The labor foundation as a strategy against technological unemployment

Technology is improving at an accelerating pace. Fundamental changes can be seen in different fields, like 3D-printing, autonomous cars or artificial intelligence to name a few. Most of those new technologies require less human power than needed in traditional industries. As a consequence, there are many voices, mainly from US-authors, who claim that a high number of jobs will get lost due to computerization. Others argue that only looking on what is missing ignores the vast opportunities to create new jobs, since with every invention there are always new possibilities. However, there is a broad consensus that the structure of the labor market is changing. Research shows that during the last decades demand for high-skilled workers has risen significantly. At the same time, there also has been an increase in low-skilled workers, although on a smaller scale. But, there is a sharp decrease for those jobs in the middle-skilled sector. Whereas low- and middle-skilled workers have a rather negative perspective, demand and payment for high-skilled workers are expected to rise further. Consequently, there is a lack of skilled-workers, basically in all OECD countries. The rising demand on high-skilled workers require labor market instruments, which have their focus on upskilling, such as the labor foundation. This instrument of active labor market policies (ALMPs) has not yet been analyzed on its suitability to deal with the consequences of technological improvement. The research question focuses particularly on this issue and reads as follows: How suitable is the model of a labor foundation as an instrument of active labor market policy to deal with the challenges of technological unemployment? The question was approached by conducting a case study which includes four qualitative interviews as well as a sufficient analysis of the literature available. The focus of the case study lies on the Steel Foundation, which is broadly considered as the best-practice example of labor foundations and was also awarded with this distinction from the European Commission. The case study includes two crises situations. The findings show that for different reasons, like its flexibility or its focus on upskilling, the labor foundation can be a vital instrument of ALMPs to deal with technological unemployment. This includes sudden changes in the labor market as well as slower structural changes which still require a constant increase in high-skilled workers or workers in new and different fields. The labor foundation is therefore an instrument which should be considered when policy makers search for innovative sustainable solutions to deal with technological unemployment. However, it also needs to be said that due to its nature of being embedded in a private environment, it automatically excludes everybody who did not work at an associated firm in the first place. The labor foundation, therefore, can only be an additional instrument of active labor market policies, but by no means the only one