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Future of Organizations & Work

# Industry Themes

Future of Organizations & Work

Automation will displace many jobs over the next ten to 15 years, but many others will be created and even more will change. Jobs of the future will use different skills and may have higher educational requirements. In this episode, we ask experts how we can retrain workers for the new world of work and what the shifts might mean for occupations and wages.

How will automation affect jobs, skills, and wages?

Peter Gumbel: Welcome to our latest podcast in the series on the new world of work. I’m Peter Gumbel at the McKinsey Global Institute (MGI). Today we’re going to be examining the outlook for occupations, skills, and wages. We’re here with Susan Lund, who is a partner at MGI and is based in Washington, DC, and Michael Chui, who is also a partner at MGI and is based in San Francisco.

 

Our starting point is the new MGI report on the future of work, which is called Jobs lost, jobs gained: Workforce transitions in a time of automation. One of the major findings of the report is that between 75 million and 375 million people around the world may need to change occupational categories and acquire new skills by the year 2030. Let’s start off by discussing that in some detail. First, perhaps Michael, you’d like to start. How did we arrive at these numbers?

 

Michael Chui: This is built on previous work that we did on the potential effects of automation. These are technologies including artificial intelligence [AI] and physical robotics. What we tried to do is to understand which activities in the global workforce potentially could be automated. We looked at not only every occupation in the global workforce but also all of their constituent activities, about 2,000 of them, and tried to understand the pace at which those could potentially be automated by adapting technologies that exist today and technologies that might be developed in the future.

 

We modeled those activities that might be automated out to the year 2030 and considered those that the machines might take over for things that people do.

Will there be enough jobs in the future?

Partner Michael Chui explains the catalysts that will drive future job growth and could potentially offset the impact of automation.

We also tried to understand what the impact might be of other catalysts—for additional demand for human labor. We looked at seven different catalysts that could significantly increase the demand for human labor even net of those activities that might be automated. They include the following:

Rising incomes or rising prosperity around the world. We’ll have another one billion people entering the consuming class during the next couple of decades.

Aging around the world. This drives the need for additional labor in healthcare, for instance.

The need to develop and deploy technologies. Digitization, automation, robotics, and artificial intelligence—these actually require people.

Investment in infrastructure, such as real estate, buildings, and bridges. All that construction could drive the additional need for human demand, even though our own MGI productivity research says more and more of that could potentially be automated.

Changes in the energy mix. We’ll have smart grids. We’ll need to change the generation of energy.

Decreasing amounts of unpaid labor in the global workforce. This is, in many cases, domestic work that’s often done by women, whether it’s childcare, cleaning, cooking, et cetera. More and more of that could enter the market as well.

We look at the net of that—all of the potential jobs lost, those things that machines might take over, and the potential jobs gained—and the additional demand for human labor that can come from these seven catalysts.

 

Peter Gumbel: Is that an exhaustive list in your mind? Or are there other factors out there that could create new labor demand in the future?

 

Michael Chui: We know we can’t predict the future completely. We do think those seven catalysts of additional labor demand are very important. We started with a list of 20 and filtered down to the ones that we thought would be the most significant. But we also know we can’t imagine every job that could possibly be developed.

 

For example, right now we have a bunch of people whose job it is to be an app developer for mobile smartphones. This isn’t a job that anyone necessarily imagined a couple decades ago. In fact, there’s an academic research report that says around half of 1 percent of jobs created every year are entirely new. By 2030, we could be looking at another 8 to 9 percent of jobs in that time period that simply don’t exist today.

How many more new jobs and new types of occupations might get generated? It’s starting and could change over time depending on how innovative the economy is and how much we invest in innovation and research development. And so, that’s something that’s potentially new.

Susan Lund: It’s important to note that the seven catalysts that we looked at, they aren’t all the sources of future labor demand. For example, we don’t use a dynamic model that takes into account the fact that when somebody gets a job, they then go out and start to spend money on all sorts of goods and services. That indeed creates other jobs. We find that, in most countries, the problem is not that there won’t be enough work by 2030 for people to do.

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