For many industries, the future is uncertain. From Brexit in the UK and Europe to interest rate hikes from the Federal Reserve in the US, there are a lot of reasons for businesses to be tentative.
A new report from McKinsey Global Institute looks at how automation, technology and a shifting employment landscape will impact jobs, skills, and wages in the near future.
Here we have highlighted the key takeaways from the report to help you and your team prepare for the future:
Automation is perhaps the most pressing issue for companies, especially those tied closely to manufacturing and processing. Estimates have suggested that millions of workers could lose their jobs to machines by 2030 but very few occupations - less than 5%, McKinsey calculates - could be fully automated.
For the vast majority of people, elements of their job will be handed over to robots, which still poses a problem for millions of professionals. However, there are issues associated with implementing automation into businesses, most obviously the upfront cost of developing and introducing it. This, along with other factors like quality and social acceptance, means that anywhere between 0% and 30% of the hours worked globally could be automated by 2030.
The report from McKinsey shows that some industries and markets will be hit significantly harder than others. Even in the sectors largely affected by automation, it may not necessarily lead to high levels of unemployment as workers will be transitioned into new roles.
Workers of the future will spend more time on activities that machines are less capable of, such as managing people, applying expertise, and communicating with others. They will spend less time on predictable physical activities and on collecting and processing data, where machines already exceed human performance.
It's likely that growing automation in the working sector will impact wages, causing stagnation or decline. In advanced economies, like the US, there will be the biggest wage growth in roles demanding higher levels of education at the top of the pay scale and those at the bottom of the pay scale, such as teaching and nursing assistants. For these occupations automation is not worth the upfront cost or cannot match the quality delivered.
In developing economies, like China and India, McKinsey predicts that it will be the middle-wage jobs that will grow the fastest.
Global consumption is expected to grow rapidly by 2030 and emerging economies will be at the heart of it. Larger incomes will trigger a spike in consumer goods that will be felt throughout the supply chain. McKinsey estimates that an additional 50 million to 85 million jobs will be generated just from the increased demand for consumer goods in the near future.
An aging population will also cause a shift in employment, spending and demand. Older people use their income differently and need the use of specific occupations across healthcare. Combine this with the expected increase in investment in new technologies, and consumer spending is likely to rocket, though certain industries will definitely feel the benefit more than others.
This consumer boom may also be met with an increase in demand for labor, as governments look to rectify years of underspending on infrastructure. In addition, housing shortages will be a significant problem for many global leaders to solve, leading to a potential spike in demand for architects, engineers, electricians, carpenters, and other skilled tradespeople.
Transitioning the workforce
It's clear that automation and evolving consumer demands will cause a shift in the workforce but McKinsey warns businesses against trying to "preserve the status quo". Instead the firm encourages investment in new technologies and developing the skills of employees to make the most of economic growth opportunities.
We should embrace these technologies but also address the workforce transitions and challenges they bring. In many countries, this may require an initiative on the scale of the Marshall Plan, involving sustained investment, new training models, programs to ease worker transitions, income support, and collaboration between the public and private sectors.
There are four key areas that need to be addressed:
- Maintaining robust economic growth to support job creation
- Providing income and transition support to workers
- Improving business and labor-market dynamism, including mobility
- Scaling and reimagining job retraining and workforce skills development
By preparing their teams early, businesses can make the most of the benefits that automation and new technologies offer, while also giving employees the time to upskill themselves into different roles.