Changes in labor demand and supply in the Finnish labor market under the impact of digital technologies

Abstract

Artificial Intelligence, Machine learning and other automation technologies are changing the world in many ways and one of the most concerning impacts of these technologies is their effect on the labor market. Numerous research studies have been done related to the future job automation which is rather abstract due to the ambiguity and dynamics of occupation descriptions coupled with undefined possibilities of these technologies. At the same time, quite few are focusing on the actual change in occupation structures including tasks and skills which is the level at which technologies operate. Although skills have always been playing a great role in the matching process between workers and employers and therefore have always been shaping the labor market, now is the time when efficient matching of jobs and skills is becoming crucial due to the effects imposed by automation.

This study investigates occupation and skill structure in Finland and its recent changes. It is the first research in Finland that utilizes online job vacancies data – an insightful source of the skill data that comes directly from the market and provides a more comprehensive labor demand data than the one collected by statistical services. The skill analysis is completed with the factor analysis that discovers skill groups and their changes. Technology impact is analyzed with the suitability for machine learning scores for occupations in Finland.

Results of this thesis show the increased importance of interpersonal, initiative, and advanced cognitive skills, falling demand in highly automatable jobs, and deepening job polarization. They point out at considerable changes in skill factors defining occupations in 2014 and in 2020 with physical and cognitive routine skills losing their differentiating power to advanced cognitive and interpersonal skills.