Digitalisation is one of the megatrends affecting societies and labour markets, alongside demographic change and globalisation. The fourth industrial revolution will redesign production processes and alter the relationships between work and leisure, capital and labour, the rich and the poor, the skilled and the unskilled. The degree of disruption induced by the technological transformation ahead largely depends on the policy framework. Digitalisation can lead to anything between soaring inequalities and widespread improvements of living and working conditions. Two main questions arise for policy makers: how to ensure equality of opportunities in the race with technology and how to find the appropriate level of redistribution of the gains associated with digitalisation to preserve social cohesion. Against this backdrop, this working paper will analyse the technology-induced transformation of labour markets, argue for a new social contract and discuss how the provision and use of skills need to adapt to the digital work environment.

This working paper relates to the 2017 OECD Economic Survey of Austria (www.oecd.org/eco/surveys/economic-survey-austria.htm).