Despite the death grip COVID-19 has had, the global economy is on the threshold of a burst of growth driven by technology.
If long-gestating technologies like Artificial Intelligence (AI) and automation fulfill their potential, we’ll have the chance to escape the current stagnation, and will be much more insulated against the employment impact of future pandemics - which there will surely be.
Largely hidden by the pandemic’s human suffering, 2020 saw some remarkable breakthroughs, including the COVID vaccine and advances in AI language generation, as well as the growth in affordable solar power and remote work. A new term has emerged - total factor productivity (TFP) - which takes into account the effect of technological and strategic progress. In 2021, the TFP will be remarkably high - perhaps the highest ever.
The United States has been suffering from a certain stagnation for years - even as the Internet transformed our daily lives. This prolonged period of little or no growth in our economy has been highlighted by periods of high unemployment and involuntary part-time employment.
In October 2020, the World Economic Forum found more than 80% of global firms plan to accelerate the digitization of business processes and increase remote work. Half plan to accelerate automation and 43% expect to reduce the overall size of their workforces, which implies an expected increase in productivity.
However, there is a catch. If those gains don’t filter down to workers - or worse, end up eliminating jobs without replacing them with better ones - even a faster, more productive economy will not ease America’s inequality; it could actually worsen it.
A closer look at some of the World Economic Forum findings is worthwhile.
Due to COVID-19, the changes have come faster than expected. What used to be considered the "future of work" has already arrived. By 2025, work between humans and machines will be divided equally. Roles that leverage human skills will rise in demand, while machines will be primarily focused on information and data processing, administrative tasks, and routine manual jobs.
The Need for Reskilling is Urgent
As the economy and job markets evolve, 97 million new roles will emerge across the care economy, in industrial revolution technologies such as AI, 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 AI 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 organization. It is almost certain that going forward, the most competitive businesses will be those that invest heavily in their human capital - the skills and competencies of their employees.
Those At Highest Risk
The individuals and communities most negatively impacted by the unprecedented changes brought about by COVID-19 are likely to be those that are already the most disadvantaged. In the absence of proactive efforts, both by industry and government, inequality is likely to be exacerbated by the dual impact of technology and the pandemic recession.
The ADP Research Institute found that between February and May 2020, displaced workers in the United States were, on average, mostly female, younger, and had a lower wage. Comparing the impact of the 2008-09 global financial crisis 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. Any 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.
The Role of the Public Sector
Currently, less than a quarter of businesses are able to make use of public funds for reskilling and upskilling programs. The public sector will need a three-tiered approach to help workers. This includes (1) stronger safety nets for displaced workers, (2) improving education and training systems, and (3) creating incentives for investments and markets for these new jobs.
Remote Working is Here to Stay but Requires Adaptation
Approximately 84% of employers are set to rapidly digitize working processes, including a significant expansion of remote working. Employers say there is the potential to move 44% of their workforce to remote operations. The downside to this is that 78% of businesses 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 COVID-19. This will be addressed through AI advances relating to remote workers and employers will work to create a sense of community, connection, and belonging among their employees.
Career pivots are also becoming more common. More people than ever are making career changes to entirely new occupations. Based on LinkedIn data gathered since 2015, about 50% of career shifts into data and AI are from different fields. The figure is even higher for sales roles (75%), content creation and production positions, such as social media managers and content writers (72%), and engineering roles (67%).
LinkedIn research shows that the majority of transitions into future jobs come from non-emerging jobs, demonstrating that many of these new jobs are more accessible than workers may think. Leaders who are directing workforce funding and investment need to identify the small clusters of skills that will have an outsized impact on opening up more sustainable career paths. This will make a significant difference in addressing the unprecedented levels of unemployment that we are now seeing.
2021 will be the test of whether the systemic changes we saw in the workplace in 2020 will continue. It will be instructive when we get to the end of 2021 to see which companies call their employees back to the office and which ones embrace remote work for the long haul.
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