Taking the guesswork out of the future of jobs

For years, nasty reports of robots eliminating 40 percent or more of our jobs have been circulating in the media. These studies often (crudely) try to assess the impact of AI and automation and put a figure on the jobs we stand to lose. But they usually fail to account for the potential growth in new jobs or the extent to which the existing workforce can reskill and upskill to meet this future demand. In our new report The Future of Jobs in the Era of AI we aim to provide greater insight on the forces impacting both supply and demand for labor and the task ahead of us to manage the huge workforce transitions required.

BCG is a world leader in strategic workforce planning. We routinely model the supply and demand factors in the labor market and help governments and businesses prepare for the future of work. In this report, we have combined our expertise and capabilities with those of faethm – a unique advanced analytics platform that enables sophisticated projections of the impact of technology at a highly granular level. We have also modelled a range of expected impacts of COVID-19, based on input from Oxford Economics.

Modelling the future of work in 2030

We looked at three countries with quite different labor supply curves out to 2030: Australia, Germany and the US. Australia has a growing workforce, the USA is stable, while Germany will see a decline over the next decade. In Australia, the range of outcomes varies from a net surplus of 800k workers to a net deficit of 800k. The driving difference being how severe the economic impact of COVID-19 is on the future demand. In the USA and Germany however, there is likely to be a labor shortfall under almost any scenario, except if the rate of technology adoption increases.

But as our report shows, the net number of jobs lost is an artificially simple metric and fails to gauge the true impact of technology and automation on global workforces. There is a huge (and not so hidden) mismatch in the future of skills supply and demand.

Our findings show that countries must take deliberate steps to prepare for surpluses and shortfalls in their workforces. We know we won’t be able to transition all of the surplus to meet all of the deficit because of the skills mismatch.

The crux of the problem is:

How might we minimize the supply-demand mismatch and maximize opportunities for people to fill the roles of the future?

A three-pronged approach

Three stakeholder groups—government, businesses and individuals—have a role to play.

• Governments need the macro view, but what is missing in many cases are the detailed strategic workforce planning capabilities like the one we’ve built for this report to really explore workforce the supply and demand dynamics and scenarios; understand where mismatches are, and thus enabling more targeted policies, programs and platforms to help businesses and citizens make more informed choices and navigate their future career pathways.
• Businesses need to think about how they can compete at the rate of learning, and transition their own existing workforce over time. They need to rethink learning and development and focus on reskilling and upskilling at-scale. Firing and hiring at the pace and scale required, in a market where there is global shortage and demand for the same skills as everyone else won't work. Not to mention the extreme social and economic disruption that this causes.
• Individuals should expect to change jobs more frequently, and to commit to life-long learning of new skills. Education systems should place more emphasis on evergreen foundational skills such as problem solving, creativity, innovation, teamwork and empathy. Qualifications are likely to become more micro and modular, with study more spread out over a persons lifetime. Education funding models are likely to need reform to support such an approach. People need to be empowered to make informed decisions about their own career and learning and development, and be supported with advice and access to skills and qualifications that enable them to pursue their careers.

Beyond the guesswork

We have the people, the data, the tools to manage this transition well. We don't have to guess, we can predict with a high degree of accuracy where and when the impacts of automation and AI are likely to be felt. We must use these to build national strategic workforce planning capabilities in our businesses and governments. We have seen too many policies and programs that aren’t focused enough on the sectors that will be hit the hardest, or on the geographies that are going to be most heavily impacted first. We can be much smarter in our preparation and responses to meet the workforce transition challenge ahead.

Miguel Carrasco is a Managing Director & Senior Partner in the Sydney office of Boston Consulting Group. He is the global lead for the BCG Center for Digital Government.