December 18, 2017

December 18, 2017 | Adviser News

The changing nature of work: implications for you and your clients

The Australian workforce is changing. The era we are now living in is filled with unprecedented opportunity but also with challenges in the shape of automation of roles that are traditionally carried out by humans; cars that drive themselves, machines that read x-rays, and algorithms that respond to customer-service inquiries.

The rapid pace of change is enough to worry thousands of Australians, who are training and working in transforming industries, that they are headed for the dole queue. However the fortunate reality is that for many people, the trend is towards job change and growth as we begin to work alongside machines, not rail against them.

These are the findings of a recent report from McKinsey Global Institute, Workforce Transitions in a Time of Automation, which assesses the number and types of jobs that might be created under different scenarios through to 2030, and compares that to the jobs that could be lost to automation.

It is a comprehensive read however, one of the most important take-outs for financial advisers is in understanding the level to which their own clients may be undergoing career changes over the coming decades, the forces that are shaping this change, in order to start planning ways in which they can support these seismic shifts.  

The future of work at a glance

McKinsey Global Institute predicts that the workforce transitions ahead will be enormous, with the next 20 years seeing as many as 375 million workers globally (14% of the global workforce) likely needing to transition to new occupational categories and learn new skills due to the rapid adoption of automation.

The support of businesses and governments in the process will be crucial because if the transition to new jobs is slow, unemployment could rise and dampen wage growth.

What jobs are most at risk?

The potential impact of automation on employment varies by occupation and sector. Activities most susceptible to automation include physical jobs in predictable environments. For example the operation of machinery, preparation of fast food, or collection and processing of data, as these activities can increasingly be done better and faster with machines.

This could displace large amounts of the labour force, including those working in mortgage origination, paralegal work, accounting, and back-office transaction processing.

What jobs are safe – for now?

It will be much harder for automation to affect jobs that involve managing people, applying expertise, and those involving social interactions, where machines are unable to match human performance – for now.

These are jobs in unpredictable environments, which include gardeners, plumbers, or childcare and aged care workers. These types of role will generally see less automation by 2030 because they are difficult to automate technically, and are often paid relatively lower wages, which makes automation a less attractive business proposition.

It is important to keep in mind, however, that even when some roles and tasks are automated, employment in those occupations may not decline overall, as workers may perform new tasks alongside machinery and technology. In many cases, employment in these occupations may even grow, if the overall demand is enough to overwhelm the rates of automation.

Signs to look out for: trends shaping the future of work

While the signs of automation’s encroachment on certain industries have been visible for many years, it is much more difficult to predict the myriad of new jobs that will be created in its wake. This is because many of these new jobs are created indirectly and spread across different sectors and geographies.

There are three trends that McKinsey Global Institute has found as potential sources of job growth, or new job creation to offset automation to 2030:

1. Rising incomes and consumption, especially in emerging economies

It is estimated that global consumption could grow by USD $23 trillion between 2015 and 2030, with the majority coming from the growing middle class in emerging economies. As incomes rise, consumers generally spend more on all categories, however their spending patterns also shift, creating more jobs in areas such as consumer products, leisure activities, financial and telecommunication services, housing, health care, and education.

Globally, they estimate that 300-365 million new jobs could be created from the impact of rising incomes.

2. Ageing populations

By 2030, there will be at least 300 million more people age 65 years and above than there were in 2014. As people age, they spend increasingly on healthcare and other personal services. This will create significant demand for a range of occupations, including doctors, nurses, and health technicians, but also home health aides, personal care aides and nursing assistants in ageing countries like Australia.

Globally, they estimate healthcare-related jobs from ageing and rising incomes could grow by 80-130 million by 2030

3. Development and deployment of technology

With the rapid growth in technology, it makes sense that jobs related to its development and will also grow. This includes computer scientists, engineers, and IT administrators. Overall spending on technology could increase by more than 50% between 2015-2030, with approximately half on information technology services, both in-house IT workers within companies and external or outsourced tech consulting jobs.

The number of people employed in these occupations is small compared to those in healthcare or construction however they are high-wage occupations. By 2030, they estimate this trend could create 20-50 million jobs globally.

Will there be enough work in the future?

This is the million dollar question that many are currently asking – and a pertinent one for financial advisers if they are to help support clients undergoing career changes in the future. Fortunately, history suggests that these fears are often unfounded as over time, labour markets adjust to changes in demand for workers from technological disruptions, although at times, with weakened wage growth. The larger challenge will lie in ensuring that workers have the skills and support required to transition to new jobs.

Employers will be on the front lines of the workplace as it changes

Governments, business leaders, and individual workers all have constructive and important roles to play. And while policy choices will vary by country, there are practical steps that can be taken by employers now to help smooth the transition, namely, the re-imagination of job retraining and skills development.

Midcareer retraining will become more important as the mix of skills required needed for a successful career changes. Programs that can quickly re-tool workers quickly (i.e. those focusing on re-training with the in-demand skills, rather than multi-year degrees) will be important.

Employers can take a lead in some areas, including with on-the-job training and providing opportunities to workers to upgrade their skills, both in-house and through partnerships with education providers.

They also have much to gain by early adoption of automation technologies, which can enable performance quality and speed, as well as greater efficiency. This will require them to both re-tool their business processes and re-evaluate their talent strategies and workforce needs, carefully considering which individuals are needed, which can be redeployed to other jobs, and where new talent may be needed. 

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