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The digitalization of the labour market offers rich opportunities, while it also brings important challenges. Opportunities include productivity growth, new market opportunities, new jobs, greater work‐life balance, and higher pay. In addition to being an opportunity for economic transition it is also an opportunity for industrial upgrading and for the creation of jobs, including greener jobs and flexible jobs. The challenges include access to social security, association, access to control/inspection of work, health implications, etc. Negative effects of digitalization are associated with income and job insecurity, work intensification, and deterioration of mental well-being. For instance, digital labour platforms provide new sources of jobs and income, but raise challenges for workers’ protection, representation and fair treatment. 

The International Labour Organisation "Digitalisation and Employment - a Review" gathers the existing literature on the digitalisation of employment, highlights some of the major challenges and opportunities, and identifies gaps as well as potential topics for future research. It is part of ILO's support to its member States to develop fit for purpose genderresponsive employment policies that address the many challenges and opportunities of the ongoing digital transformation.

Indeed, governments are grappling to adequately respond to the rapid pace of labour market change brought about by digitalization and automation as public policies to protect workers lag behind this digital transformation. The COVID-19 pandemic has led to a reconceptualization of the nature of work, the workplace and has accelerated the shift of government services and people’s livelihoods on to virtual and digital platforms.  The digitalization of the labour market encompasses a variety of occupations from on-demand logistics services like Deliveroo, to highly skilled software developers working remotely to individuals (or ‘influencers’) earning via data transactions generated by social media channels and livestreaming services. Digital workers are distributed around the world with an asymmetrical organization of labour. Digital workers are generally young and male. The skill levels of digital workers are heterogeneous, though with greater representation among those who are highly skilled.

Remote work has become, for some, a new norm and digital entrepreneurship is playing a greater role in economic development and social progress, especially since the COVID-19 pandemic. In addition, e-formality has become an emerging solution to decent work and sustainable development. Yet, despite these efforts, there are widening inequalities across countries, sectors and workers. In this context, digitalization has posed new challenges to the world of work.

  • First, employment relationships have become increasingly blurred. This has posed significant challenges to social protection that are based on formal employment relations.
  • Second, employees’ skill composition is challenged. Labour markets require more advanced digital skills but there is a shortage of digitally skilled workers and a high prevalence of skill mismatches.
  • Third, the quality of jobs is being threatened. While flexibility is widely celebrated by digital workers, it can involve a greater amount of precarious and unpaid work. Moreover, social and professional isolation and work-life imbalance is a downside of this new flexibility. Although digital employment can increase economic inclusion, there is evidence of explicit or inexplicit forms of discrimination based on location, ethnicity, religion, and gender.

Furthermore, digitalization potentially creates an unprecedented extension of work surveillance with an exponential rise in the use of smart phones and tracking technologies. Different social groups are affected differently in the increasingly digital society. Employment outcomes of digitalization between men and women vary significantly. Compared to men, women face more difficulties in the transition across occupations and skill levels. Generally, they are less represented in sectors that require high digital skills and disruptive technical skills. Since digitalization can offer various pathways for economic development and poverty reduction, it is hoped that increased digitalization may enhance job opportunities for young people, refugees and marginal social groups such as ethnic minorities and people with disabilities.

Efforts have been made by various stakeholders to ensure a fair and equal work environment in the digital era at local, national and international level. Some policies have been introduced to ensure the quality of employment concerning occupational safety and health standards, social security, regulation of work time and access to data and privacy. Skills training programmes and initiatives have been launched to target women, young people and marginalized social groups. However, there are still many (regulatory) gaps that need to be addressed, such as cross-border remote working, blurred employment relationships, workers’ rights and collective bargaining. 

In brief, this report:

  1. reviews the publicly available literature which examines the new labour market opportunities brought about by digital transformation;
  2. identifies gaps and potential avenues for future research
  3. explores how some policies may be designed to offset the negative impacts of labour market transformation on individuals and communities.

Skills intelligence publication details

Target audience
Digital skills for the labour force.
Digital skills for ICT professionals and other digital experts.
Digital skills for all
Digital technology / specialisation
Geographic scope - Country
Industry - field of education and training
Inter-disciplinary programmes and qualifications involving Information and Communication Technologies (ICTs)
Geographical sphere
International initiative
Publication type
General guidelines