Few topics are as important as the future of work in our 21st century digital economy. In the spring of 2018 MIT President Rafael Reif commissioned a task force on the Work of the Future to address whether our rapidly advancing technologies will not only raise economic output and the wealth of nations, but enable people to attain higher living standards and better working conditions. After working across MIT for over two and a half years, the task force released its final report in November, 2020.
“Amidst a technological ecosystem delivering rising productivity, and an economy generating plenty of jobs (at least until the COVID-19 crisis), we found a labor market in which the fruits are so unequally distributed, so skewed towards the top, that the majority of workers have tasted only a tiny morsel of a vast harvest,” was the overriding conclusion of the task fore. But, it further argued that with better policies in place, more people could enjoy good careers even as new technologies transform the very nature of work.
Similar conclusions were reached by Upskilling for Share Prosperity, a report published in January, 2021 by the World Economic Forum (WEF) in collaboration with PwC. “Millions of people are already being left behind because of volatile market conditions, the effects of COVID-19, or because they work in industries that are being replaced by new sectors,” said the report… There is an enormous opportunity to reconfigure the world of work at this critical juncture and embark on an upskilling revolution that will give people across the world the ability to participate fully in the future of work, whatever that might be.”
Wide-scale upskilling is urgently needed to address the inadequacies of our current economic structures, in particular, the growing mismatch between people’s current skills and those needed for future jobs. For years, businesses have struggled to find the skilled workers they need to keep up with fast changing technologies and markets. According to a recent WEF Jobs Report, companies estimate that to meet their expected needs by 2024, around 40% of workers will require up to six months of retraining, and almost all business leaders expect their employees to pick up new skills on the job. At the same time, lower-skilled jobs are increasingly threatened by automation and stagnating wages, and many workers cannot get good jobs because they lack the required skills.
The report includes a quantitative analysis of the impact of upskilling on GDP and economic growth across geographies, countries, and industry sectors. Beyond GDP, it highlights the importance to society of providing workers with well-paying, reasonably secure, motivating jobs. The report concludes with a call to action for wide-scale upskilling and a roadmap for government, business, and education providers. Let me summarize each of these sections.
The economic case for upskillling
Upskilling investments throughout the decade have the potential to increase global productivity by 3% on average, and boost global GDP by $6.5 trillion by 2030. The GDP impact is expected to follow a typical S-shaped growth pattern, with slower growth early in the decade due to the lag between the initial upskilling initiatives and their impact on workforce productivity, followed by faster growth in the middle years as more initiatives roll out, with growth tapering off in the later years due to the diminishing returns of additional investments.
The economic impact of upskilling is larger in regions and countries whose growth is potentially held back by serious skill gaps. The potential increase to GDP by 2030 is 6.1% in Asia-Pacific - which includes the large populations of China, - whose growth potential is 7.5%, - and India, where it is 6.7%. The upskilling potential is 7.7% in Latin America and 7.8% in Sub-Saharan Africa - where agriculture and natural resources still represent significant portion of their economies. On the other hand, the economic impact of upskilling is significantly smaller in the developed economies of Western Europe and North America at only 2.5% and 3.6% respectively, -where the US is at 3.7%, and Germany at only 0.3%.
The potential for GPD growth by industry sector depends on many factors, including technology, international trade, global supply chains and industrial dynamics. “Industries that are transforming because of technology will see boosts when the talent pool to fill these more highly skilled jobs becomes available.” Business services and manufacturing, the two largest sectors encompassing a vast array of jobs, will see almost 40% of the total additional GDP through upskilling. Sectors that have suffered from low productivity and wage growth, like health and social care, could reap significant benefits. Sectors with fewer jobs that require more skills, like agriculture and construction, will see the least benefits.
Upskilling could lead to the net creation of 5.3 million new jobs by 2030. The WEF expects that by 2025 the percentage of jobs that will be automated or no longer relevant will decline from 15% to 9% of the global workforce, while currently emerging professions will grow from 8% to 14%. Upskilling can usher an economy where new technologies will complement, rather than replace, human labor and improve the overall quality of jobs.
Upskilling as a transformational force for society
The very nature of work is being transformed. “The benefits to society of upskilling at scale will be visible in the well-being of the generations who will be able to participate in the economy and find meaning in the work they do throughout their lives.” Given the seismic forces of innovation, automation, and globalization, nations around the world are challenged to create better pathways for all their workers to adapt and thrive. These challenges include:
Fostering a learning mindset. “Upskilling can be more transformational when it leads to developing attitudes and aspirations that will equip people with the skills to continually adapt to and take part in the changing world of work, resulting in healthier societies, supported by healthier economies. … Developing such wide skill sets requires a learning or growth mindset: the ability to keep developing skills over time. This is different from a narrow view of upskilling that presupposes people have a basic set of skills to learn a task quickly. A learning mindset requires training – ideally from a young age, perhaps even starting in elementary education.”
Helping those that are getting left behind. “The disparity between the rich and poor has been growing for decades. Today, the world’s richest 1% have more than twice as much wealth as 6.9 billion people. … Though upskilling alone will certainly not solve all wealth and social inequalities, if upskilling initiatives become widespread and inclusive, more workers can raise their own productivity, leading to better job options, which in turn helps reduce wage inequalities, in particular those created by skill- biased technological change.”
The benefits of upskilling are greater in developing economies, where many are held back by their socio-economic circumstances. Consequently, in developing countries upskilling must be complemented by providing basic economic necessities, including clean water, food security, health services, and access to the internet.
Good jobs in the upskilling narrative. “The economic challenge of the future will not be producing enough. It will be providing enough good jobs,” wrote former Harvard president and Treasury Secretary Larry Summers in a 2014 WSJ article.
But, what is a good job? “A good job or ‘decent work’, as it is known in the international development community, encompasses a broad concept,” noted the WEF report. “Any definition presupposes a set of values about what matters – sustainability for some, productivity or security for others. PwC defines ‘good jobs’ as work that is safe, paid fairly, reasonably secure, reasonably motivating, and leverages the human skills of the worker, thus delivering higher levels of productivity.”
A call to action
Finally, the WEF report identifies key areas where urgent action is needed by government, business, education providers and other stakeholders:
● Government - “Adopt an agile approach to driving national upskilling initiatives, working with business, non-profits and the education sector;”
● Business - “Anchor upskilling and workforce investment as a core business principle and make time- bound pledges to act;”
● Education providers - “Embrace the future of work as a source of reinvention to normalize lifelong learning for all;” and
● All stakeholders - “Build a strong and interconnected ecosystem committed to a comprehensive upskilling agenda and give people the opportunity to participate.”
Well, that is a very precise description of one of the most urgent problems societies must solve soon. However, although the U.S.A. are a very large country, this problem cannot be solved without a concerted effort of all (mostly western oriented) democracies in the northern hemisphere. Not in the short term, but ultimately such an effort will benefit the whole world. But we need to consider the short- and mid-term disadvantages for the societies in the developed countries.
Because upskilling means that more people in developing countries (presumably more in the southern hemisphere) are seeking and finding better jobs, i.e., higher responsibility as well as higher wages. And that approach will result in multiple conflicts in the developed countries, where both, low wage jobs and middle-class jobs will probably be affected by this new and growing competition. Growing unemployment and frustration is a good ignition source for populists offering “simple” solutions. Well, the U.S. has just survived such an example of simplicity and foolishness.
There are always two sides of a coin: Upskilling and better living chances for a large part of the human world population, but simultaneously there is the need to consider the drawbacks for a presumably lower part of the human population, which may nevertheless be a huge reservoir for political rat catchers in democracies. We need to do both, upskilling everywhere and by that protecting the negative impact for parts of the societies in the developed countries. This is a very long run. Nationalism and short-term “wins” are not what the world needs here, because we all must face the negative impacts of autocracies and dictatorships, whether they come with the flavors of communism, nationalism, or both.
Posted by: Johannes Wallenborn | May 08, 2021 at 07:32 AM
Critical indeed, particularly on upskilling as a transformational force for society! Thank you Irving.
Posted by: Zarina Stanford | May 15, 2021 at 08:58 AM