Geneva, Switzerland – The Fourth Industrial Revolution, which includes developments in previously disjointed fields such as artificial intelligence and machine-learning, robotics, nanotechnology, 3-D printing, and genetics and biotechnology, will cause widespread disruption not only to business models but also to labour markets over the next five years, with enormous change predicted in the skill sets [...]

The Sunday Times Sri Lanka

Five million jobs by 2020: Real challenge of the 4th industrial revolution

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File photo. Workers at a factory.

Geneva, Switzerland – The Fourth Industrial Revolution, which includes developments in previously disjointed fields such as artificial intelligence and machine-learning, robotics, nanotechnology, 3-D printing, and genetics and biotechnology, will cause widespread disruption not only to business models but also to labour markets over the next five years, with enormous change predicted in the skill sets needed to thrive in the new landscape.

These are the finding of a new report, The Future of Jobs, published on Monday ahead of the Davos-based World Economic Forum which was held on January 20-23 in Davos, Switzerland, the forum said in a media statement on Monday.The report is based on a survey of chief human resources officers and top strategy executives from companies across nine broad industry categories and covering 15 of the world’s largest economies, according to a media release issued by the forum.

These are Australia, Brazil, China, France, Germany, India, Italy, Japan, Mexico, South Africa, Turkey, the UK and the US, plus the ASEAN and GCC groups. Together, these economies account for 65 per cent of the global workforce. In terms of overall impact, the report indicates that the nature of change over the next five years is such that as many as 7.1 million jobs could be lost through redundancy, automation or disintermediation, with the greatest losses in white-collar office and administrative roles.

This loss is predicted to be partially offset by the creation of 2.1 million new jobs, mainly in more specialised “job families” such as Computer and Mathematical or Architecture and Engineering. These predictions are likely to be relatively conservative and leave no room for complacency. Yet the impact of disruption will vary considerably across industry and gender as well as job type. For example, Healthcare is expected to experience the greatest negative impact in terms of jobs in the next five years, followed jointly by Energy and Financial Services and Investors.

The industry that stands to create the most jobs, perhaps less surprisingly, is Information and Communication Technology, followed by Professional Services and Media, Entertainment and Information professionals.“Without urgent and targeted action today to manage the near-term transition and build a workforce with future proof skills, governments will have to cope with ever-growing unemployment and inequality, and businesses with a shrinking consumer base,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.

There is also a gender implication to the future of jobs. Based on the absolute job gains and losses mentioned above, the burden of job losses seems to fall equally on women (48 per cent) and men (52 per cent). However, given that men represent a larger share of the overall job market than women, this even spread translates into a widening of the employment gender gap, with women losing five jobs for every job gained compared with men losing three jobs for every job gained. This is also partly explained by low participation by women in the “job families” that are expected to grow, such as Computers and Mathematics, thus adding to the urgency with which leaders must address the chronic problem of getting more women into STEM (science, technology, engineering, mathematics) professions.

When it comes to respondents’ outlook on how best to deal with these sweeping changes, the news is more encouraging. The most popular workforce strategy across every industry is investing in reskilling current employees. Other practices, such as supporting mobility and job rotation, attracting female and foreign talent and offering apprenticeships, also scored high. Hiring more short-term or virtual workers are much less popular responses. Indeed, the survey suggests that those companies that are treating future workforce planning as a priority are almost 50 per cent more likely to invest in reskilling than those that do not. The report also indicates that those companies that report satisfaction in their future workforce strategy are more than twice as likely to be targeting female talent, and significantly less likely to be planning on hiring more short-term workers.

Drivers of Change
The most significant driver of change – across all industries – is the changing nature of work itself. As new technologies make “anytime, anywhere” work possible, companies are breaking up tasks in new ways, leading to a fragmentation of jobs across many industries. These effects are further compounded by the rise of mobile Internet and cloud technology, enabling the rapid spread of internet-based service models. However, while the new “gig economy” may be one of the most visible and current manifestations of disruptions to the labour market, there is more change – both positive and negative – expected in specific industries, leading to new management and regulatory challenges.

Further unpacking the bundle of technological drivers of change in the Fourth Industrial Revolution yields a rather more optimistic picture on the job creation potential of technologies such as big data analytics, mobile Internet, the Internet of things and robotics. However, by far the biggest expected drivers of employment creation are demographic and socio-economic in nature; in particular, the opportunities offered by young demographics and rising middle classes in emerging markets and the rising economic power and aspirations of women. Conversely, the survey respondents predict that increasing geopolitical volatility risks are the biggest threat – by far – to employment and job creation globally.

Regional Analysis
At country level, expectations of the nature of upcoming disruptions are shaped by the demographic, economic and technological development of the country in question. Overall, changing and flexible work is seen as the most significant driver of change in advanced economies, whereas the rising middle class takes this role in emerging markets. New energy supplies and technologies are expected to play the largest role in the Gulf Cooperation Council (GCC) countries, while climate change adaptation is seen as a particularly major driver in Germany. A number of developing countries expect particularly large impact from the mobile internet given that the technology has the potential to bring millions of formerly unconnected workers and consumers into the formal economy for the first time.

Skills instability – the rapid change in the skills requirements of all existing jobs – will also impact countries differently. While ASEAN, GCC and Japan will have only 25 per cent instability in the top skills mix overall, in Turkey, China, India and Italy over 40 per cent of the top skills required across all jobs will change in the next five years. In the UK, 28 per cent of the top skills mix is expected to change by 2020 while in the US this number is expected to be 29 per cent. In France (28 per cent) and Germany (39 per cent) the situation is even more challenging.

Employment outlook is net positive in only five of the 15 countries covered, but even in those countries there is significant job churn – with some functions becoming redundant as new ones emerge. Using the forecasts from chief human resource officers and current employment data, the highest ratios of jobs created per job lost is expected to be in ASEAN (3.72 jobs gained per job lost), Mexico (3.06), United Kingdom (2.91), United States (1.37) and Turkey (1.14). In all other countries covered by the Future of Jobs report, there is an expected net loss in jobs.

Industry and Occupation Analysis
Drivers of change will also have a very disparate impact within specific industries. For example, new energy supplies and technologies will have a particular impact on Energy, Basic and Infrastructure, and Mobility. Processing power and big data will hav an especially strong impact on Information and Communication Technology, Financial Services and Professional Services. The rising middle class in emerging markets will have the largest effect on Consumer, Financial Services and Mobility. Consumer ethics and privacy issues will have a significant impact on the Consumer, Financial Services and Information and Communication Technology sectors.

The business model changes created by these drivers will, in turn, have specific and different consequences for employment and skills needs in each industry. While there is a modestly positive outlook for employment across most sectors over the 2015-2020 period, underneath this aggregate outlook there is significant relative growth in some job families and significant relative decline in others. Skills instability is expected to impact all industries but is particularly pronounced in Financial Services where 43 per cent of the top skills needed in all job families across the industry are expected to change by 2020.

The next most affected industries are Basics and Infrastructure (42 per cent) and Mobility (39 per cent). The least affected by 2020 are Media, Entertainment and Information (27 per cent) – unsurprisingly, as the industry is already in the midst of a major skills displacement – and Consumer industry (30 per cent). The survey respondents expect strong employment growth across the Architecture and Engineering and Computer and Mathematical job families, a moderate decline in Manufacturing and Production roles and a significant decline in office and administrative roles. Other sizeable job families, such as Business and Financial Operations, Sales and Related and Construction and Extraction have a largely flat global employment outlook over the 2015-2020 period. However, across all job families, chief human resource officers expect major challenges in recruiting.

The release said, “Our research also explicitly asked respondents about new and emerging job categories and functions that they expect to become critically important to their industry by the year 2020, and where within their global operations they would expect to locate such roles. Two job types stand out due to the frequency and consistency with which they were mentioned across practically all industries and geographies. The first are data analysts, which companies expect will help them make sense of the torrent of data generated by the technological disruptions referenced above. The second are specialised sales representatives, as practically every industry will need to become skilled in commercialising and explaining their offerings to clients. Other new specialties frequently mentioned include new types of human resources and organisational development specialists, engineering specialties such as materials, biochemicals, nanotech and robotics, regulatory and government relations specialists, geospatial information systems experts, and commercial and industrial designers”.

The Case for Cooperation
“While forecasts vary by industry and region, momentous change is under way and, ultimately, it is our actions today that will determine whether that change mainly results in massive displacement of workers or the emergence of new opportunities,” the report said. “One of the major barriers to change identified by chief human resource officers is the lack of specificity on the types of disruptive change under way. Our dataset aims to bring specificity to the debate and to the options for action by providing the perspective of chief human resources officers of leading employers who are among those at the frontline of the emerging trends and are key actors in implementing future workforce strategies.

“Our analysis reveals that upcoming disruptions to the employment landscape will be about much more than simply automation. It is essential that we act collectively now to prepare ourselves for the changes that we know the Fourth Industrial Revolution will bring,” said Saadia Zahidi, Head of the Global Challenge on Employment, Skills and Human Capital at the World Economic Forum. In part, this will entail business taking more responsibility for upskilling, reskilling and collaborating rather than competing on talent. In addition, it is imperative that governments put in place rapid and fundamental change in education systems to prepare for the new labour market. The World Economic Forum’s Global Challenge Initiative on Employment, Skills and Human Capital (see below) brings together businesses and governments to collaborate on making these solutions a reality.

Methodology
The Future of Jobs Survey that formed the basis of the report covered over 350 of the largest companies in the world, including over 150 of the Fortune Global 500. In addition to the individual company responses, the team had over 1,300 detailed occupation-level data points on mass employment, specialist and newly emerging occupations based in specific geographic locations across these companies’ global operations. The survey respondents primarily included chief human resource officers, chief strategy officers and other senior talent and strategy executives. The target pool of respondents comprised, as the primary selection criterion, the 100 largest global employers in each of the target industry sectors. In addition to the aggregate analysis, the report contains 15 country or regional profiles and nine industry profiles providing detailed information for each on the current situation and the 2020 outlook.

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