The developments made in a wide range of technologies have caused considerable consternation about just what the future of work will be. Some fear that vast swathes of jobs will be automated, while others (including myself) believe we will still find work to do in future, but that doing so will require perhaps greater adaptation than we have ever undergone before.
The state will undoubtedly play a major role in this process, so a new paper from McKinsey is interesting as it outlines some of the ways in which governments can respond to the changes unfolding in the workplace.
“In this report on the role of governments in adapting to the Future of Work, we describe the potential benefits of a technological disruption, discuss active management of the workforce transitions to avoid creating a lose–lose (or win–lose) scenario, and provide a
framework that governments can use to develop a road map to a win–win transition,” McKinsey say.
Positive change
Far from the doomsday predictions of many, McKinsey believe the new wave of technologies will have a positive social and economic impact, but urge policy makers to not take this impact for granted. They shouldn’t be regarded as passive observers as this future unfolds, as they will be crucial actors in ensuring the benefits of the 4th industrial revolution are broadly spread.
The report highlights how the successful adoption of digital technologies could be responsible for as much as 60% of productivity growth by 2030, with AI alone contributing a large portion of this. This mirrors the perception I raised in an earlier article, that technology is actually crucial to the creation of jobs, purely because it plays such a huge role in raising productivity.
There are understandable concerns about whether this future will be positive for all, however, and McKinsey cite a recent survey of over 100,000 people across 29 countries, which showed that job security was the biggest economic concern for the future. This places three central challenges at the door of government that it must address to ensure the future is a good one for all.
1. Changing skill requirements
There are growing calls not only for new technical skills, but also a growing range of soft skills in order for humans to both work effectively alongside new technologies, and also to maintain relevance in a world in which their primary job may be automated.
What is abundantly clear is that people cannot rest on their laurels and assume that skills will maintain a long shelf-life. McKinsey suggest up to 14% of people might need to change occupations by 2030, with this figure potentially higher in advanced economies with greater technology adoption. Providing the training and development at this kind of scale has never been achieved before, and there are few examples of it being done even at a smaller level. It’s a huge challenge for governments to address, but it’s not the only one.
2. Growing inequality
A second major challenge is the inequality that is not only driving social unrest, but has been a central force behind the political upheaval that is evident across the developed world. While the exact outcome is obviously unclear, many believe that technology is likely to deepen inequality, not least because it will place an ever greater premium on advanced skills, whilst at the same time diminishing the value of lower skills.
This, coupled with the divergent speed with which people can adapt to disruption means that the gap between those who can adapt and those that cannot is likely to grow ever wider. Given the political upheaval we are already seeing, this promises to be a major challenge for governments to tackle in the coming years.
3. A backlash against technology
The evidence is clear that politicians are not afraid to find scapegoats for societies ills that ensure any blame is not placed at their door. In the recent past this blame has fallen at the feet of migrants, but there is much historical evidence for backlashes against the technology that is causing so much disruption.
Given the role technology is playing in driving productivity growth, governments are likely to be loathe to succumb to this fear, but if the Luddite rebellion is not to be repeated, it’s important that the lessons are learned from the past.
Supporting the change
So what can governments do to help overcome these challenges? The report provides a four key recommendations, across which governments can play a key role in ensuring the changes wrought by the 4th industrial revolution are positive for all aspects of society.
1. Supporting and enabling technology adoption
Technology promises to bring tremendous productivity advantages to society, yet adoption remains very uneven. Large and technologically savvy companies are early adopters of the latest technologies, but many others, especially in traditional sectors and among the army of small businesses lack the nous and resources to make sufficient investments in people and technology to fully capitalize on the possibilities that are presenting themselves.
As such, McKinsey urge governments to do more to help ensure technologies are adopted across the economy. This requires branching out from supporting the development of new technologies into helping democratize those technologies across all sectors.
2. Reform the training and development system
It’s hard to picture a time where people have been required to develop new skills and capabilities as they are now. It’s clear that the university system today is unfit for such work, not least because the huge cost and lengthy tuition is ill-suited to the rapid and frequent development of skills.
From a governments perspective, the first thing McKinsey recommend is to invest heavily in early years education so that children are equipped with both the mindset and the ability to learn that will be so important throughout their life.
What is equally important is the call for greater incentivization of on-the-job training, while also providing financial support for citizens to learn at their own behest. This support is welcomed, but there are also cultural and psychological barriers to accessing education that need to be addressed, so a coaching role, especially in relation to those whose jobs are automated, would surely be sensible.
3. Adapting social security systems
Given the disruption many are advocating, the rethinking of social security systems are long overdue, as current systems lack the flexibility and comprehensiveness to help people get back on their feet.
McKinsey believe a modern social protection system needs to close the gap between growth in productivity and the median wage; increase the portability of social protection benefits; and provide additional support to those who don’t benefit from automation.
4. Mobilizing society
Last, but not least, McKinsey believe it’s vital that governments are able to create a dialog with the whole of society to both understand the future of work and mobilize them towards an effective and inclusive future. They cite the likes of Denmark and Singapore as exemplars in this regard, with convening a national debate a vital task of government in this febrile time.
This in itself won’t be enough, however, and it’s vital that government is coordinated across its multiple departments, each often with differing agendas. Adopting a cross-departmental approach is likely to yield a more unified policy response and avoid fragmented and ineffective policies.
“The coming technologies will bring major discord in areas such as work, economies, and societal well-being,” McKinsey conclude. “This report provides an overall blueprint with examples of how some governments are creating opportunities, minimizing social disruptions, and propelling their nations forward.”
