations that influence labor mobility. Digital

technologies accelerate the processes of population

movement; they change the job search process, forms

of employment, and working hours.

increasing efficiency, lies in the fact that it makes the

facility more adaptable and flexible to the current

conditions of technological development, which

allows for an increase in customer satisfaction and

the availability of any services [6].

Tul [7] defines the global digitalized labor market

in her scientific work as a globally integrated digital

space. Within its framework, buyers and sellers of the

labor force interact based on the functioning of an

interstate mechanism for regulating labor supply and

interaction of buyers and sellers of the labor force is

accelerated by technology at the national and

international levels.

Despite the significant impact of digitalization on

depending on the structure of the economy and job

requirements in a particular sector.

In general, digitalization influences labor markets

in the following ways:

Increasing digitalization of the economy and

automation, and the introduction of technology in the

private and public sector have led to new forms of

employment, labor organization, and greater

flexibility for employees and firms [8]. New forms of

labor are flexible and structured, project-based, more

open to ecosystems, more efficient, and more

innovative. Accordingly, jobs are also more flexible;

new professions are emerging, and traditional ones

term contracts is growing [9].

New forms of labor organization (self-employed

and freelance workers) are especially popular in the

United States, the Netherlands, Germany, France,

and other EU countries. Currently, the concept of

employment quality includes decent wages, health,

and safety, acceptable working conditions, training,

and promotion opportunities.

(class, labor collective, group, stratum), social-

demographic (youth, pensioners), professional and

qualification, territorial (type of settlement), and

ethnic communities (nations, nationalities) connected

the labor market should be considered as a set of

social, social-demographic, professional, and

qualification and territorial communities of

employees, employers, intermediaries, trade unions,

and other institutions, including state institutions,

identify the peculiarities of employment recovery in

the EU-27 labor markets, and the social structure of

the EU labor market.

The functional analysis is applied to determine the

dynamic features of the system (dynamics of the

social structure, transformation of the labor market)

by studying the processes of changing its states over

time.

indicators of the EU labor markets, which form the

hierarchical structure of the EU labor markets and

make it possible to characterize their most essential

properties as a system (Table 1). “Working age” is

defined based on the Eurostat classification: 20-64

years.

decreased by 11,4% in 2013-2019, which means that

the reform of the EU labor markets after the 2008-

2009 crisis was effective. In general, a significant

impact of the level of education on employment and

ensuring employment of young people with higher

education can be observed. Member States have

distinctive structural and institutional systems that

ensure the flexibility of the EU labor markets. The

net income of the people employed is growing by

social group.

factor in improving their employment prospects [20].

the labor market: stable growth of the employed

population over the past ten years; differences in

labor markets and employment within the EU-27

countries, in particular, differentiation of volatility (it

is especially evident in Bulgaria, the Czech Republic,

Greece, Spain, Croatia, Cyprus, Lithuania, Hungary,

Malta, Poland, Portugal, Romania, Slovenia,

Slovakia); differences in the level of employment

depending on the social-economic development of

the country (thus, the highest employment levels are

2022.

2022 are highlighted in Table 3. In general, in the

time decreased from 19,1% in 2013 to 17% in 2022,

with an average of 18,4%. The share of Employed

persons with temporary contracts decreased from

Underemployed persons working part-time

decreased from 4,3% in 2013 to 2,7% in 2022, with

an average of 3,61% in 2013-2022. Therefore, forms

of employment are changing within the EU-27.

Table 3. Total Part-time employment in the EU-27 (from 20 to 64 years), 2013-2022, %

Source: compiled by the author based on the Eurostat data [11].

Recent employment trends in the EU-27 include a

Thus, as a result of labor automation and the

pandemic, an increase in the level of remote

employment and telecommuting can be observed,

indicating the emergence of new forms of

employment.

The European Foundation for the Improvement of

Living and Working Conditions [22] has analyzed

the “new forms of employment” that are developing

and the labor market, namely:

employee is jointly hired by a group of employers to

meet the needs of the HR department of different

companies, which ensures the employee’s permanent

full-time employment;

together, combining two or more jobs into one full-

time job;

experts are hired temporarily for a specific project or

to solve a specific problem, thereby integrating

external management capabilities into the company’s

work;

to regularly provide work to the employee, but has

the flexibility to hire the employee on demand;

provides payment and social security;

professionals perform individual work for a large

number of clients, using online platforms to search

for clients, creating jobs for each;

connects employers and employees who fulfill

employers’ tasks;

employed or micro-enterprises work to overcome

longer any employment contract, no wage standards,

working time rules, or regulations regarding the

working day, workplace, training, access to trade

unions, or collective action within this form of

– belongs to this virtual community and manages his

or her employment on the basis of a self-employment

benefits), and security. In addition, the status of labor

remains informal, and employment depends solely on

one’s responsibility skills, and competence. This

form of contractual employment is gaining popularity

extremely fast. Tens of thousands of new freelance

workers are registering on such platforms as Uber

Airbnb, etc. The activities of a specialist are often

outside the law, which requires legislative initiatives.

Digital platforms have led to the development of

a new form of labor immigration – digital. After all,

liberalization of the labor market. The growth of e-

commerce may make digital platforms play a central

role in the future of employment.

The share of employment by educational level is also

changing within the EU (Table 4). In general, the

number of employed people is growing across all

educational levels: from 178935 thousand people in

2013 to 193457 people in 2022. At the same time, the

educational attainment is revealed in the scientific

literature. Workers with the highest educational

attainment level have the lowest unemployment rate,

and vice versa, the highest unemployment rate is

31-33].

Table 4. Employment in EU-27 by educational attainment level (EAL) (1 000), 2013-2022

activity in the EU-27 has been changing over the

period 2013-2022. In particular, the share of those

employed in the agricultural sector is reduced from

5% to 3%; the share of those employed in

professional, scientific and technical fields is

increased from 5% to 6%; the share of those

employed in the information and telecommunications

structure of employment by sector also indicates

shifting employers’ needs for employees’ skills and a

greater demand for specialists with technical and

digital knowledge, skills, and competencies.

Consequently, the structure of employment by type

of activity is being transformed [26, 27].

Table 5. Employment in the EU-27 by economic activity (1 000), 2013-2022