The paper 'The Digital Economy or What Next in 2020' is a great example of a Macro and Microeconomics Case Study. The emerging digital economy has brought about significant changes in how people work, live, communicate, and transact business. Continuous technological innovations particularly in information and communication technologies are bound to bring about a digital revolution that will inevitably change different spheres of the economy and life in general. By 2020 a lot is expected to change. This essay seeks to critically examine three socio-economic aspects that are bound to change between now and 2020 due to advancements in the digital economy.
The three aspects that will be examined in this paper include; the labor market, the environment, and people’ s lifestyles. Moreover, this paper will highlight the positive and negative impacts of the changes highlighted in the three areas. The findings of this essay will be based on a critical review of relevant literature such a books, peer-reviewed journals, online articles, and newspapers. The Labour Market The use of new information and communication technologies (ICT) has resulted in significant changes in the labor market over the last decade.
The increasing use of the internet and its wide range of applications have fundamentally changed how organizations are structured and how labor is recruited, their productivity, and compensation (Sui & Rajeski 2002). In the 21st century, many organizations are conducting employee recruitment online, a human resource practice that initially contributed to lower unemployment in economies that were characterized by the intensive use of ICT (Scholz 2012). In the new digital economy, job seekers apply for jobs online speeding up the process of matching labor demand and supply by reducing the time it takes for organizations to recruit labor (Campbell 2002). Another effect of the increased use of the internet is that it has significantly changed how employees work in the 21st century.
Over the last decade, work-related travel has increasingly been substituted by information technologies creating a virtual workplace. Facilitated by the internet, more people are telecommuting or working from remote locations or from home, therefore, reducing the need to physically travel to the workplace (Mathews & Williams 2005 Campbell 2002). It has been estimated that approximately one out of every five workers globally telecommute frequently and that an estimated 10 percent work from home, a trend which is projected to continue (Reaney 2012).
The increased adoption of ICT has allowed businesses and organizations to outsource critical functions such as customer support to employees in distant geographical locations through call centers (Scholz 2012). There are three feasible scenarios for how the labor market will look like by 2020. The increased digitization of labor in the new digital economy may spur increased wealth creation due to increased labor productivity.
This may result in lower unemployment rates globally due to technological advances. Another scenario is that the digitization and automation of labor may render manual labor skills obsolete and result in massive global unemployment as more and more people are laid off work (Campbell 2002). This will be characterized by lean and efficient businesses that will aim to cut costs by restructuring themselves and using ICT applications to streamline their business processes. Another feasible scenario for the global labor market is a growing gap between the incomes of employees in underdeveloped economies and developed economies as the latter increasingly benefit from technological advancement and gain leverage over the former (Campbell 2002).
As a result, many economies will witness the influx of foreign employees who will earn higher incomes due to their ICT skills proficiency (Scholz 2012).
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