We are at a major inflection point that will largely determine the future of work. By 2030, according to a recent McKinsey Global Institute report, Jobs lost, jobs gained: Workforce transitions in a time of automation, 375 million workers – or roughly 14 percent of the global workforce – may need to switch occupational categories and learn new skills as digitization, automation, and advances in artificial intelligence (AI) disrupt the world of work. History, if it has taught us anything at all, has taught us that technology has created large employment and sector shifts, but also widened job opportunities.
A STITCH IN TIME
The word crisis has given us some of the most beautiful lines in English literature, as seen in Oliver Twist: “It had been bright day, for hours, when Oliver opened his eyes; he felt cheerful and happy. The crisis of the disease was safely past. He belonged to the world again.” In other contexts too – war or peace, fortune or ruin, disease or recovery, coronation or abdication, a new parliament or not – a crisis is a transitional stage leading to something. This is particularly true today.
The COVID-19 pandemic has upended life with its devastating effects all over the globe. From the personal (losing loves ones) to the professional (losing jobs), the fallout is reaching every aspect of people’s lives. Now, and for the foreseeable future, we must adapt the new normal to survive. Not all of this is news to chief executives and other business leaders. ‘Reskill to repurpose’ is the new mantra for survival in a post-COVID-19 economy and leaders are motivated to move past the nexus of this seismic force. In a recent McKinsey Global Survey on the future of workforce needs, nearly nine in ten executives and managers say their organizations either face skills gap already or expect gaps to develop within the next five years. But less than half of the respondents had a clear sense of how to address the problem.
If history is any guide, we could also expect the current Industrial Revolution might lead to an increase in employment opportunities. Humans and machines need to work together, and this is where executives need to come to the fore.
This begs a pressing question: What do we do next? Amid pandemic, it is crucial to address this question. This is a key moment for business leaders to respond promptly and with urgency. Organizations are now facing a learning curve as managers scramble to lead their teams virtually. It is a tough time as they bank on social capital and how to maintain cohesion without the benefit of informal coffee, lunch or smoke breaks. As we return to the workplace post-pandemic, a new set of skills is also likely to emerge for the transition.
In terms of magnitude, it’s akin to the Industrial Revolution that was felt on the agricultural community. It brought large-scale coal-based industries like mining, steel, pottery, and textiles, which helped create the foundation of modern society and wealth. There were short-term job losses, but new jobs were created that did not previously exist. The Fourth Industrial Revolution evokes fear that unskilled workers will be replaced by machines. If history is any guide, we could also expect the current Industrial Revolution might lead to an increase in employment opportunities. Humans and machines need to work together, and this is where executives need to come to the fore.
The world of work faces a paradigmatic transition. According to McKinsey, AI and automation will displace between 400 million and 800 million individuals by 2030. That’s one-fifth of the global workforce. New jobs will be available, but people will have to find a way into these jobs. China faces the largest number of worker displacement – up to 100 million, or 12 percent of the workforce by 2030 – due to automation. For richer nations, the share of the workforce that may need to reskill and find new occupations is even higher: Nearly half in Japan, and up to one-third of the workforce in the United States and Germany.
Many organizations are struggling to figure out how job roles will evolve and what kind of talent they will require over the next decade. According to a McKinsey survey, some executives see ‘reskilling’ as a top priority – 42 percent in the United States, 24 percent in Europe, and 31 percent in the rest of the world admit they currently lack a “good understanding of how automation and/or digitization will affect our future skills needs.’
Such a high degree of trepidation is understandable. This is the beginning as executives face bigger challenges ahead. Organizations will need to ensure that people have the skills and support needed to transition to new jobs. Nations that fail to manage this transition could see rising unemployment and reduced wages.
For richer nations, the share of the workforce that may need to reskill and find new occupations is even higher: Nearly half in Japan, and up to one-third of the workforce in the United States and Germany.
The need to reskill and enable individuals to learn marketable new skills during their lifetime will be a critical challenge – and for poorer nations, a sweeping challenge. Reskilling will become more important than ever as the skills needed for fulfilling career changes. Organizations can take a lead in certain areas, including on-the-job training and development as well as provide opportunities for individuals to upgrade their skills.
CO-DESIGNING A BETTER FUTURE
Greater organizational fluidity will be required in workforce management (WFM) to smooth transitions we expect. This includes reestablishing now-fading labor mobility in richer economies. Digital talent platforms can cultivate that fluidity, by collaborating with workers and organizations looking for their skill upgradation and by giving a surfeit of new work opportunities for those open to taking them. Lawmakers in nations with inflexible labor markets can learn from other countries that have deregulated, like Germany, which revitalized its federal unemployment agency into a powerful job-matching entity.
According to a McKinsey survey, some executives see ‘reskilling’ as a top priority – 42 percent in the United States, 24 percent in Europe, and 31 percent in the rest of the world admit they currently lack a “good understanding of how automation and/or digitization will affect our future skills needs.’
We have learned from history that wages for some occupations can shrink for quite a while during labor force transitions. More perpetual policies might be necessary to increase wages and support future aggregate demand ensuring workforce fairness. More comprehensive minimum-wage policies, universal basic income, or wage gains tied to growth are solutions that could be explored.
Business leaders, policymakers, and individuals all have constructive and significant tasks to carry out in smoothing labor force transitions ahead. History shows us that nations across the globe, when faced with monumental challenges, often rise to the occasion for the health and wellbeing of their citizens.
Unfortunately, investments and policies to support the workforce over the past few decades have shrunk. Public spending on workforce reskilling and support has fallen in most member nations of the Organization for Economic Co-operation and Development (OECD). Education models have not on a very basic level changed in 100 years. It is imperative to reverse these trends, with governments making labor force changes and job creation a more exigent need.
Organizations will be on the front lines of the workplace as it transitions. This will require them to both revisit their business processes and reassess their strategies and labor force needs, deliberately considering which individuals are needed, which can be redeployed to other positions, and where new talent might be required. Many organizations are finding it is in their self-interest—as well as a part of their responsibility—to reskill workers for a new world of work.
People, too, will need to be better prepared for a rapidly evolving world of work. Acquiring skills that are sought after in the future of work will be critical to their own prosperity. There will be demand for human labor, however workers everywhere will need to reskill transitional notions of where they work, how they work, and what talents and skills they bring to this new world of work.