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This Is The Hidden Challenge In The Future Of Work

New research suggests we need to stop worrying about robots taking our jobs and concentrate on workforce development.

This Is The Hidden Challenge In The Future Of Work
[Photo: Rawpixel/iStock]

On the heels of a mostly positive jobs report from the Bureau of Labor Statistics (BLS) (4.6% unemployment is the lowest it’s been in nine years), the McKinsey Global Institute (MGI) released a more sobering snapshot of the world of work.

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A briefing by MGI director James Manyika, compiled from the company’s extensive research, took a deeper dive into employment numbers. He writes:

In the United States and the 15 core European Union countries (E.U.-15), there are 285 million adults who are not in the labor force—and at least 100 million of them would like to work more. Some 30% to 45% of the working-age population around the world is underutilized—that is, unemployed, inactive, or underemployed. This translates into some 850 million people in the U.S., the U.K., Germany, Japan, Brazil, China, and India alone.

Manyika says that unemployment figures typically get the most attention at the expense of those who are underemployed. Indeed, the latest figures from the BLS indicate that the labor force participation rate (a combined total of those who are either working or actively seeking work) is just over 62%, which represents a steady decline since 2000. Parsing the meaning of this decrease is complicated, yet it is often referred to in the broadest sense as proof that the labor market is shrinking due to a variety of factors. The result, regardless of the cause, is a lot of “untapped human potential,” according to Manyika.

The Economic Consequences

This has serious economic consequences that affect every country. Wage stagnation has affected advanced economies despite increases in productivity. The brief also states that globally, 655 million fewer women are economically active than men. In a previous report, MGI revealed that advancing women’s equality could add $12 trillion to the global GDP by 2025.

Why More People Aren’t Working

Why is this happening? The MGI brief offers several reasons, including the fact that education hasn’t keep pace with the skills needed for a changing workforce.

McKinsey research found as many as 40% of employers in nine countries said lack of skills was the main reason for entry-level job vacancies. Sixty percent of them said that new graduates were not adequately prepared to work. They cited the lack of both technical and soft skills such as communication, teamwork, and punctuality as reasons they couldn’t fill open positions. A survey conducted by PayScale reached a similar conclusion. Chief among the complaints by hiring managers were that communication, leadership, ownership, and teamwork were missing in this new crop of workers.

The brief also found that cross-border migration has a somewhat negative impact on the labor force. Manyika writes, “Migration boosts global productivity, but its consequences are often feared by native workers, who face labor market disconnects and a lack of well-paid jobs.” He also notes that in the midst of such challenging labor market conditions, “popular sentiment has moved against immigration.”

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Debunking The Myth Of Robots Stealing Jobs

Perhaps surprisingly, the MGI brief reveals that automation won’t vacuum up jobs and further hurt the labor force.

MGI research on the potential for automation across 54 countries and more than 2,000 work activities indicated that the number of jobs that can be fully automated by adapting currently demonstrated technology is less than 5%. That number could go as high as 20% in some middle skill categories.

That said, even if a job isn’t completely taken over by a robot, MGI found that about 60% of all jobs have a least a third of activities that could be automated based on current technology (think: virtual assistants).

For those workers who might still be worrying they’ll become obsolete, Manyika points out, “One-third of new jobs created in the U.S. in the past 25 years were types that did not exist, or barely existed, in areas including IT development, hardware manufacturing, app creation, and IT systems management.” So while part of your job is likely to become automated in the next few years, chances are there will be something else to take its place.

Some Solutions

Manyika notes that the net impact of new technologies on employment can be positive. However, there is still a vast number of people across the globe who aren’t tapped into the potential labor market because they don’t have internet access. He writes:

More than 4 billion people, or over half of the world’s population, is still offline. About 75% of this offline population is concentrated in 20 countries, including Bangladesh, Ethiopia, Nigeria, Pakistan, and Tanzania, and is disproportionately rural, low income, elderly, illiterate, and female. The value of connecting these people is significant, and as they enter the global digital economy, the world of work will transform in fundamental ways and at an unprecedented pace.

Training for both those who haven’t had online access before and those who are currently employed can go a long way to driving change in the labor force. Manyika also suggests that policy makers offer companies tax and other incentives to invest in their workforce. Public-private partnerships could also advance online infrastructure to facilitate participation.

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Additionally, Manyika recommends rethinking incomes. “If automation (full or partial) does result in a significant reduction in employment and/or greater pressure on wages,” he explains, “some ideas such as universal basic income, conditional transfers, and adapted social safety nets could be considered and tested.”

About the author

Lydia Dishman is a reporter writing about the intersection of tech, leadership, and innovation. She is a regular contributor to Fast Company and has written for CBS Moneywatch, Fortune, The Guardian, Popular Science, and the New York Times, among others.

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