Technology, including most recently, and significantly, the rise of gen AI, AI Agents and advances in robotics, along with other sector development factors, are set to create major changes in the pattern of labour demand through to the year 2030.
The recently released study, “The New Future of Work”, a version of the McKinsey Global Institute future of work model, builds a fairly comprehensive picture of the shift in the quantity of occupational transitions that are likely to playout in the next five years’ time, and indicates how this will affect the demand for different types of jobs and skills.
While the study covered the US and European markets only, and as such took a view from more advanced economies and industrialisation than seen in developing nations, it still presents a picture that sees many job functions disappearing and there needs to be a greater embracing of training staff and preparing the workforce for these changes.
Some, such as in the medical industry, are likely to see many new jobs and qualifications appearing on the horizon while in sectors such as industrial manufacturing there is likely to be a severe drop in labour demand.
Tightening Labour Markets
With tightening labour markets and a slowdown in productivity growth, Europe and the United States will certainly face shifts in labour demand, spurred by AI and automation.
McKinsey’s updated modelling of the future of work shows that demand for workers in STEM-related sectors such as, healthcare, and other high-skill professions are more than likely to rise, while demand for occupations such as office workers, administration jobs, production workers, and customer service representatives are set to decline.
The model shows that by 2030, which is a in a midpoint adoption scenario, up to 30% of current labour hours worked could be automated, accelerated by generative AI (gen AI).
IN a somewhat different scenario in Europe particularly compared to what could be expected in developing regions, the drive towards net-zero emissions, together with an aging workforce, and growth in e-commerce, as well as infrastructure and technology spending and overall economic growth, could also shift employment demand completely.
While in Africa the population is much younger, there are still relevant issues that could potentially replicate itself such as the definite e-commerce boom and the growth in robotics in manufacturing that will also be likely to have an impact.
Massive Transitions Anticipated
By 2030, Europe could require up to 12 million occupational transitions, double the pre-pandemic pace. In the United States, required transitions could reach almost 12 million, in line with the pre-pandemic norm.
Both regions have been able to navigated high levels of labour market shifts at the height of the COVID-19 period, suggesting that they could possibly manage this scale of future job transitions. The pace of occupational change is broadly similar among countries in Europe, although the specific mix reflects their economic variations.
For other regions however, this scale of labour shift could be cataclysmic with lower levels of education and poor STEM developments and education playing its role in reducing the likelihood of successful transitions, that may result in massive loss in jobs.
Need for Skills Development
The changes underline a pressing need to develop skills and provide extensive training to the labour force. Companies will need to invest in staff development on an unprecedented scale to meet the changing job skill patterns.
Demand for technological and social and emotional skills could rise as demand for physical and manual and higher cognitive skills stabilizes. Surveyed executives in Europe and the United States expressed a need not only for advanced IT and data analytics but also for critical thinking, creativity, and teaching and training—skills they report as currently being in short supply. Companies reported that they plan to focus on retraining workers, more than hiring or subcontracting, to meet changing skill needs.
Lower Wage Employment at Risk
Workers with lower wages face challenges of redeployment as demand shifts toward occupations with higher wages in both Europe and the United States.
This is likely to be mirrored in developing economies as well, particularly where sectors such as manufacturing, energy and mining are concerned
Occupations with lower wages are likely to see reductions in demand, and workers will need to acquire new skills to transition to better-paying work. If that doesn’t happen, there is a risk of a more polarized labour market, with more higher-wage jobs than workers and too many workers for existing lower-wage jobs.
Clear Choices are Key
Choices made today could revive productivity growth while creating better societal outcomes. Embracing the path of accelerated technology adoption with proactive worker training, skill development and redeployment, could help Europe achieve an annual productivity growth rate of up to 3 percent through 2030.
However, slow adoption would limit that to 0.3 percent, closer to today’s level of productivity growth in Western Europe. Slow worker redeployment would leave millions unable to participate productively in the future of work and create what could be the largest labour crises since the great depression.
Read more about Labour and Labour policies: READ HERE
