Future of Work – Reskilling (2)

Many pundits warn of a dystopian future with massive technological unemployment caused by automation technologies.  Others conclude that with the right policy decisions, these technologies will generate significant wage increases, longer life expectancy and overall economic growth.

The determinant factor between the dystopian future and a healthy society lies in the capacity of business and government to ‘reskill’ the work force.  Reskilling that retrains the work force to apply new technology and strengthens the ‘soft skills’ to enhance effective communication.

The Big Issue

Most reports on the Future of Work estimate that robots, artificial intelligence and other technologies will eliminate 5-15% of the occupations over the next 10 years.  At the same time, new technologies will probably create just as many new occupations as we lose.

The bigger issue is that 60% of the current occupations will have more the 30% of their tasks automated by 2030.  The implications for workers are simple.  Workers who learn to apply new technologies to their job become much more productive and will make a much higher salary.   Workers that are not continually mastering new technology, will lose their job.

The implications for business are also simple.  They must “reskill” their employees with new technology to remain competitive.

Reskilling framework

The Harvard Business School Managing the Future of Work program borrows a framework from the work of Nir Jaimovich (University of Zurich) and Henry E. Siu (University of British Columbia) to understand the Future of Work.  They categorize occupations along two dimensions. 

Routine occupations involve a relatively small set of specific activities that can be accomplished by following well-defined instructions. 

Non-routine occupations entail a larger number of tasks requiring flexibility, creativity, problem-solving, and human interaction skills.

Manual occupations primarily require physical activity.

Cognitive occupations primarily require thinking.

The non-routine cognitive occupations have the highest salaries.  These include business executives, physicians, lawyers and computer programmers.

The non-routine manual occupations have the lowest wages.  These are primarily service jobs such including janitors, gardeners, bartenders, and home care aides.

Routine occupations, whether manual or cognitive, are the big loser in automation.  The cognitive jobs include office administration and sales.   The manual jobs are factory workers.

In their 2018 paper on the Polarization of Jobs, Jaimovich and Siu show the effect of automation on the mix of employment.  Since 1982, routine occupations, the bread and butter of the American middle class, have declined from 56% to 42% of employment.  At the same time, the high salary and low salary non-routine jobs have increased substantially.  

This data underscores the phenomena that is bifurcating society into the wealthy winners and angry losers of the digital revolution.

The Reskilling Revolution

The 2018 World Economic Forum report titled Towards a Reskilling Revolution takes a very practical approach to linking the skill sets of occupations likely to disappear and with fast growing new occupations.  Examples such as: bookkeepers becoming accountants, secretaries becoming human resource specialists, machinists becoming construction workers.

The report draws extensively on the Burning Glass Technologies database that aggregates information on approximately 15,000 unique skills, across 550 unique skill clusters and 50 million online job postings.

The Burning Glass chart below points out three important insights:

  • Almost all the new occupations created over the next 10 years will involve cognitive skills.
  • Almost all of the new occupations involve learning how to apply more than 6 technologies.
  • 64% of the highest paying jobs involve mastering more than 40 technologies.

A 2017 McKinsey survey of executives in 300 large businesses concludes that executives increasingly see investing in “upskilling” existing workers as an urgent business priority that companies, not governments, must take the lead on.  Sixty-two of the businesses plan to retrain or replace more than a quarter of their workforce between now and 2023 due to advancing automation and digitization.

What are the new skills?

The best evidence that businesses have an urgent need to reskill their workforce is in the all high paid consulting businesses creating content on the subject.  I like the McKinsey work force skills model the most because it leads us to practical ways we can adapt our 100-year-old education system to the digital revolution.

The McKinsey workforce skills model is broken into 5 categories and estimates the changing demand for these skills from 2016 to 2030.  It points out the importance of learning how to apply new technology in our occupations, as well as high economic value of soft skills (social and emotional) in the future of work.

The details within each category describe the skills that lead to good paying jobs in the future.  Many of the advanced programming and data analytic skills are already available for affordable prices online by the top universities in America.  But higher cognitive and emotional skills require substantial changes in our early education systems.

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