The Future of Work – Three challenges and a government blueprint

Digital and artificial intelligence technologies will likely have a substantial economic and social impact. Governments can act now to create shared prosperity and better lives for all citizens.

Three challenges

While automation has the potential to boost economic growth, it poses some key challenges to the nature of work. The public senses this shift. In a recent survey of 100,000 citizens in 29 countries, we found that job security was the number-one economic priority for the future. Our analysis has identified three challenges associated with automation.

Shifting skill requirements. The path toward sustained prosperity requires a growing number of talented individuals to enable a broad adoption of digital and AI technologies as well as a broad-based workforce capable of operating in a more automated and digital environment. Without addressing this skill demand, technology adoption could slow, and people with obsolete skills could exit the labor force.

The adoption of digital and AI technologies will also require most workers to upskill or reskill. Up to 14 percent of people globally may need to change occupations by 2030, a figure that could climb to more than 30 percent in more advanced economies with a faster pace of automation. However, reskilling is hard to do well at scale, and efforts to date have produced mixed outcomes.

Rising inequality. The trend of increasing inequality within countries has been visible for decades now. Most studies on the impact of further automation and AI on inequality expect increased polarization. And if income growth is concentrated among high earners with a very low marginal propensity to consume, aggregate demand could stagnate and drag down both business investments and job creation, resulting in a period of secular stagnation.

Backlash against technology. Concerns over shrinking job security and growing inequality have already led some governments to take measures to slow the pace of automation. Scaling back investment incentives and hindering the rise of platform-based business models exemplify this trend. But hostility toward automation would significantly impede productivity and prosperity growth.

Governments have an opportunity to enable the adoption of technology and automation while ensuring everyone benefits.

Reforming the human-capital development system. Workers can expect their jobs to constantly change because of automation, and many might have to switch occupations several times in their working lives. This pattern means education will progressively be a lifelong endeavor, requiring significant redevelopment of human capital. Regardless of whether a country’s education providers are primarily private or public, governments are responsible for designing and coordinating the transition, and many have embarked on paths to reform.

Governments, especially those in Northern Europe, have increased access to high-quality early childhood education, as this is the best time to nurture mind-sets and metaskills. Primary and secondary education systems are rethinking their curricula as well as the roles of teachers while capturing opportunities for personalized learning. In addition, governments could manage the urgent, ongoing reform of postsecondary education and adult learning by establishing employer partnerships, offering employers incentives to provide on-the-job training, and financing citizens’ lifelong learning. Last, to improve educational and labor outcomes, governments can use data and analytics to measure progress, shift toward outcome-based funding, and reinforce the midcareer training ecosystem.

Chosen excerpts by Job Market Monitor. Read the whole story @  The future of work: A government blueprint | McKinsey

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