New McKinsey Report Challenges Business Leaders, Policymakers, to Re-imagine Job Training, Workforce Structures

December 01, 2017

A recently published study by McKinsey, "Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation," underscores the public policy issues that could be generated as advanced automation is deployed between now and 2030.  For example, the study forecasts that up to 375 million workers, or 14 percent of the global workforce, will need to switch occupational categories during this period.  As automation evolves, so too will those working alongside robotics; they will need to achieve higher levels of educational attainment.  But it is the character of these changes that is particularly noteworthy.  There was the shift in the early 1900s in the United States when young people moved from farms to the cities for industrial jobs.  In the coming decade, in contrast, the challenge will be retraining midcareer workers, particularly in advanced countries.  "There are few precedents in which societies have successfully retrained such large numbers of people," McKinsey finds.  For a policy organization such as ours, attention should be paid to their determination that displaced workers must be reemployed quickly, at least within a year, to avoid unemployment and depressed wages.  For that to occur, "the pace of reemployment will be influenced by the effectiveness of retraining, the capacity of companies to innovate and, in some sectors, the elasticity of demand."  This last point refers to what McKinsey describes as the "now-waning geographic mobility in advanced societies."  The report goes right after the traditional employment relationship—"Digital talent platforms and the rise of the 'gig' economy can foster fluidity, by matching workers and companies seeking their skills, and by providing a plethora of new work opportunities for those open to taking them."  While a dynamic economy must embrace the benefits that AI and automation bring to business and society to prosper, public policy should "also address the workforce transitions and challenges they bring.  In many countries, this may require an initiative on the scale of the Marshall Plan involving sustained investment, new training models, programs to ease worker transitions, income support, and collaboration between the public and private sectors."  In urging policymakers and business leaders to play a role in smoothing these workforce transitions, McKinsey asserts: "Educational models have not fundamentally changed in 100 years; we still use systems designed for an industrial society to prepare students for a rapidly-changing knowledge economy.  It is now critical to reverse these trends, with governments making workforce transitions and job creation a more urgent priority."  Download the full study (PDF).