The Skilling Challenge

Within the next 10 to 20 years, 65% of all activities that are currently performed by humans will be automatable. According to a report from the McKinsey Global Institute on “Harnessing automation for a future that works” 1,5% of all tasks currently performed by humans are automatable with technology available today. Another 15% will be automatable soon; the remaining 35% of tasks currently performed by humans will not be automatable soon.

While many jobs will become obsolete, automation and the resulting increase in productivity will also create new jobs. According to current forecasts, automation will replace about 15% of jobs in Western economies. At the same time, new positions equal to 21% of today’s labor demand will be created, mainly because of rising incomes, healthcare for ageing populations, investments in infrastructure, buildings and energy, as well as technological development and a growing market for previously unpaid work.

Accordingly, automation has the potential to create more positions in the coming years than it will cut. However, in order to ensure full employment, many workers – the latest MGI report “Future of Organizations and Work” estimates 75 to 275 million workers (i.e., 3 to 14% of the global workforce) – will need to switch occupational activities. In Germany, up to 32% of the workforce will have to switch occupational activities until 2030.

It is thus not the quantity of jobs that is the issue, but rather that there is a gap between the skill requirements of the old and new jobs. This skill mismatch could become the main problem for the labor market. In the worst-case scenario, the result will be millions of unemployed despite massive numbers of vacant positions, and the related overall economic costs of this worst-case scenario could easily exceed EUR 1 trillion for Germany alone by 2030.

This report therefore focuses on innovative answers how to manage the radical shift required for skilling the labor force in these times; other factors that impact the quantity of jobs and the skills required are further detailed in the latest MGI report.