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Reskilling Revolution: A Future of Jobs for All

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The global economy faces a reskilling crisis with 1.4 million jobs in the US alone vulnerable to disruption from technology and other factors by 2026, according to a new report, Towards a Reskilling Revolution: A Future of Jobs for All, published today by the World Economic Forum.

The report is an analysis of nearly 1,000 job types across the US economy, encompassing 96% of employment in the country. Its aim is to assess the scale of the reskilling task required to protect workforces from an expected wave of automation brought on by the Fourth Industrial Revolution.

Drawing on this data for the US economy, the report finds that 57% of jobs expected to be disrupted belong to women. If called on today to move to another job with skills that match their own, 16% of workers would have no opportunities to transition and another 25% would have only between one and three matches.

At the other end of the spectrum, 2% of workers have more than 50 options. This group makes up a very small, fortunate minority: on average, all workers would have 10 transition options today.

The positive finding of the report is the huge opportunity identified for reskilling to lift wages and increase social mobility. With reskilling, for example, the average worker in the US economy would have 48 viable job transitions – nearly as much as the 2% with the most options today. Among those transitions, 24 jobs would lead to higher wages.

The case for a reskilling revolution

The research, which is published in collaboration with The Boston Consulting Group, finds that coordinated reskilling that aims to maintain or grow wages has very high returns for workers at risk of displacement – and for businesses and the economy. At-risk workers who retrain for an average of two years could receive an average annual salary increase of $15,000 – and business would be able to find talent for jobs that may otherwise remain unfilled. With this approach, up to 95% of at-risk workers would find new work in new, higher-income jobs. Without such coordinated upskilling efforts, the report finds, one in four of at-risk workers would lose on average $8,600 of their annual income even if they are successful in moving to a new job.

However, this reskilling revolution requires that 70% of affected workers retrain in a new job “family” or career, highlighting the need for retraining initiatives that combine reskilling programmes with income support and job-matching schemes to fully support those undergoing this transition.

“The only limiting factor on a world of opportunities for people is the willingness of leaders to make investments in re-skilling that will bridge workers onto new jobs. This report shows that this investment has very high returns for businesses as well as economies – and ensures that workers find a purpose in their lives,” Klaus Schwab, Founder and Executive Chairman, World Economic Forum.

A future of jobs for all

The report also describes what reskilling would need to look like. The people who will do best in the transitions underway are those who have “hybrid” skills – transferable skills like collaboration and critical thinking, as well as deeper expertise in specific areas. Both highly specialized and highly generalist roles will need significant reskilling.

The report lays out 15 job pathways to demonstrate the precise range of options that reskilling can present for professions as diverse as assembly-line workers, secretaries, cashiers, customer service representatives, truck drivers, radio and TV announcers, fast-food chefs, mining machine operators and computer programmers.

However, for these viable and desirable job transitions to come to fruition requires concerted efforts by businesses, policy-makers and various stakeholders to think differently about workforce planning and to invest in reskilling that will bridge workers to new jobs.

“Work provides people with meaning, identity and opportunity. We need to break out of the current paralysis and recognize that skills are the ‘great redistributor’. Equipping people with the skills they need to make job transitions is the fuel needed for growth – and to secure stable livelihoods for people in the midst of technological change,” said Saadia Zahidi, Head of Education, Gender and Work System Initiative and Member of the Executive Committee, World Economic Forum.

A gendered impact

Of the 1.4 million jobs expected by the US Bureau of Labor Statistics to be disrupted between now and 2026, the majority – 57% – belong to women. This is a worrying development at a time when the workplace gender gap is already widening and when women are under-represented in the areas of the labour market expected to grow most robustly in the coming years. The data show that the current narrative about the most at-risk category is misleading from a gender perspective. For example, there are nearly 164,000 at-risk female secretaries and administrative assistants, while there are just over 90,000 at-risk male assembly-line workers.

Without reskilling, on average, at-risk women have only 12 job transition options, while at-risk men have 22 options. With reskilling, women have 49 options, while men have 80 options. With reskilling, the options gap between women and men narrows. However, these transitions also present an opportunity to close the persistent gender wage gap. Combined reskilling and job transitions would lead to increased wages for 74% of all currently at-risk women, while the equivalent figure for men is 53%.

The many futures of work

Towards a Reskilling Revolution: A Future of Jobs for All is complemented by a second World Economic Forum report launched today: Eight Futures of Work: Scenarios and Their Implications, also produced in collaboration with The Boston Consulting Group. It presents eight visions of the future of work in the year 2030.

“The future of work is not predetermined. All of the scenarios we present are possible, but none is certain. It is in our hands to proactively manage the changes underway and build the kind of future that maximizes opportunities for people to fulfil their potential across their entire lifetimes,” says Rich Lesser, Global Chief Executive Officer and President, The Boston Consulting Group.

The scenarios make the case that, while stakeholders cannot definitively choose to bring about any scenario that they might prefer on their own, they can manage the changes underway and influence the future through collaboration. Eight Futures of Work identifies reskilling the current workforce as one of the most critical actions that can be taken to proactively shape a new, positive future of work. Together, both studies aim to provide actionable tools that will help individuals, employers and policy-makers take action to influence a more inclusive and positive future of work.

The World Economic Forum project on Closing the Skills Gap provides a platform for public- and private-sector leaders to work together on reskilling and education reform, and will use both studies to tailor solutions for workers. At the Annual Meeting 2018 in Davos, the project will announce a new target for collaboration to reach workers with appropriate reskilling and retraining.

Methodology

The Towards A Reskilling Revolution: A Future of Jobs for All report introduces a new methodology built on innovative new data from 50 million online job postings, encompassing 15,000 unique skills, collected over a two-year period by Burning Glass Technologies, the data partner for the report. Combined with labour market statistics from the US Bureau of Labor Statistics, the data used in the study covers 958 unique types of jobs.

The methodology combines the various aspects of a job, including work activities, skills, knowledge, abilities, years of experience and education, into an index of job-fit to measure the similarity between jobs in the set. While the methodology uses the United States labour market as an example, it can be applied to a variety of job requirements and sources of data to map out job-transition opportunities in diverse labour markets, and will be expanded in the future.

The Eight Futures of Work: Scenarios and Their Implications report creates eight potential worlds based on how different combinations of three key variables may come together – the rate of technological change and its impact on business models; the evolution of learning among the current and future workforce; and the magnitude of talent mobility across geographies.

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Portugal’s post-crisis policies boosted growth and employment

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A mix of sound economic and social policies and constructive social dialogue between the government, workers’ and employers’ organizations have helped Portugal recover from the 2008 economic and financial crisis and have driven economic and employment growth, says a new ILO report.

The study, entitled Decent work in Portugal 2008-18: From crisis to recovery , finds that Portugal way out of the crisis lied on a mix of economic and social policies which helped improve the business environment, public sector efficiency, education and training, and integration in global production chains. These factors – some of which pre-dated the crisis – paved the ground for the country’s current trajectory towards solid recovery.

According to the report, the Portuguese experience does not support the conventional notion that economic recovery can be accelerated and international competitiveness rapidly regained simply by means of reducing labour costs and making the labour market more flexible.

Reaching 4.8 million by the end of 2017, employment in Portugal has partially recovered from the more than 600,000 jobs lost following the 2008 economic and financial crisis.

With an estimated 351,800 jobseekers (6.7 per cent) in the second quarter 2018, unemployment has reached pre-crisis levels. In 2013, unemployment had peaked at 927,700 compared to only 455,200 job seekers in 2008.

ILO Director-General Guy Ryder commended the study as a solid basis to inform Portugal’s future policy decisions which could “also become a point of reference for other countries”. He cited Portugal “as an important example of overcoming austerity policies, while continuing to pursue a realistic commitment to needed fiscal consolidation.”

Social dialogue between the country’s government and social partners before, during and after the crisis, though not always resulting in consensus, was key to the country’s achievements over the last decade, the report states. However, “where decisions were made unilaterally, or against the interests of unions and/or employers, conflict and pushback resulted.”

Nevertheless, in spite of economic and employment recovery, concerns remain about the quality of jobs and the need to further strengthen the production base to enhance resilience to external shocks, underscoring that these two objectives are not incompatible.

In addition, labour market segmentation “has led to a high rate of involuntary temporary contracts, raising both equity and efficiency concerns. There is a need for policies to address this issue, particularly the low number of workers moving from temporary to permanent employment and unequal working conditions across contract types,” the report says.

In this context, the report authors welcome the commitment of the Portuguese government to further tackle labour market segmentation as a step in the right direction. The will of the government and the social partners to work together on this issue was reflected in a tripartite agreement in June of this year.

The study also highlights recent changes in the country’s collective bargaining system, noting that the goal of the agreement and subsequent legislation “to decentralize collective bargaining from the sectoral to the enterprise level was not achieved.” It also says that the extension of collective agreements was key to promoting collective bargaining, reducing inequality and fostering inclusiveness. The study therefore recommends maintaining this system of extensions.

While wages picked up before the 2008 crisis, they sharply fell during 2010 – 2013 and levelled off just slightly above pre-crisis levels. The report notes, however, that the wages of low-paid workers increased due to Portugal’s minimum wage policy, which was pursued in recent years. This contributed to a decline in wage inequality.

Following consultations with Portugal’s Ministry of Labour, Solidarity and Security, these findings update a 2013 ILO report, Tackling the Jobs Crisis in Portugal .

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Further reforms will promote a more inclusive and resilient Indonesian economy

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A steady economic expansion in Indonesia is boosting living standards, curbing poverty and offering millions of people greater access to public services. Reforms that boost growth, improve the business environment for small and medium-sized enterprises and increase government revenues will allow investment in infrastructure and increased spending on health and social services, which would ensure a brighter future for all Indonesians, according to two new reports from the OECD.

The latest OECD Economic Survey of Indonesia looks at the current expansion, as well as the challenges facing the country moving forward. The Survey projects growth of 5.2% this year and 5.3% in 2019, and lays out an agenda for making the economy more resilient and more inclusive.

The Survey, presented in Bali by OECD Secretary-General Angel Gurría and Indonesian Finance Minister Sri Mulyani Indrawati, highlights the importance of policies to increase resilience as global risks rise. It also underlines the potential for tax reforms that increase government revenues to meet financing needs in a growth and equity-friendly manner, as well as how tourism can contribute to sustainable regional development.

“As the OECD launches the latest Economic Survey of Indonesia today in Bali, our heartfelt sympathies go out to the Government and the people of Indonesia over the tragic loss of life from the earthquake and tsunami in Central Sulawesi. This Economic Survey promotes policies designed to improve Indonesia’s resilience to global risks. Efforts already underway to recover from this natural disaster and rebuild for the future offer a powerful illustration of resilience in action,” Mr Gurría said.

“The Indonesian economy is growing at healthy rates, and a demographic dividend will further boost growth in the coming years,” Mr Gurría said. “The challenge going forward will be to create the conditions to ensure that future generations have the opportunities for a better life. Infrastructure, education, health and job quality still pose important challenges that must be addressed to ensure that Indonesia achieves sustainable and inclusive growth.”

To make the economy more resilient and inclusive, the Survey calls for improved targeting of social assistance, deepening domestic financial markets, better transparency and governance of state-owned enterprises, reforms to employment regulations to bring more workers into formal employment and further simplification of business regulations.

To raise greater revenues to meet spending needs, the Survey proposes Indonesia increase investment in tax administration, make greater use of information technology to strengthen monitoring and facilitate compliance, broaden the tax base for both income tax and value-added taxes, and work with local governments to increase revenues from recurrent property taxes.

To develop a stronger and more sustainable tourism sector, the Survey points out the need to include infrastructure in new development plans, expand tourism skills training and consider opening new areas for appropriate tourism use.

Improving conditions for SMEs and entrepreneurs will also be key for future economic development, according to the first-ever OECD SME and Entrepreneurship Policy Review of Indonesia 2018. Mr Gurría presented the Review in Bali with Minister of Cooperatives and SMEs Anak Agung Gede Ngurah Puspayoga and Minister of National Development Planning Bambang Brodjonegoro.

The Review examines the performance of SMEs and entrepreneurship and provides tailored recommendations for improving the business environment and framework conditions, the strategic policy context, national programmes and the coherence between national and provincial policies.

“In Indonesia, small companies employing less than 20 people account for more than three-quarters of national employment, more than in any OECD country,” said Mr. Gurría. “This is why policies to boost SME development should remain a priority for the Indonesian Government.”

To strengthen productivity growth in SMEs, the OECD suggests increasing government spending on skills upgrading and innovation in SMEs. The Review finds that Indonesia spends less than 0.1% of GDP on R&D, compared with the OECD average of 2.3%, and that standard innovation policies such as R&D tax credits are relatively underdeveloped.

To reduce the budgetary impact of this policy, the OECD also suggests reducing the cost of some large-scale programmes, such as KUR (Kredit Usaha Rakyat, People’s Business Credit) – a loan guarantee with an interest rate subsidy – by increasing focus on targeted groups, such as first-time borrowers and SMEs from lagging regions.

To improve the overall coherence of Indonesian SME policy, the Review recommends the integration and merger of programmes that offer very similar services but are operated by different ministries, for example in the field of business development services and business incubators.

Mr Gurría and Minister Indrawati also launched a new OECD – Indonesia Joint Work Programme (2019-21) that will cover a range of national studies, policy advice and capacity building, while placing greater emphasis on bringing Indonesia closer to OECD bodies and instruments. “Aligning Indonesia to OECD standards can lead to a more dynamic economy and a more inclusive and sustainable growth model,” Gurría said.

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Shared mobility and automation will reshape the auto industry by 2030

MD Staff

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Shared mobility and automation are expected to drive a revolution in the automotive industry workforce and production by 2030, according to a new study by PwC’s Strategy& consultancy.

Transforming vehicle production: How shared mobility and automation will revolutionize the auto industry by 2030 predicts substantial changes for manufacturers and consumers. Vehicle production will have split between mass-market, largely no-frills “cars on demand” that will be rented journey-by-journey and more customized vehicles for those who still want to drive, or be driven in, their own vehicle.

PwC’s Strategy& expects that this will require original equipment manufacturers (OEMs) to rapidly develop two distinct types of factory. The first will be focused on standardised, networked ‘plug and play’ vehicles aimed at young, urban drivers. The second ‘flex champion’ model will produce customised vehicles for a range of consumers, akin to today’s luxury prestige market.

The study expects this change to radically alter the current workforce as robots take on a greater share of the work, on both assembly lines and in the R&D function. It is estimated that between 40-60% of today’s workers with contemporary skills will be needed on the shop floor, although the required number of data engineers and software engineers may rise by 90%.

“The auto industry has not substantially altered its model since Ford’s assembly lines were introduced over a century ago,” says Heiko Weber, partner in PwC Strategy& Germany, “yet we expect to see many of these changes to gather pace by 2021.

“OEMs must start now to build the workforce they will need over the next decade, both by hiring people with the right skills and by retaining and retraining their existing employees. By 2030 the number of data engineers will almost double in the flexible plant and increase by 80 percent in the plug-and- play plant, while the number of software engineers needed will rise by 90 percent, and 75 percent, respectively,” Weber says.

The study also notes that the pace of change will accelerate in other areas, with the time between R&D and production to shrink to two years, compared to 3-5 years today. There will also be growing competition to OEMs from technology companies who will be able to provide mobility-as-service solutions directly to consumers.

At the same time, there will be growing pressure on manufacturers to create far more cost-efficient production processes to accommodate an increasingly diverse range of vehicles and designs.

“The auto industry is on the brink of a revolution where data management and the ability to adapt will be essential to survival,’ says Weber.

“OEMs should act now, making the right choices for their production models and future workforce,” he adds.

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