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Will there be enough work in the future? Opinions are fairly divided between those who believe that technology advances will reduce human jobs, and those who believe that technology advances will produce as many jobs as they displace. It’s easier to predict the jobs that will be automated away by technology, but much more difficult to predict the new jobs that these same technologies will create. In the end, we don’t really know.
The McKinsey Global Institute in December published Jobs Lost, Jobs Gained: Workforce Transition in a Time for Automation, a report that directly addresses this question. The McKinsey study examined the work that’s likely to be displaced by automation through 2030, as well as the jobs that are likely to be created over the same period.
The report’s overall conclusion is that a growing technology-based economy will create a significant number of new occupations, as has been the case in the past, which will more than offset declines in occupations displaced by automation. However, “while there may be enough work to maintain full employment to 2030 under most scenarios, the transitions will be very challenging–matching or even exceeding the scale of shifts out of agriculture and manufacturing we have seen in the past.”
Let me briefly discuss some of the report’s key findings.
Automation will transform a large number of occupations. The McKinsey study analyzed the impact of automation on jobs taking into account not just technical feasibility, but also other factors including labor market dynamics, social acceptance and regulatory issues. Their research estimated that, on average, 15% of occupations could be significantly impacted by automation, with the percentage rising to 30% for the fastest rates of automation adoption.
Advanced economies will experience the largest displacements, with Japan the highest at 26% for average rate of automation adoption, the US around 23% and the UK at 20%. Emerging economies are significantly lower on average, with India at 9%, Brazil at 14% and China around 16%.
The impact of automation also differs by occupation and industry sector. Occupations based on more routine activities will experiences the greatest displacement, such as operating machinery, preparing fast food and collecting and processing data. Automation will have a much lesser effect on physical work in unpredictable environments–such as child and elder-care, gardeners, plumbers and electricians–and on occupations requiring management expertise, decision making, planning, social skills and creative tasks.
Potential new occupations and employment growth. The report identified several trends of new labor demand that may result in net job creation through 2030.
Rising incomes and consumption, especially in emerging economies. Previous McKinsey research has estimated that over the next decade an additional one billion people will have enough discretionary income to become consumers, mostly from emerging economies. Such global consumption could grow by $23 trillion between 2015 and 2030. This could add over 300 million new jobs around the world.
Aging populations. The study estimates that by 2030 there will be over 300 million more people aged 65 and over than there were in 2014. Caring for aging populations around the world could generate between 80 million and 130 million additional jobs by 2030.
Development and deployment of technology. “Overall spending on technology could increase by more than 50 percent between 2015 and 2030. About half would be on information technology services, both in-house IT workers within companies and external or outsourced tech consulting jobs… By 2030, we estimate this trend could create 20 to 50 million jobs globally.” While these numbers are relatively small, they are high-wage occupations including computer scientists, engineers and IT administrators.
Investments in infrastructure and building. McKinsey estimates that the world needs to invest an average of $3.3 trillion per year in infrastructure compared to the current annual spending of $2.5 trillion. These investments could create from 80 million to 200 million jobs.
Investments in renewable energy, energy efficiency, and climate adaptation. Such investments could create between 10 and 20 million additional jobs in a range of new occupations.
Marketization of previously unpaid domestic work. “About 75 percent of the world’s total unpaid care is undertaken by women and amounts to as much as $10 trillion of output per year, roughly equivalent to 13 percent of global GDP.” Most of it is domestic work. Given the rising female labor force participation, much of this currently unpaid work will require paying for services, which could create between 50 million and 90 million additional jobs around the world.
Job creation can offset the impact of automation, but the transition must be properly managed through education and worker training. Automation anxieties have understandably accelerated in recent years, as our increasingly smart machines are now being applied to activities requiring intelligence and cognitive capabilities that not long ago were viewed as the exclusive domain of humans.
“History would suggest that such fears may be unfounded: over time, labor markets adjust to changes in demand for workers from technological disruptions, although at times with depressed real wages,” says the report. “[I]f history is any guide, we could expect 8 to 9 percent of 2030 labor demand will be in new types of occupations that have not existed before.”
“Automation represents both hope and challenge,” notes the report in conclusion.
“The global economy needs the boost to productivity and growth that it will bring, especially at a time when aging populations are acting as a drag on GDP growth. Machines can take on work that is routine, dangerous, or dirty, and may allow us all to use our intrinsically human talents more fully. But to capture these benefits, societies will need to prepare for complex workforce transitions ahead. For policy makers, business leaders, and individual workers the world over, the task at hand is to prepare for a more automated future by emphasizing new skills, scaling up training, especially for midcareer workers, and ensuring robust economic growth.”
Irving Wladawsky-Berger worked at IBM for 37 years and has been a strategic advisor to Citigroup and to HBO. He is affiliated with MIT, NYU and Imperial College, and is a regular contributor to CIO Journal.
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