The report referenced in this post can be read here from the McKinsey Global Institute.
While much of the narrative around automation has been focused on the large number of jobs that could be lost, the McKinsey Global Institute has a much more positive outlook. Their December 2017 report “Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation” argues that increasing automation will increase productivity and marks an economic transition, but warns that workers will need to be adaptable and have new skills in the future.
Workers Must Be Adaptable
McKinsey predicts that the shift to automation will mirror the historical shifts out of agriculture and manufacturing, and that workers will need to become more educated, or in some cases re-trained, to keep up with these changes.
Automation will increase productivity and economic growth, and because of this, actually drive demand for workers despite jobs lost. McKinsey predicts an increased demand in healthcare as societies age and construction as investment in infrastructure increases. Adaptability is key, as 75 to 375 million workers across the globe may need to switch occupational categories.
Fewer Jobs Lost Than Predicted
The report argues that fewer jobs will actually be lost than has been previously predicted. While it is true that about half of all work has the potential to become automated by 2030, the number of jobs lost will likely be much lower due to various technical, social, and economic factors.
While automation is possible, in many instances the adoption of these technologies may not occur. McKinsey estimates that closer to 15% of jobs will be automated worldwide, and that advanced economies will be more affected than developing ones.
Automation and Income Polarization
Despite this report’s more positive outlook on the future of work, McKinsey warns that adoption of automation may lead to continued income polarization in the US.
Automation will lead to a loss of primarily middle-wage occupations and increase demand for high-wage jobs. This means that overall growth is reliant on displaced middle-wage workers finding new employment within a year. Otherwise, “frictional unemployment will likely rise.”
However, this trend will not be universal. In emerging economies like China, middle-wage jobs will likely see growth and enhance the middle-class.
For more information and insights from the McKinsey Global Institute, read the full report here.
