Category: economics

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Work time reduction

One of the major elements of social progress in the 20th century consisted in the reduction of work time. Reductions from 48 hours per week in the first half of the century were largely reduced to 40 hours per week or less in some industries with strong trade union representation. State regulations also pushed in this direction with positive implications for physical and mental health as well as wellbeing. Advances in longevity of employees may be attributable to this social progress agenda of the 20th century. In the 21st century we witness a new thrust of enterprises and employees striving to implement a 4 day work schedule by at the same time organizing a further reduction of work hours. The scientific evidence which is based on pre- and post trial assessments of workers satisfaction shows rather positive results (Fan, Schor, Kelly, Gu 2025). More studies are due to accompany this potential of further health and wellbeing effects of reduced work time and the reorganization of work time in enterprises. 

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Geo-politics of Electricity

Think of a society only based on electric energy. In the 21st century this energy stems from photovoltaic cells, wind and water turbines as well as geothermal energy sources. Each region of the globe and even within a country has its own kind of access to electric power specifically originating in the geographic and geologic context. This means we are returning to a phase in which “natural monopolies” of power generation have their comeback. Rather than nation wide power monopolies, the regional specificity becomes important again. Of course, this raises a lot of geopolitical issues and maybe tensions. Local economies will develop their own electricity provision. Larger and smaller companies can reorganize their power provision themselves. Energy monopolies become outdated if the infrastructure and legal frameworks are adapted to the potential of the “All electric society” conditional on new forms of “power” sharing. Electric and political power sharing will be key in the geo-politics of electricity.

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Electrifying Jobs

The transition to the “all electric society” necessitates to prepare the labor force for the upcoming challenge. The knowledge about electricity and electric appliances constitutes the basics of the knowledge base of the future. This goes far beyond the basics of physics and electrical engineering. There many processes like sharing of electric infrastructure in households, cities, in and beyond countries that have to be delt with. Investment calculations and legal issues to address the different risks involved are another area to cover in the process to prepare society for the “all electric society”.
However, the skills of professions with more direct links to the fossil fuel based technologies have a role in the phasing out of the heavy reliance on fossil fuels. Reverse engineering of such engines and heating will need people still knowledgeable of the past, when younger generations set their focus primarily on professions with links to electricity. Even using a solar powered heat pump in a home requires pipes to the existing network of radiators, for example. This will most likely be a gradual shift of the job structure and occupational requirements over at least a decade, but the shift has started already. Some might argue we need a well functioning “transitional labour market”, labour market policies and social security system for this to happen smoothly.

 

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All electric now

The shift over to the “All electric society” is easiest in sunny states like California in the USA, Africa or Southern Europe. For other regions of the globe not only the production of energy through the sun is a bit less abundant, but the storage of the sun’s energy production for deferred use is the next challenge. Countries of the globe near the equator have to balance 12 hours daylight with 12 hours night, countries far from the equator have to balance additionally more long-term between short winter days and long summer light.
Different energy storage solutions have to be envisaged.
On a daily basis or even weekly basis, battery energy storage systems (BESS) can do the trick. These systems become more costly for high capacity, longer duration storage. Battery size and price quickly become an issue. The number of electric vehicles (EVs) that have this more intelligent BESS is rising. This makes it possible to eventually use this storage capacity, if your car is sitting around your home or office for most of the time anyway. To make the “all electric society” function 24 hours, energy storage has to be planned at the same time as production and consumption patterns. The all electric prosumer will be the de-central “pro-store-sumer” in the 21st century.

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Work and Time

The link between work and time has been evolving as a major element of social progress over centuries. In what younger generations seem to take for granted, <40 hours week, paid time off-work. 4-5 days per week to name only the major ones, has been the result of huge struggles and hustles driven by employees and their trade unions to achieve such milestones. The current debate to get employees back into offices and/or to work longer hours again, is also in the end a debate about work and time. The advantage of working from home consists among other factors in saving a lot of valuable time and stress from commute to work. This unaccounted time to go to work has become a major health hazard even in an apparently comfortable company subsidized car or any other means of transportation. The traffic jams of so-called rush hours, when in fact everybody is slowed down, are a serious health hazard usually ignored by employers. However, these hours are a major part of the work-life-time balance of employees. In many negotiations and collective bargaining about working time this is the big elephant in the room rarely addressed.

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Green trade flows

The statistics on trade flows reported by the UN Department of Economic and Social Affairs have a comprehensive data base in the background. The descriptive inspection of the raw data on trade flows comprising solar panels, batteries and electric vehicles shows a stark imbalance of how future-proof the trade between countries is. The New York Times (David Gelles et al. 2025-6-30) has put this information into an impressive graphical design to show the magnitude of the imbalance of how China trades in green products with the world and how the USA is losing out on future-proof low carbon emission trade. Despite the fact that China is still heavily emitting CO2 today due to burning coal for electrical power, the investments at home and trade with the world is moving into the opposite direction. We have seen many of these industries at risk in Europe, like solar panel production, batteries and increasingly electric vehicles, without the western countries getting organized to address crucial business and economic challenges. Falling behind in these industries and trade will shift global balances in the near future. Renovation through innovation is more promising than holding on for another decade to inefficient and more polluting energy sources. Repairs of homes and buildings have long lasting effects, which we can, nevertheless, change today.

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Ultimate Step

Reports in the New York Times, The Guardian and Le Monde in recent weeks have brought to our attention that there are shocking ultimate steps undertaken by several employees of public services. In the case of the British post office a decade long inquiry has uncovered that 13 suicides of employees occurred after they had falsely been accused of fraud. A long time ago in France Telecom a series of suicides was also attributed to a harsh personnel policy. The Office of Public Finances (DGFiP) is confronted with a series of suicides in 20025 of 12 employees who apparently made the ultimate step to put an end to their life. Not all is to be blamed on the enterprises or public services concerned, however, they failed or omitted attempts to prevent the ultimate steps. Initiatives like peer listeners as anonymous contact points or access to psychological counseling are necessary parts of a responsible human resource practice, even if it might not be a sufficient condition to avoid the ultimate step in some instances. In many cases employees go far beyond their mental capacities in terms of commitment to their work, they should not be left alone in case of severe consequences.
Burn-out, for example, needs to be tackled as part of the responsibility of enterprises and public services alike. It is highly unfair to put the costs of psychological consequences on the shoulders of families and the state. Investigations into toxic leadership styles and the current revival of “workaholic” work ethos will have serious negative consequences for families and society as whole again.

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Learning by using

Is learning by using different from learning by doing? In an economic model to test the employment/unemployment impact of AI in the USA, Wang & Wong (2025) suggest an important impact of employees’ productivity due to learning by using AI. In terms of the traditional language of economics the employees who use AI in their work shall have comparative advantage to those who don’t.
In a model of job search in the economy there is the additional possibility, similarly to robots previously, that certain tasks maybe influenced by the, more or less, plausible threat of an employer to replace the employee by training an AI system to perform the tasks. The credibility and acceptability of such threats are likely to impact wage claims and unemployment risks. All these effects do not happen instantaneously, but evolve over time with varying speed. Hence, calculations of effects have high error margins. The resulting model yields oscillations of “labor productivity, wages and unemployment with multiple steady states in the long run”.
Learning by using seems to be a good description of what occurs at the micro level (the employee) and at the macro level of an economic sector or the economy as a whole. Society may guide the use cases of AI just as much as the business case to use AI, for example in the creative industries as infringements of copyrights may occur on a massive scale. However, learning by using is not free of risks to society at large. Just like allowing people to use automotive vehicles has lead and still leads to thousands of deaths annually, learning by using produces external costs. Overall, this is another case for a benefit/cost analysis for businesses, the economy and society.

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Pepper and Nao

We have seen many persons that became somehow emotionally touched when addressed by Pepper or Nao. These 2 versions of a humanoid robot have served for thousands of persons as the first welcoming moving information desk. I have been guided through museums (DTM, Berlin) and exhibitions by this robot guide with a friendly outlook. Beyond those experiences there is a lesson in industrial policy to be learned from this innovative French humanoid robot. The start-up enterprise was founded as early as 2005. With a substantial funding of ½ billion € from Softbank the enterprise could develop robots for the fields of personal companionship, education, restaurant services or personal care for the elderly.
We have seen the robots at international fairs in several countries, but the prohibitive costs have limited the rapid spread of the robots to broader applications. Subsequently, the decline of the enterprise, or not reaching financial targets fast enough, caused the loss of financial support for the enterprise. In 2025, Aldebaran filed for bankruptcy and the patents will be sold to the best offers. The employees received generous packages of departure and will most likely find rapidly jobs in other robotics, IT or AI related fields.
The loss is probably greatest for the persons who were serviced by Pepper or Nao in elderly homes or the Swiss hospitals, as spare parts or updates will no longer be available. The humanoid robot story is yet another case where the social, economic and financial context of technology is overriding the technological innovation process.

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Social promise

In the beginning and middle of the 2020s the social promise to younger generations has been broken. The latest figures from the USA reveal that 2 million students (WSJ 2025-6-25 A3) who have financed their studies and potential social mobility by taking out a substantial loan are very likely to default on their credits. This observation was less a surprise to labor market analysts as the stalling of student hiring in many countries has happened for several years now. The more surprising finding is that the Wall Street Journal 2025-6-25 has been reporting on this. Banks or universities who are highly exposed to this kind of risk will themselves become downgraded for their credit rating. Higher interests for universities means higher fees and higher student loans eventually. The social promise to reach higher status and earnings through higher education as the social promise of the meritocratic society becomes an illusion. Investors in student housing might also find the sector less juicy for them. Students and their parents were taken hostage by an excessive commercialization and commodification od education. Lifelong learning is a still a promising route to revitalize the social promise.