Creating a workforce for the machine age

How digital technology will affect employment is uncertain, but whatever the impact, reskilling needs to be at the heart of any response.

Skills and employment is one of three areas we focus on as part of the societal implications cross-industry theme. The other themes we examine are trust and shared value, and a sustainable economy.

The digital revolution has created new roles (such as search engine optimization managers and social media account managers), new types of organizations (cloud computing providers and social media agencies), and even new sectors of the economy (digital security and data science). And it is not just direct employment in digital sectors that is important. And the impact of digitalization has acted as a catalyst for employment growth in the wider economy. In India, for example, it is estimated that three to four jobs are created for every job within the business process outsourcing and IT enabled services sectors.¹ Overall, studies have shown that investment in information and communications technology infrastructure creates 1.4 to 3.6 indirect and induced jobs for every direct job created.² 

Today, however, the question of whether technology creates or destroys jobs is gaining momentum. Recent publications such as The Rise of the Robots: Technology and the Threat of a Jobless Future³ or Humans Need Not Apply: A Guide to Work and Wealth in the Age of Artificial Intelligence⁴ paint a grim picture of the future. Massachusetts Institute of Technology economists Erik Brynjolfsson and Andrew McAfee provocatively ask ‘Will Humans Go the Way of Horses?’ ⁵ It is time, they argue, “to start discussing what kind of society we should construct around a labor-light economy”, i.e., an economy in which there simply are no longer enough jobs to go round.

Today, however, the question of whether technology creates or destroys jobs is gaining momentum. Recent publications such as The Rise of the Robots: Technology and the Threat of a Jobless Future or Humans Need Not Apply: A Guide to Work and Wealth in the Age of Artificial Intelligence paint a grim picture of the future. Massachusetts Institute of Technology economists Erik Brynjolfsson and Andrew McAfee provocatively ask Will Humans Go the Way of Horses? It is time, they argue, “to start discussing what kind of society we should construct around a labor-light economy”, i.e., an economy in which there simply are no longer enough jobs to go round.

he truth is that we actually know quite little of what is going to happen. What will the economic impact of innovations be in the future? How will humans interact with machines and algorithms? What kind of skills do we need and how should we learn? How will all of this impact labor markets?

The future of work

We can at least be sure that there will be three types of jobs, categorized by the percentage of codifiable tasks within the role:

1. Those that will disappear (lost the race against the machine). For example, clerks and administrative staff, or truck drivers.
2. Those that are in collaboration with machines/algorithms (run with the machine). For example, those professions that rely on cognitive and social capabilities, such as doctors/surgeons.
3. Those jobs that are completely new or remain largely untouched (running faster than the machine or running a different race). For example, roles in the creative arts are unlikely to be automated, as are new roles that involve managing data and machines.

Within that context, our analysis suggests that digital transformation has the potential to create a significant number of jobs. Our value at stake analysis estimates that the overall impact of digital transformation across the industries we analyzed was a net gain of 2.1 million by 2025. Within that headline figure, digitalization could create nearly 6 million jobs in just the electricity and logistics industries by 2025.

But clearly there will be both winners and losers – as Figure 1 shows, while the net impact on jobs in the logistics industry could be positive, many sectors will experience job losses.

Challenges

Digital technologies fundamentally transform organizations, with the pace of technological change exacerbating the challenge. Organizations must have a coherent strategy that includes a plan to reskill workers. Whereas previous technological revolutions (most notably the industrial revolution) played out over a relatively long period of time, the speed of digital transformation is such that businesses need to move quickly.

For governments, the challenge is equally pressing. The potential inequality and wage deflation or even social unrest requires urgent action to prepare the workforce for a digital future.

A new digital divide? Patchy digital skilling strategies

The mismatch between the supply of and demand for digital skills has been widely acknowledged. Globally, Cisco has identified 1 million unfilled digital security roles.⁷ The failure of education systems to meet the demand for digital skills is illustrated by the shortfall in graduates in STEM (science, technology, engineering and mathematics) subjects in certain countries. Recognizing the challenge, a number of governments around the world have launched their own digital skills flagship initiatives.

It is not just technical skills that are needed. Increasingly, employees will need to differentiate themselves through activities that are hard to automate or codify. Skills such as creativity, teamwork and problem-solving will be essential to find rewarding employment.

New models of human-digital augmentation

Robotics and artificial intelligence systems will not only be used to replace human tasks, but to augment their skills. This, too, will provide challenges for businesses, which will need to reskill employees so that they can work effectively with new technology. Consider a surgeon who, with the aid of advanced robotics, can perform complex procedures with greater precision. This technology is already in play; robots from the da Vinci Surgical System were used in 570,000 operations around the world in 2014, covering a wide range of surgical procedures. A surgeon working in this way will need a different skill set from that of a surgeon using more traditional techniques, especially the ability to work effectively with advanced robotics systems. To realize the full potential of technological augmentation, not just to increase productivity but to mitigate job losses from automation, reskilling will be critical.

Five ways to get started

1. Increase investment in digital skills development. Companies should look to increase investment in the development of digital skills. According to a 2013 survey, no company spent more than 20% of its training budget on digital. In the same study, while 87% of businesses believed digital transformation to be a competitive opportunity, only 46% were investing in developing digital skills.

2. Learn by doing. Companies should look to prototype new technologies with employees to help understand and demonstrate the full potential of human-digital augmentation (see Airbus case study below).

3. Explore new partnerships and innovative models for professional credentials, to find new ways of skilling. Online education blended with classroom learning can provide a particularly powerful learning experience (see case study below). McAfee transformed its training program by adopting online platforms as its core teaching element and then dedicating classroom time to discussion-based exercises.⁹

4. Collaborate with industry partners, academia and civil society to understand demand and supply for digital skills. Businesses need to engage proactively with local educational institutions, government agencies and civil society organizations to devise common strategies for managing the transition to a digital workforce (see case study below).

5. Shape educational curricula to include human-digital skills: Businesses need to be more proactive in identifying future skills needs and working with policymakers to adapt educational programs accordingly (see case study below). However, technical skills are not the only answer. In the longer term, teaching creativity, teamwork and interpersonal skills can help ensure that employees find rewarding work and get the best out of human-digital combinations.