There is general agreement that the world of work is going to change enormously over the next few decades. Apart from some doomsday-type scenarios such as that put forward by the late, great, Stephen Hawking, however, there is less agreement about what the changes might mean. A new report from the McKinsey Global Institute, entitled Jobs lost, jobs gained: workforce transitions in a time of automation, attempts to put a little meat on the bones.

A challenging situation

The report suggests that jobs will be both lost and created through automation. The headline finding is that there are likely to be enough new jobs to replace those lost, but that the skill changes required to fill these new jobs will be extremely challenging.

The report addresses five questions.

  • What impact will automation have on work?

Estimates suggest that around half of current work activities could be automated in whole or part. Very few occupations could be fully automated, but more than 30% of activities could be automated in 60% of occupations. It is possible that up to 30% of the workforce could be displaced by automation by 2030, and that 8–9% of the 2030 workforce will be in new types of occupations. This suggests that there will be substantial changes for large numbers of people in work. The biggest changes are likely to be in physical work, such as operating machinery, and food preparation, although data collection and processing is also likely to be increasingly automated, which will affect professional and support work.

  • What are possible scenarios for employment growth?

It is easier to predict which jobs will be displaced than which areas will grow. However, the report suggests that there will be growth from increased consumption, including in health and education. It also predicts that aging populations will have an effect, particularly on healthcare. Information technology jobs are expected to increase, and there may also be new jobs in infrastructure and housing, as well as changes from the energy sector. These moves suggest that millions of people—up to 375 million—may need to learn new skills and change their occupational categories to match new jobs.

  • Will there be enough work in the future?

History suggests that the labour market will adjust: there will be enough work for those who want it, but not necessarily in the same type of work, and some of it will be in new types of occupations. However, history also suggests that sometimes this type of transition is accompanied by lower wages, and additional investment may be needed. Countries are likely to be affected differently, depending on their demographic profile and potential to generate new jobs through economic growth. The report suggests that there will generally be enough work in the future, but that rapid reemployment of  displaced workers will be essential to avoid periods of unemployment and economic hardship.

  • What will automation mean for skills and wages?

The headline message is that the new types of jobs and occupations are likely to need higher levels of education than those that they are replacing. This is particularly true in developed countries, but the fastest growth rate everywhere is expected to be in graduate jobs. Workers are also expected to need better ‘soft skills’, because their work will involve more communication and interaction with people, and better social and emotional skills. It is hard to estimate the effect on wages, because this will depend on the speed of growth of new work, and decline in old.

  • How do we manage the upcoming workforce transitions?

Perhaps the biggest and most important question of all is what to do with this information. Slowing down the rate of progress could be one way to manage, but not necessarily the best. Instead, the report suggests that countries need to look to four areas. First, they must maintain robust economic growth, as this supports job creation. Second, they need to provide support for retraining and reskilling the workforce, including mid-career, as well as apprenticeships and other youth training. Third, they need to encourage mobility in the working age population, and flexibility in jobs. Finally, countries must be prepared to provide economic support to workers as the labour market changes, including income supplements if necessary.

These changes, although they sound obvious, reverse several decades’ worth of industrial and educational policy. The report suggests that there is time to do this, but it needs commitment from governments, businesses and individuals to address the challenges and rise to the occasion.

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