Barely a week goes by without another headline about the future of work, along with predictions of a brave new world. Here are some examples:
- Traditional employment will no longer be the norm;
- Companies will consist of a small core of employees and a large cloud of temporary and contract workers;
- Wireless networks will be embedded in human bodies enabling a nomadic work pattern;
- The end of the bricks and mortar office;
- Sophisticated software will solve data overload problems;
- We will reach gender pay parity.
These were predictions made in various reports a decade or so ago about work in 2020. That is now just over a year away and these forecasts look some way wide of the mark. The last one will no doubt give rise to a hollow laugh among some readers. Sure, these predictions were indicative of some trends and we are further towards most of them than we were ten years ago but the progress has been much slower than forecasters envisaged. Work in 2020 doesn’t look anywhere near as futuristic as the breathless headlines of the late 2000s suggested.
Take employment, for example. The full-time employee job is still the norm in most of the advanced OECD economies. Despite the headlines claiming that 35 percent of the US workforce is freelance, even if you stretch the definition and allow for people’s second jobs, a figure of around 16 percentlooks closer to the mark. It’s a similar story in the UK, where the much reported rise in self-employment peaked in 2017 at around 15 percent and has fallen back slightly since. Across the OECD, the proportion of workers in full-time employee jobs fell from 71 percent to 67 percent but took nearly twenty years to do so. That’s an interesting trend but hardly a groundbreaking shift. It looks safe to assume that the majority of us will not be working in the gig economy for some time yet.
What is noticeably absent from the predictions of ten years ago is the robot future. Nowadays no discussion about the future of work would be complete without including AI enabled automation and the robots taking all our jobs. Here again, though, there are reasons to be sceptical. Earlier this year, MIT Technology Review collated all the estimates of technology-led job destruction they could find. The results vary wildly. Even the academic studies came up with a wide range of predictions. The picture that seems be emerging from this debate, though, is one of the automation of tasks rather than entire jobs. So, while some jobs will undoubtedly disappear, others will still exist but will change radically as some of the more routine tasks are automated. For example, McKinsey Global Institute estimated that less than 5 percent of US jobs could be fully automated but that 60 percent could see over 30 percent of their tasks replaced by technology.
As Tom Standage, Deputy Editor of The Economist and head of its digital strategy, remarked:
“A third of skills will probably be replaced by automation but that doesn’t mean a third of jobs will go. The change will be in the make-up of jobs and the pace at which people have to learn new skills.
“It is more difficult to imagine the new jobs that will be created than to see how the old jobs might disappear.
“The past is a good place to look for clues about the future. People have been predicting that machines would put people out of work for decades.”
Commentators argue about whether the next technological revolution will be different from those that went before. However, there is one aspect of the future of work where we can say with confidence “this time it’s different” and that is demographic change.
For most of human history, population profiles have been pyramid-shaped. Over the course of this century, population ageing will see them become beehive-shaped, with bulges at the top as large cohorts move into old age. This is not just a feature of developed economies. Just as the emerging economies industrialised at a much faster rate, they are ageing at a much faster rate too. According to UN projections, by the middle of the century the median age in the upper middle-income economies will be almost as high as that of the rich countries. Places we think of today as young countries will have a higher median age than many European countries by the middle of the century. Of the larger economies, China, Iran, Thailand and South Korea currently have lower median ages than the UK and the USA but will have overtaken both by 2050.
According to research by Mercer, even if we make generous assumptions about increasing workforce participation by people working longer and currently underemployed groups being encouraged into the workforce, most major economies will see a decline in the size of their workforces over the next ten years. As we might expect from their demographic profile, the scale of this shift will be greatest in some Asian economies, such as China, South Korea and Thailand.
In our view it is this, not automation or the gig economy that will be the big story of the next decade. While all prediction is fraught with difficulty, by and large, demographic projections tend to be more reliable than economic, technological or geopolitical ones. This is the nearest thing we have to a known known. Even if the speed and numbers in the forecasts turn out to be wrong, we can be reasonably sure that the world’s population will age and that this will have a significant impact on the world’s economy. The implications for employment, healthcare, pensions, welfare and tax are massive.
Companies will need to adapt. Many still have a culture of buy-not-build. The default response to a talent gap is to go out and hire someone. But as Mercer’s Julia Howes pithily put it:
“We cannot recruit our way out of the workforce crisis and automation is not going to save us.”
Competition for highly skilled workers is likely to be fierce. Buy-not-build may prove to be a strategy with a short life. Governments may help to re-skill their workforces and to bring previously excluded groups of workers into the labour force but this will be a colossal task. Countries may well find themselves with labour shortages alongside large sections of the population unable to re-skill quickly enough. Against this background, employers will need to step up to fill the gaps.
These were some of the themes discussed at our Future of Jobs and Work and Working conference in Barcelona in October and in the report we published to accompany it. We aim to dig into these themes in more detail in blog posts over the next few weeks, including some more detailed suggestions about what action companies might take.
Forecasting is difficult. There are simply too many moving parts to make predictions with any degree of certainty. Social, economic, political and technological change are interdependent. This is why it is so often wrong. As American economist Ezra Solomon said:
“The only function of economic forecasting is to make astrology look respectable.”
With that warning in mind, we are still prepared to put a stake in the ground. We believe that, while the prospect of technology taking jobs may make for exciting headlines, the future of work will be as much about the people as it ever was. The big story of the next decade will be a human one.
Our next CRF webinar will review jobs in the future and how organisations and individuals can anticipate, plan and deploy the skills and talent to meet needs. Scheduled for Tuesday 20 November, the webinar will provide an opportunity to join the discussion online. For further information and to register your attendance please click here.
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