The Digital Economy will profoundly transform our daily life, how we work and how we live.
The Observatory will provide ISSA members with an understanding of the opportunities and the challenges it will present to social security administrations.
It will look at this transformation from two angles: the changing environment in which social security institutions evolve and how Social Security institutions themselves will be impacted and can respond to these challenges.
The ISSA has grouped the multitude of topics that are linked to the digital economy and its impact on social security. This ‘look into the future’ is supported by the ISSA Technical Commissions, findings from ISSA conferences and events, member surveys, good practices, literature reviews, research and input by external experts.
How will the digital economy change the environment for social security?
Large-scale automation of industrial production and services is based on applying a range of advanced technologies such as Artificial Intelligence, cognitive computing, big data, Blockchain, Internet of Things and robotics among others.
Although very diverse, the application of these technologies enables the automation - to varying extents – of a number of tasks usually done by people. Some examples are the usage of increasingly autonomous robots in industrial production lines, self-services managed by artificial intelligence systems, and autonomous vehicles. These all combine all the technologies mentioned.
While such large-scale automation will undoubtedly impact on employment, the implementation of such automated systems is highly complex and potentially costly Furthermore, these “intelligent” systems have to be “trained” to specific application scenarios - which adds complexity and costs. Their potential usage cannot cover a large spectrum of activities such as creative and analytical ones (e.g. determining if software systems are correct).
Social security administrations could anticipate local impacts, particularly unemployment scenarios, and promote reconversion through training. Also, the construction, installation and training of these systems constitute economic activities themselves which require business know-how.
Digital platforms include a very diverse range of emerging services and economic activities carried out using the Internet. Some examples are Amazon and e-bay for e-commerce, Uber for transportation, Airbnb for accommodation, and Freelancer and Upwork for freelance work.
While their business models vary (i.e. collaborative and sharing vs. intermediaries, and so on), the increasing use of Internet and mobile devices has fostered the growth of these platforms in a large number of countries.
On the one hand, digital platforms impact on existing businesses (e.g. taxis, libraries,) and often change the nature of the employer-employee relations to self-employment. On the other hand, these platforms overcome personal barriers to labour participation such as mobility disabilities and removes the geographic boundaries by enabling cross-borders activities.
The emergence of these platforms pose challenges for social security administrations such as enrolling workers of digital platforms - which may be difficult to reach. They may be working across-borders, so enforcing the compliance of social security regulations may be a further challenge. These challenges may undermine the capacity to protect the social rights of the involved workers and also the economic sustainability of the schemes.
The increasing impact of the digital economy will likely see changes in capital versus labour market share, changes in job organisation, economic transformation and focus on new industries.
Whilst job losses are likely in some industries, this may have an impact on competiveness and productivity meaning a slowdown in delocalisation and more competitive developed economies.
Therefore the same industries may lose certain types of jobs but gain others. Countries’ industrial strategies are likely to change to greater focus on value added industries and those that respond to the challenges of this century, most notably climate change and the scarcity of natural resources.
Unemployment systems are likely to have to adapt to provide a more holistic approach taking into account partial employment, flexible work and individuals having numerous careers.
The financing of social security will need to be rethought in the context of this transformation including current and future ideas to adapt to these changes, such as basic income , flat rate fixed benefits and the taxation of different means of production.
Whilst social security systems will continue to meet life cycle needs, institutions will increasingly act as a catalyst and support to these changes and at the same time take policy decision to ensure sustainability and the payment of adequate benefits.
The digital economy is already having profound impact on the labour market and will have a major influence on the future of work over the next decades.
While it will provide new opportunities for some people, it will pose challenges for others because of technology’s potential to replace work. Highly-routine and manual jobs are being challenged by artificial intelligence and automation. Meanwhile, the demand for high-skilled workers and non-routine jobs will further increase.
The need for low-skilled non-routine jobs such as carers that are difficult to automate will grow in the future in line with the ageing of the population. New forms of work have emerged and allow many to contribute to the economy through teleworking and new digital platforms.
This fast changing environment opens up extraordinary opportunities, yet raises questions about wages, labour rights and access to social security for the workers involved. Discussions have started about social contributions from robots, creating new categories of workers for platform based workers, and the changing nature of work, all of which will need to be resolved in the future.
Social security administrators and policy makers need to anticipate and adapt to the future to make social security programmes efficient, relevant and sustainable.
These issues are increasingly high on the agenda of many national governments as well as international organizations. As the platform of exchange for social security administrations throughout the world, ISSA has its unique niche in the search for innovative solutions.
The digital economy is transforming the way social interaction and personal relationships are conducted.
The wide range of new social networks has tremendous impact on societies’ collective behaviours, some negative, others positive. On the one hand, technology breaks down physical barriers and provides countless possibilities to communicate, interact and meet people without consideration for their countries of residence, social origin, or time constraint.
On the other hand, technology enables the individual to withdraw into to a virtual world where it is sometimes difficult to distinguish facts from fiction, opening the door to manipulation. Those who do not have the access or the ability to navigate the digital world are becoming outcasts – creating a digital divide.
The digital economy will see significant changes in the workplace where those with less education and training at higher risk of being permanently side-lined and creating a social stigma and stress for the individual, the family and the community. Though on the other hand social media has fostered an increased awareness of key social challenges facing society such as reducing inequalities, and lifting people out of isolation or poverty.
Today social security institutions must find ways to leverage technology to break down the barriers of isolation, the digital divide and mitigate the social impact of dramatic adjustments in the labour markets. They must harness the technology to protect the social investment throughout the life course particularly during key transition: from early childhood, to education, to the workplace, job loss and re-entry in the workforce, sickness and disability and retirement.
Social security institutions must explore ways to harness data to perform predictive analysis of risks and to design prevention measures that will preserve the social investment. They must identify the new risks faced by the individual, the family and the community to adapt its programme, with a view of empowerment.
How will the digital economy impact social security administrations?
New Business Processes refers to the back-office processes of social security systems: it is all that the client does not see. It involves the people, technology and policies that are required to manage the various parts of the process: enrolment, contribution collection, inflows of applications, the adjudication of benefits and services, the controls, assessment of results, the management of the process for appeals and the evaluation.
The increasingly accessible computing capacity, connectivity, information exchange, and storage capacities will allow unprecedented automation of social security operations, predictive analysis and measurement of trends and outcomes. Artificial intelligence will support the decision making leaving only the more intricate case to be reviewed.
Protection of personal data, integrity by design and automated rule-based adjudication will be widespread. Information exchange through business units will allow a ‘tell-us-once’ approach. With data being the life blood of the organization, business processes must be built around modules that can be interconnected.
In the world of social security, these transformations will require leadership and continuous change management to address the challenges and to take advantage of the opportunities they generate. The HR function will be central to select, hire, grow and retain staff that is dedicated, flexible, bring added-value and able to use to their full potential the new tools available.
Identity management and instant confirmation of life events across borders will allow total portability of one’s rights and benefits. Inter-institutional digital coordination will break down silos and place the clients needs at the center of all the program and services available applying homogeneous rules and supporting a non-stop service delivery.
Big Data means very large datasets of diverse types of elements (e.g. numeric, text, multimedia, maps, and so on) which are generated very quickly.
Such datasets are processed by means of cognitive computing and analytical technologies, which enable the management of varied data, finding correlations and ultimately generating predictive models to extract useful information.
Such advanced processing could help address social and global challenges, such as health and social protection of vulnerable populations.
Harnessing big data offers new opportunities for social security institutions to improve their customer services, detect fraud and strengthen compliance enforcement through the creation of ‘typical’ customer profiles.
It can enhance the design and evaluation of social programmes by cross-analyzing the population covered with the corresponding demographic and socio-economic data.
An analysis of the Big Data reflecting societal activities (e.g. births, marriages, jobs, housing, schools attended, medical care, and so on) could enable social security organizations to refine programme design and the assessment of outcomes as well as to adapt social programmes to an ever changing context.
Nevertheless, the application of these technologies is not “plug-and-play”. It requires tackling a number of technical challenges (e.g. complying with data privacy regulations and assessing the data quality) as well as a deep business knowledge to identify the appropriate datasets and analysis operations to achieve the social security goals.
The advent of the digital economy will see new risks emerging.
Among those there is the emerging digital divide, where citizens who do not have access to, or the ability to use, the new technologies, are side-lined from the mainstream.
Other issues revolve around the need to protect the large amount of personal and commercial data from unauthorized access. The issue of trust is absolutely central to the development of the digital economy, and the risk of a loss of trust in the storage of data would fundamentally challenge the development of the digital economy.
New ways to manage identity will need to be developed to provide the level of protection required. With the increase in the volume and potentially sensitive nature of the data collected, it is essential to gain trust and the consent to the use of data, whilst reducing the threat from cybercrime.
Social security programmes must adapt to the new forms of work, where the employer-employee relationship does not exist. In the absence of this bond, it becomes difficult to enforce compliance and ensure that appropriate coverage exists, contributions are paid and rights are accrued. While the scope of the issue is unknown, it could weaken the financial base of the scheme in the short term and add to social expenditure in the future.
New service delivery models have emerged, providing instant access to a myriad of products and services.
Harnessing the potential of digital technologies requires the interplay of three important dimensions: human capital and insight to innovate, adequate information and telecommunication infrastructure, and the availability of online services and content. These three factors have been identified in the literature as critical to developing new service delivery models related to online service delivery, e-participation, multi-channel service delivery, mobile services, and innovative partnerships across organizations.
Access to internet and mobile devices creates a virtual infrastructure that allows clients to be in contact 24/7. Digital platforms and big data allow the sharing of information to support new service delivery models that meet the ever-increasing expectations of the public for personal and instant access to address their needs.
The digital economy is ever present in the private sector through massive and sustained investment and very importantly due to the consent most of us provide – without even knowingly doing so - for the use of our personal data.
The immense opportunities this offers social security organizations will only be realized if institutions can access data, protect it and provide a demonstrably improved service experience. This will be both in terms of ease of access, superior social security services as well as creating cost efficiencies for the organization itself.
“Doing more and better, with less” could well be the mantra of the digital economy. Mobile technologies, biometrics and unique IDs, big data, master data management, digital platforms, cloud and social networks are providing the virtual infrastructure that enables new service delivery models that meet the expectations of increasingly technology-savvy customers.
The wide-ranging innovative impact of digital technologies makes the life-course and Whole-of-Government service delivery feasible, with services from public agencies coordinated into a single tell-us-once virtual platform.