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Future of Work and AI – Technology will disrupt labor markets by 2030, displacing millions but creating new opportunities

An in-depth analysis of the US, Germany, and Australia shows how technology will disrupt labor markets by 2030—displacing millions of workers but creating new opportunities as well.

Looking at all of these factors gave us an aggregate impact of automation and economic growth on national workforces by 2030. Two economic forecasts, and three possible technology adoption rates, led to a total of six possible scenarios:

Baseline COVID-19 projection: high, medium, or low rate of technology adoption
Severe COVID-19 projection: high, medium, or low rate of technology adoption
Throughout this report, unless mentioned otherwise, we will refer to the midrange scenario, which comprises a baseline GDP forecast in response to the pandemic and a medium rate of technology adoption.

We find that the US will likely experience a labor shortfall in its workforce of 0.9% to 4.4% by 2030. Germany will also experience a shortfall, of 0.5% to 4.1%. And although Australia will experience a labor shortfall of up to 3.7% in the baseline scenario, it will experience a labor surplus of up to 4.0% if the pandemic causes a more severe impact on GDP growth. (See Exhibit 2.) These consolidated gaps are the difference between the total supply and the total demand in the future workforce for each country. This net number, however, is only an initial indication, and policymakers and business leaders need to look at the disaggregated perspective to see the full picture. Our research also reveals that automation will reduce the number of both unskilled jobs and white-collar positions.

Growing Demand for Technological and Soft Skills

For all three countries, the development of labor supply does not fully match the changes in demand, except for certain occupations. At the same time, in many sectors, severe shortages of skilled workers will mean that growth in demand for talent will be unmet. This is particularly true for computer-related occupations and jobs in science, technology, engineering, and math, since technology is fueling the rise of automation across all industries. This is why the computer and mathematics job family group is likely to suffer by far the greatest worker deficits in all three countries.

Meanwhile, in job family groups that involve little or no automation but that do require compassionate human interaction tailored to specific groups—such as health care, social services, and certain teaching occupations—the demand for human skills will increase as well. Germany and the United States, given their overall human resource deficits, will face the greatest pressure for talent in these occupations. For example, Germany will suffer a shortfall of 346,000 people in the educational instruction and library sector by 2030. The deficit for health care practitioners and technical support will rise to 254,000. In the United States, the deficits for those two groups will rise to 1.1 million and to nearly 1.7 million, respectively, by 2030. Even Australia will suffer a significant shortfall, in health care practitioners and technical support: 168,000.

Recommendations for Governments

Countries need to take the following actions to get ahead of current and future work imbalances in their employment markets.

Plan for the future workforce. Governments should have a central workforce strategy and policy unit in place to understand the current trends in workforce supply and demand; identify the gaps that exist in certain jobs, sectors, and skills; and predict the measures that will be needed to close those gaps. Specific resources include advanced-analytics models to predict changes over time and sufficiently granular sources of data that can generate insights into various regions, sectors, and demographics. Furthermore, the findings should be translated into strategic directions that are then implemented in specific policies and programs across government departments, including education, welfare, labor, and economics.

Rethink education, upskilling, and reskilling. Guided by strategic workforce planning, governments should create adult upskilling and reskilling programs at scale. Success requires working closely with the private sector and academia to develop more creative solutions that match the shifting realities of the labor marketplace over time. Governments also need to refocus education systems to develop so-called metaskills, such as logical thinking, reasoning, curiosity, open-mindedness, collaboration, leadership, creativity, and systems thinking.

In addition, education systems must become more flexible, moving beyond degree programs that require several years to complete and, instead, facilitating intermittent periods of study. They should also help people to obtain microcredentials and certifications tailored to industry needs (ideally created in partnership with the private sector) and to upgrade their skills on a regular basis.

The right solution will require a much broader set of educational formats to convey these skills in a sound way. Current education funding models need to shift from large, one-time subsidies to smaller, incremental payments spread over a person’s lifetime. This might mean, for example, creating lifelong learning accounts, such as those in a program offered by the Singapore government, which provide funding for a person’s education over their lifetime and can be drawn upon whenever they need to upgrade existing skills or gain new ones. Traditional education systems will need to apprise prospective students of the fields of study and types of degrees that are most aligned with the needs of the workforce, so they can make informed decisions about which path to pursue. This is especially true for students who are transitioning to higher education. What’s more, doing so would cut down on any future reskilling needs because citizens will have acquired the skill profiles demanded by the labor market right from the start.

Build career and employment platforms. To ensure that the labor market is working as efficiently as possible, some governments are creating comprehensive data and digital employment platforms so that workers can navigate to jobs and training opportunities more easily and quickly. A world-class platform helps citizens assess their skills, identify potential employment pathways, and close capability gaps through upskilling and reskilling opportunities. Critically, these platforms need to be continually updated and reinvented to ensure that they remain relevant and useful. In addition, governments need to establish their own employer brands in order to influence immigration patterns and attract employees with relevant skills from other countries.

Update social safety nets. Given the risk that automation poses for many jobs, policymakers need to focus on providing upskilling and reskilling opportunities for workers who are in transition, employed part-time, or unable or unwilling to adapt to the digital economy. Welfare policies need to adapt so the system can assist people who regularly enter and exit the workforce. Supporting those who do not profit directly from the positive effects of future technologies is critical to fuel a societal support for this major shift toward a more flexible and adaptive workforce. Funding all this will require governments to embrace automation in their own administrations as boldly as possible.

Drive innovation and support small and midsize enterprises (SMEs). SMEs may lack the funds to continually enhance their automation and thus will need support in the form of subsidized loans or investment tax breaks as they work to develop a digitally enabled workforce. Regulations for the use of advanced technologies should not overburden these SMEs, in order to avoid inhibiting their innovation. Supporting SMEs will help build the capabilities needed to drive innovation throughout the economy as well.

Recommendations for Companies

To ensure that current and future work imbalances do not have an impact on their financial stability and ability to compete, companies need to take the following actions.

Perform strategic workforce planning. As at the country level, a company should regularly assess the current size, composition, and development of its workforce. It should also evaluate future demand on the basis of strategic direction and determine the gaps for certain jobs and specific skills. Furthermore, it should proactively design the measures needed to close those gaps. These strategic measures need to be closely connected to the company’s overall planning for the medium term and need to be budgeted accordingly to ensure swift implementation.

Upskill and reskill existing workforces. Given the rapid shifts in skill requirements and the number of entirely new tasks and roles that are emerging, the labor market will be unable to supply sufficient new talent to fill available positions. Companies therefore need to supplement external hiring with internal development initiatives and on-the-job training.

Create a lifelong learning culture. Corporate training used to consist of certifications or intermittent training programs, but the digital economy will demand a constant upgrading of skills. Companies therefore need to build constant learning into their business models. Content and skill upgrades should be delivered in a variety of formats so that they can be integrated into the daily routine of every employee, ensuring a nimble and agile workforce.

Rethink talent recruitment and retention strategies. The combination of demand for digital skills and demographic shifts will put extreme pressure on the labor supply pipeline, creating fierce competition for talent. Thus, companies may need to shift the recruitment focus from hiring for skill to hiring for will: as some of the skills needed in the future (such as coding computer languages) will most likely be self-taught or come without an explicit certification, HR professionals will need to view candidate criteria with a more open mind and embrace diverse curricula. Companies will also need to find new ways of retaining their talent and equipping them with the skills that will enable them to stay relevant within the changing context in which the enterprise operates.

Companies may also opt to create an employee pool to which people with new skills can be added without yet knowing which field of operations they’d be best suited for. Companies could choose to assess intangible skills with trial periods as well. In a postpandemic era, the higher prevalence of remote working will allow companies to access international and more fluid talent pools that are outside the companies’ main markets. For many organizations, this will be a completely new source of talent to explore and manage.

Recommendations for Individuals

In order to ensure that they are prepared for the jobs of the future, individuals will have to take greater responsibility for their own professional development, whether that means through upskilling or reskilling. They should take the following actions.

Make lifelong learning the new normal. Whether through programs offered by employers or through private channels, continuous learning and the acquisition of new skills must become central to an individual’s working life. Individuals should also invest not only in digital skills but also in metaskills, which will serve them well regardless of shifts in the market.

Continuous learning and the acquisition of new skills must become central to an individual’s working life.

Remain focused on upskilling and reskilling. More and more sources of information about jobs and skills will become available in the coming years. Many governments are establishing overviews of jobs and skills that are currently in demand and creating forecasts for the future. Individuals need to pay attention to these sources of information and update their skills accordingly, either by searching out high-quality providers of education or by charting their own course amid the vast amount of online-learning offers.

Become more flexible when developing a career path. Frequent career changes and lateral moves into similar job positions will become increasingly necessary. Therefore, workers should remain flexible throughout their careers, looking for positions where their existing skill sets can be applied successfully as well as updating their skill sets according to where their own interests match the market’s needs.

 

Chosen excerpts by Job Market Monitor. Read the whole story @ The Future of Jobs in the Era of AI | BCG

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