Discover How The Future Of Work Will Impact Companies In Europe Over The Next Decade?

Future of Work in Europe

Last week, the McKinsey Global Institute (MGI), the business and economics research division of McKinsey & Company, published a discussion paper with an enticing title – The Future of Work in Europe. The researchers analyzed data from 1,100 local economies in 29 European countries, taking a decade-long view of the future of work in Europe. While most of the data were collected before COVID-19, the objective was to create a scenario of the future of work in 2030.

The study found that even though the world of work had been unfolding for the past decade, the COVID-19 pandemic may accelerate technology adoption of automation and AI and cause other workforce shifts. Automation and future jobs will require employees to acquire new and more sophisticated skills than what they possess today.

Before the pandemic, Europe saw the highest employment rates since 2000. Similar to other developed economies, the European countries were experiencing a decline in manufacturing and agriculture and an increase in knowledge-based sectors, such as financial services, education, telecommunications, and real estate.

Professions with repetitive tasks, including production work, office support, and transportation services, were already facing slowing growth due to automation. However, there was job growth at the low end of the skills range for employees in cashier or sanitation professions.

MGI highlighted a large body of academic research that analyzed middle-skills and middle-wage roles and observed a “hollowing out” pattern showing erosion of these positions. That relates to the changing nature of work. Part-time work increased in the majority of European countries, and independent work, before the COVID-19 crisis, made up 20% to 30% of all jobs. Independent work includes the gig economy workers, freelancers, and people who work for temporary staffing agencies.

The study also found an overlap between the jobs high at risk of loss due to the pandemic and displacement through automation. For example, almost 70% of jobs in the wholesale and retail sector that could be displaced by automation are also at risk of loss from COVID-19. This shows that COVID-19 may accelerate job displacements that were initially projected to take ten years. The pandemic could also increase automation adoption out of fear that employees may get sick and not be able to work.

Typically, only less than 5% of professions can be automated in their entirety. In about 60% of occupations, about 30% of activities could be automated through the use of technology. Bots can take over repetitive tasks, allowing employees to work on high-productivity activities. This means that many roles will change and get reconfigured rather than eliminated.

Before the crisis, stronger job growth was expected in human health and social work, education, and professional, scientific, and technical services. The most significant decline was expected to occur in manufacturing. With the changing views of the supply chain and the concern of relying on one country to manufacturer a substantial portion of its products, we are looking forward to reading MGI’s next discussion paper, which will cover the implications of COVID-19. It will be interesting to see if the expectations for the manufacturing industry will change even though it is the industry most susceptible to automation.

When creating the workforce of the future, leaders will have to establish a strategic vision for their organizations and determine what role technology will play in their future. They will also have to assess their employees’ skills, evaluate the future needs, and develop a roadmap to bridge the gap. Finally, every organization should be mindful of social responsibility and weigh the impact of their decisions on local communities in which they operate.

When companies develop a training roadmap for the employees, they should segment their workforce into separate categories and have a different training plan for each.

  1. High-end producers (workers with technological and manufacturing skills) – Promote culture of lifelong learning, agility, continuous improvement, and innovation. Retrain and redeploy employees toward more productive tasks.
  2. Information and communications technology professionals (highly compensated employees with advanced digital skills) – Create platforms to support remote work and broaden the hiring pool.
  3. High-skill white color professionals – Upgrade their skill set to include advanced data analytics to enable the integration of digital tools in all functions.
  4. Specialized practitioners (ex. doctors, lawyers) – Decide which functions will be handled by local employees and which can be done by independent contractors or remote workers.
  5. Mid- to low-skill white-collar workers (highly automatable administrative and office support occupations) – Retrain employees to fill new digital roles or redeploy some into more customer-facing positions.
  6. Low- to middle-skill workers (employees who perform physically intensive or repetitive tasks) – Develop technical and digital capabilities and redeploy existing workforce.
  7. Local tradespeople (ex. repair) – Build digital capabilities for the existing workforce. Develop and implement new business models that increase productivity and innovation.
  8. Builders and transporters (ex. parcel delivery) – Retrain to install, maintain, and use new technology systems.
  9. Frontline labor (ex. retail) – Enable employees to focus on customer experience

Europe and the rest of the world may take years to overcome the economic crisis caused by the COVID-19 pandemic. However, companies should still keep in mind the long-term trends. With constant and rapid change, the old model of front-loading education early in life is no longer enough to serve people for their entire careers. Companies need to help individuals prepare for the jobs of tomorrow and chart new career pathways. Employees need access to effective training programs to acquire new and more relevant skills. While Europe and the rest of the world focus on the immediate outcome of the pandemic, now is the time to reimagine the future of work.

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