The Future of Jobs 2020 report has found that COVID-19 has caused the labour market to change faster than expected. The research released today by the World Economic Forum indicates that what used to be considered the “future of work” has already arrived.
By 2025, automation and a new division of labour between humans and machines will disrupt 85 million jobs globally in medium and large businesses across 15 industries and 26 economies. Roles in areas such as data entry, accounting and administrative support are decreasing in demand as automation and digitization in the workplace increases. More than 80% of business executives are accelerating plans to digitize work processes and deploy new technologies; and 50% of employers are expecting to accelerate the automation of some roles in their companies. In contrast to previous years, job creation is now slowing while job destruction is accelerating.
“COVID-19 has accelerated the arrival of the future of work,” said Saadia Zahidi, Manging Director, World Economic Forum. “Accelerating automation and the fallout from the COVID-19 recession has deepened existing inequalities across labour markets and reversed gains in employment made since the global financial crisis in 2007-2008. It’s a double disruption scenario that presents another hurdle for workers in this difficult time. The window of opportunity for proactive management of this change is closing fast. Businesses, governments and workers must plan to urgently work together to implement a new vision for the global workforce.”
Some 43% of businesses surveyed indicate that they are set to reduce their workforce due to technology integration, 41% plan to expand their use of contractors for task-specialized work, and 34% plan to expand their workforce due to technology integration.
By 2025, employers will divide work between human and machines equally. Roles that leverage human skills will rise in demand. Machines will be primarily focused on information and data processing, administrative tasks and routine manual jobs for white- and blue-collar positions.
New sense of urgency for the reskilling revolution
As the economy and job markets evolve, 97 million new roles will emerge across the care economy, in fourth industrial revolution technology industries like artificial intelligence, and in content creation fields. The tasks where humans are set to retain their comparative advantage include managing, advising, decision-making, reasoning, communicating and interacting. There will be a surge in demand for workers who can fill green economy jobs, roles at the forefront of the data and artificial intelligence economy, as well as new roles in engineering, cloud computing and product development.
For those workers set to remain in their roles in the next five years, nearly 50% will need reskilling for their core skills.
Despite the current economic downturn, most employers recognize the value of reskilling their workforce. An average of 66% of employers surveyed expect to see a return on investment in upskilling and reskilling of current employees within one year. They also expect to successfully redeploy 46% of workers within their own organization. “In the future, we will see the most competitive businesses are the ones that have invested heavily in their human capital – the skills and competencies of their employees,” Zahidi said.
Building a more inclusive future of work
The individuals and communities most negatively affected by the unprecedented changes brought about by COVID-19 are likely to be those that are already most disadvantaged. In the absence of proactive efforts, inequality is likely to be exacerbated by the dual impact of technology and the pandemic recession.
The Future of Jobs 2020 report partner ADP Research Institute tracked the impact of COVID-19 on the United States labour market. Between February and May 2020, data showed that displaced workers were, on average, mostly female, younger and had a lower wage. Comparing the impact of the global financial crisis of 2008 on individuals with lower education levels to the impact of the COVID-19 crisis, the impact today is far more significant and more likely to deepen existing inequalities.
“In the wake of COVID-19, the US workforce experienced immense change, and we were able to track this impact on the labour market in near real time,” said Ahu Yildirmaz, Head of ADP Research Institute Labour Market Research. “While the swift and staggering job loss in the initial months was significant, it is only one anomaly of this ‘recession.’ Industry distribution, business size and worker demographics were all disrupted due to labour market changes brought about by COVID-19, signalling that this downturn is unlike any other in modern US history.”
“The pandemic has disproportionately impacted millions of low-skilled workers,” said Jeff Maggioncalda, Chief Executive Officer of Coursera, another report partner. “The recovery must include a coordinated reskilling effort by institutions to provide accessible and job-relevant learning that individuals can take from anywhere in order to return to the workforce.”
Currently, only 21% of businesses worldwide are able to make use of public funds for reskilling and upskilling programmes. The public sector will need a three-tiered approach to help workers. This includes providing stronger safety nets for displaced workers, improving the education and training systems and creating incentives for investments in markets and the jobs of tomorrow.
Companies can measure and disclose their treatment of employees by adopting environmental, social and governance (ESG) metrics. This will help benchmark success, provide support where it is needed and ensure new gaps that arise are quickly identified and closed.
Remote working is here to stay but requires adaptation
Some 84% of employers are set to rapidly digitalize working processes, including a significant expansion of remote working. Employers say there is the potential to move 44% of their workforce to operate remotely.
According to the report, 78% of business leaders expect some negative impact on worker productivity. This suggests that some industries and companies are struggling to adapt quickly enough to the shift to remote working caused by the COVID-19 pandemic.
To address concerns about productivity and well-being, about one-third of all employers said they will take steps to create a sense of community, connection and belonging among their employees.
Career pivots become the “new normal”
The research also indicated that a growing number of people are making career changes to entirely new occupations. According to LinkedIn data gathered over the past five years, some 50% of career shifts into data and artificial intelligence are from different fields. That figure is much higher for sales roles (75%), content creation and production positions, such as social media managers and content writers (72%), and engineering roles (67%).
“As we think about ways to upskill or transition large populations of the workforce who are out of work as a result of COVID-19 into new, more future-proofed jobs, these new insights into career transitions and the skills required to make them have huge potential for leaders in the public and the private sector alike,” said Karin Kimbrough, Chief Economist at LinkedIn.
“Our research reveals the majority of transitions into jobs of tomorrow come from non-emerging jobs, proving that many of these jobs are more accessible than workers might think, Kimbrough continued. “If we can help individuals, and the leaders who are directing workforce funding and investment, identify the small clusters of skills that would have an outsized impact on opening up more sustainable career paths, we can make a real difference in addressing the unprecedented levels of unemployment that we’re seeing globally.”
Data shows how long to reskill
According to The Future of Jobs Survey, core skills such as critical thinking, analysis and problem-solving are consistently top of the reskilling and upskilling priorities for educators and businesses. Newly emerging in 2020 are skills in self-management such as resilience, stress tolerance and flexibility.
Data from Coursera suggests that individuals could start gaining the top 10 skills for each emerging profession in people and culture, content writing, sales and marketing in one to two months. Those wishing to expand their skills in product development and data and artificial intelligence could do so in two to three months, and those switching into cloud computing and engineering could make headway in the new skillset through a four to five-month learning programme.
There has been a fourfold increase in the number of people seeking opportunities for online learning under their own initiative, a fivefold increase in employers offering their workers online learning opportunities and a ninefold enrolment increase in people accessing online learning through government programmes.
Those in employment are placing larger emphasis on personal development courses; those unemployed have placed greater emphasis on learning digital skills such as data analysis, computer science and information technology.
“The pandemic has accelerated many of the trends around the future of work, dramatically shrinking the window of opportunity to reskill and transition workers into future-fit jobs,” said Hamoon Ekhtiari, CEO of FutureFit AI. “No matter what prediction you believe about jobs and skills, what is bound to be true is heightened intensity and higher frequency of career transitions especially for those already most vulnerable and marginalized.”
“The Future of Jobs Report is a critical source of insights in supporting companies and government through these workforce transitions, and FutureFit AI is honoured to share our data and insights in the Report, Ekhtiari continued. “We look forward to continuing to contribute to a just, worker-first, and data-powered recovery as a partner of the World Economic Forum’s New Economy & Society community and its Reskilling Revolutions Platform.”
The Future of Jobs
Now in its third edition, The Future of Jobs report maps the jobs and skills of the future, tracking the pace of change. It aims to shed light on the pandemic-related disruptions in 2020, contextualized within a longer history of economic cycles and the expected outlook for technology adoption, jobs and skills in the next five years. The Future of Jobs survey informs the report. It is based on the projections of senior business leaders (typically Chief Human Resource Officers and Chief Strategy Officers) representing nearly 300 global companies, which collectively employ 8 million workers.
It presents the workforce planning and quantitative projections of chief human resource and strategy officers through to 2025, while also drawing on the expertise of a wide range of World Economic Forum executive and expert communities. The report features data from LinkedIn, Coursera, ADP and FutureFit.AI, which have provided innovative new metrics to shed light on one of the most important challenges of our time.
Confident in managing liquidity, organizations still face challenges forecasting
Most responding C-suite and other executives (84.6%) feel confident in their organizations’ abilities to manage cash and liquidity, according to a Deloitte poll. But as uncertainty persists, it’s important for organizations to continue to improve and strengthen their cash and liquidity management abilities so as not to provide a false sense of security.
“With increased disruption from the pandemic, it’s important for executives to build long-term, sustainable strategies for liquidity versus focusing on short-term fixes which can provide a false sense of security. Bettering processes like forecasting can help give better visibility into cash-flows which in turn can help attain liquidity objectives.”
While forecasting can help give organizations better visibility into their financials, doing so has been difficult for many organizations amid the pandemic. Respondents stated that forecasting was either their top challenge (13.8%) or among their top challenges (54%) with liquidity and cash management during COVID-19.
“The pandemic has shifted executives’ focus from long-term planning to addressing more immediate business concerns—putting forecasting capabilities into the spotlight, which has shown weak points in these efforts. Gaining better visibility into forecasting to fully understand the liquidity impacts in their business is critical in navigating a path forward,” Jackson continued.
Advanced technologies are here to help but few are taking advantage
With forecasting challenging executives, especially in a time of increased disruption, leveraging advanced technologies can help. However, only 13.5% of respondents stated they are currently doing so and 18.8% of respondents plan to implement in the next 12 months. Almost half of respondents (46.8%) stated that they have no plans to use advanced technology in their liquidity management efforts.
Jackson said, “Utilizing technologies like advanced analytics can help executives save time and gain valuable insight that might not have otherwise been available—identifying trends and issues throughout areas like forecasting efforts. Ultimately, advanced technologies can help executives evaluate the most strategic ways to strengthen their liquidity.”
Through disruption, organizations are regularly updating liquidity management efforts
Executives stated that their organizations are updating cash flow and liquidity management plans in a regular cadence. Nearly a third (31.4%) of respondents are updating their plans monthly and nearly a quarter (24.5%) are updating their plans on a weekly basis. Only 7.2% of respondents stated they were not making changes to their cash flow and liquidity management plans.
Jackson concluded, “Efforts in managing cash flow and liquidity have usually been reserved for companies in distress. However, with the pandemic and increased disruption, these efforts are now relevant for almost every organization. Executives should recognize that now is the time to act by updating or creating better processes, gaining visibility and enhancing capabilities to make proactive and informed decisions that affect liquidity.”
Family businesses risk missing the mark on ESG – PwC
In a year where business has had to transform the way it meets the needs of society and the environment, family owned businesses risk falling behind, according to a new global survey of 2,801 family business owners.
While more than half (55%) of respondents saw the potential for their business to lead on sustainability, only 37% have a defined strategy in place. European and American businesses are lagging their Asian counterparts in their commitment to prioritising sustainability in their strategy. 79% of respondents in mainland China and 78% in Japan reported ‘putting sustainability at the heart of everything we do’ compared to 23% of US and 39% in the UK. Larger businesses and those owned by later generations also buck the trend, with greater focus on sustainability.
This reluctance to embrace sustainability comes despite the fact family owned businesses are highly likely to see a responsibility to society. Over 80% engage in proactive social responsibility activity, and 71% sought to retain as many staff as possible during the pandemic. Nor is it a function of economic pessimism – less than half (46%) expect sales to fall despite the pandemic and survey respondents felt optimistic about their business’ abilities to withstand and continue to grow in 2021 and 2022.
Instead, the issue is an increasingly out-of-date conception of how businesses should respond to society, with 76% in the US and 60% in the UK placing greater emphasis on their direct contribution, often through philanthropic initiatives, rather than through a strategic approach to ESG matters. Family businesses are also somewhat insulated from the investor pressure that is currently pushing public companies to put ESG at the heart of their long term plans for commercial success.
Peter Englisch, global family business leader at PwC says,
‘It is clear that family businesses globally have a strong commitment to a wider social purpose. But there is a growing pressure from customers, lenders, shareholders and even employees, to demonstrate a meaningful impact around sustainability and wider ESG issues. Many listed companies have started to respond but this survey indicates that family businesses have a more traditional approach to social contribution.
‘Family businesses must adapt to changing expectations and, by failing to do so, are creating a potential business risk. This is not just about stating a commitment to doing good, but setting meaningful targets and reporting that demonstrate a clear sense of their values and purpose when it comes to helping economies and societies build back better.’
The survey suggests family businesses have weathered the pandemic relatively well. Less than half (46%) expect sales to fall despite the pandemic and survey respondents felt optimistic about their business’ abilities to withstand and continue to grow in 2021 and 2022.
Family business lagging on digital transformation
Even though 80% of family businesses adapted to the challenges of the COVID-19 pandemic by enabling home working for employees, there are also concerns about their overall strength when it comes to digital transformation.
62% of respondents described their digital capabilities as ‘not strong,’ with a further 19% describing it as a work in progress.
Yet here there are clear generational differences: 41% of businesses that describe themselves as digitally strong are 3rd or 4th generation, and Next Gens have taken an increased role in 46% of digitally strong businesses.
Peter Englisch says,
‘It is a concern that family businesses are lagging behind the curve. There is clear evidence that having strong digital capabilities enables agility and success and that they have a similar enthusiasm for sustainability
‘Businesses should consider how they can engage the experience and fresh insight of Next Gens when it comes to prioritising their digital journey.’
The governance gap
While family businesses report good levels of trust, transparency and communication, the survey highlights the benefits of a professional governance structure. While 79% say they have some form of governance procedure or policy in place, the figures fall dramatically when it comes to important areas: just over a quarter state they have a family constitution or protocol, while only 15% have established conflict resolution mechanisms.
Peter Englisch says,
‘Family harmony should never be taken for granted – it’s something that must be worked on and planned for, with the same focus and professionalism that’s applied to business strategy and operational decisions.
‘There are growing concerns from regulators around the world about family business succession, especially with a third of 1st, 2nd or 3rd generation businesses expecting the next generation to become majority shareholders in the next five years.
‘It is therefore vitally important that businesses take a lead on ensuring they have formal processes in place they can ensure stability and continuity in the long run.’.
Services trade restrictions increased in 2020, compounding COVID-19 economic shock
The global regulatory environment for services trade became more restrictive in 2020, with new barriers compounding the shock of the COVID-19 pandemic on exporters, according to a new OECD report.
OECD Services Trade Restrictiveness Index (STRI): Policy trends up to 2021 shows an increasing pace in the erection of new barriers to services trade across all major sectors. New restrictions are affecting services traded through a range of commercial establishments, in sectors including computer services, commercial banking and broadcasting. Global services trade fell by 24% in the third quarter of 2020 compared to a year ago, a small uptick from the 30% year-on-year decline registered in the second quarter.
While the overall trend was toward greater restrictiveness, governments around the world did lower barriers to cross-border digital trade in 2020, as part of the overarching policy response to the COVID-19 pandemic. More facilitation measures for digital trade were issued than in previous years, helping remote working and online business operations.
“We have experienced a major shift in trade during the pandemic,” OECD Secretary-General Angel Gurría said. “Transport and travel have collapsed, but digitally-delivered trade and enabling services such as telecommunications have contributed to the resilience of our economies. Lifting restrictions to trade in services will be critical as governments seek to put the global economy on the road to a strong, inclusive and sustainable recovery.”
The report, which covers services trade regulations in 48 countries, representing more than 80% of global services exports, identifies top performers in terms of regulatory best practices, including Czech Republic, Latvia, the Netherlands, Japan, Lithuania and the United Kingdom. It also highlights recent reform efforts in Brazil, China, Iceland, Indonesia and Kazakhstan.
National and collective action to ease barriers to services trade can reduce trade costs for firms that provide services across borders. On average across sectors and countries, services trade costs could decline by more than 15% after 3-5 years if countries could close half of the regulatory gaps with best performers. An ambitious services trade agenda, including new services market access commitments in comprehensive trade and investment agreements, can drive such gains, the report said.
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