18 Jan 2016
Oliver Cann, Director, Public Engagement, Tel.: +41 79 799 3405; Email: Oliver.Cann@weforum.org
· The Fourth Industrial Revolution, combined with other socio-economic and demographic changes, will transform labour markets in the next five years, leading to a net loss of over 5 million jobs in 15 major developed and emerging economies
· Skills and jobs displacement will affect every industry and geographical region, but losses can be offset by job growth in key areas
· A clear majority of businesses believe that investing in skills, rather than hiring more short-term or virtual workers, is the key to successfully managing disruptions to the labour market for the long term
· The new research by the World Economic Forum is the first of its kind, representing more than 13 million employees in nine industry sectors and 15 economies; it aims to guide business and policy-makers on how to equip labour forces with the skills to navigate the disruption of the Fourth Industrial Revolution
Geneva, Switzerland, 18 January 2016 – 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. This is the finding of a new report, The Future of Jobs, published today by the World Economic Forum.
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. These are; Australia, Brazil, China, France, Germany, India, Italy, Japan, Mexico, South Africa, Turkey, the UnitedKingdom and the United States, plus the ASEAN and GCC groups. Together, these economies account for 65% of the global workforce. A major goal of the report is to analyse the impact of key drivers of change and provide specific information on the relative magnitude of these expected changes by industry and geography, and the expected time horizon for their impact to be felt on job functions, employment levels and skills.
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 specialized “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 futureproof 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%) and men (52%). 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% 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.
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% instability in the top skills mix overall, in Turkey, China, India and Italy over 40% of the top skills required across all jobs will change in the next five years. In the United Kingdom, 28% of the top skills mix is expected to change by 2020 while in the United States this number is expected to be 29%. In France (28%) and Germany (39%) 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 have 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% 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%) and Mobility (39%). The least affected by 2020 are Media, Entertainment and Information (27%) – unsurprisingly, as the industry is already in the midst of a major skills displacement – and Consumer industry (30%).
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.
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 specialized sales representatives, as practically every industry will need to become skilled in commercializing and explaining their offerings to clients. Other new specialties frequently mentioned include new types of human resources and organizational 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.
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.
The Future of Jobs Survey that formed the basis of the report covers over 350 of the largest companies in the world, including over 150 of the Fortune Global 500. In addition to the individual company responses. we 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 our 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.
Global Challenge on Employment, Skills and Human Capital
The World Economic Forum’s Global Challenge Initiative on Employment, Skills and Human Capital produces analytical tools such as the Human Capital Report, the Disrupting Unemployment compendium and the Future of Jobs report to allow companies and countries to benchmark their current performance, assess their prospects and learn from best practices. In addition, the Challenge Initiative serves as a platform for public-private partnerships to address skills gaps and prepare for the future of jobs in selected regions and countries. It cooperates with industries to analyse employment and skills needs and implement solutions, working closely with global multistakeholder communities of leaders and experts dedicated to boosting employment, closing skills gaps and improving education.
Partners of the Global Challenge on Employment, Skills and Human Capital are: Adecco Group, African Rainbow Minerals, Alghanim Industries, AlixPartners, The Bahrain Economic Development Board, Chobani, The Coca-Cola Company, Edelman, GEMS Education, Infosys, LinkedIn, ManpowerGroup, Mercer, Microsoft Corporation, Pearson, The Rockefeller Foundation, SAP, Saudi Aramco, Siemens, Tata Consultancy Services, Tupperware Brands Corporation, Uber, Workday, WPP and Zain.
Over 2,500 leaders from business, government, international organizations, civil society, academia, media and the arts will participate in the 46th World Economic Forum Annual Meeting in Davos-Klosters, Switzerland, on 20-23 January. Under the theme, Mastering the Fourth Industrial Revolution, the programme comprises over 250 sessions, of which over 100 will be webcast live.
Taking a formative role in shaping the discussion at the Annual Meeting 2016 as the Co-Chairs are: Mary Barra, Chairman and Chief Executive Officer, General Motors, USA; Sharan Burrow, General Secretary, International Trade Union Confederation (ITUC), Brussels; Satya Nadella, Chief Executive Officer, Microsoft Corporation, USA; Hiroaki Nakanishi, Chairman and Chief Executive Officer, Hitachi, Japan; Tidjane Thiam, Chief Executive Officer, Credit Suisse, Switzerland; and Amira Yahyaoui, Founder and Chair, Al Bawsala, Tunisia.
Notes to Editors
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