Automation and adaptability: Navigating the future of work

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In this file photo taken on January 10, 2019, Alpha Mini robots that use artificial intelligence dance at the Las Vegas Convention Center during CES 2019. On the face of it, the prospect of widespread automation sounds worrisome. But McKinsey Global Institute has found that it is not entire jobs that are likely to be automated, but constituent activities within them. In less than 5 percent of occupations can entire activities be fully automated.
JUNE 06, 2019 - 6:07 PM

The world of work is in a state of flux. With the advent of digital, you can now conduct work activities just as comfortably by a pool in Bali, as you would in a skyscraper in Raffles Place. Companies such as Grab and Amazon have spurred a rise in independent workers participating actively in the gig economy. Advances in automation, artificial intelligence (AI), and robotics now promise to further transform the world of work but have raised deep concern. Doomsday scenarios about mass unemployment associated with the rise of the
machine are all too common – but the reality is likely more nuanced, and less negative.

Many of the technologies we employ in our daily lives would have seemed unimaginable a mere decade ago. Virtual and augmented reality, AI and big data analytics are transforming workplaces. Their deployment will, without doubt, have a significant impact on jobs, skills, and wages, disrupting many workers and requiring millions to transition into new occupations and change their work practices. But in the long term, they also promise higher efficiency, more productivity, more safety and convenience. The key to making automation a success is adapting to the change that is coming.

Putting automation adoption into perspective

On the face of it, the prospect of widespread automation sounds worrisome. According to research by the McKinsey Global Institute (MGI), the economic and business research arm of McKinsey & Company, in about 60 percent of occupations, at least one-third of the constituent activities could be automated by 2030 based on currently demonstrated technologies. In Singapore, estimates show about 24 per cent of work activities in Singapore could be impacted by 2030. 

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However, MGI found that it is not entire jobs that are likely to be automated, but constituent activities within them. In less than 5 percent of occupations can entire activities be fully automated.

Of course, technical feasibility to automate does not automatically translate into actual automation. Many factors can slow down adoption including the cost of developing the hardware and software, labour market dynamics, the regulatory environment, and whether
automation will be accepted by society. The tasks that are most likely to be automated will be routine physical and clerical ones. Machines will clearly play a larger role in healthcare, but who wants to be cared for in a hospital solely by a robot?

Looking at a range of high-value technologies over the past 60 years, from airbags to MRI machines to smartphones, we find that it still takes between 5 and 16 years to reach 50 percent adoption and 5 to 28 years to reach 80 percent adoption. Although adoption is
speeding up, it will still take time to become widespread.

Nevertheless, a period of radical change is in prospect. One most consider the number of jobs that are neither lost nor gained, but fundamentally changed for reasons that are hard to predict. As automation and AI grow in prominence, so will dynamic new jobs to cater to the changing economy. 

If history is a guide, up to 9 percent of 2030 labour demand will be for jobs that did not exist before – in the way that social media managers and search engine optimisation specialists did not exist a mere decade ago. Overall, we take the view that with sufficient growth, innovation, and investment—and retraining and upskilling—there can be sufficient job creation to offset the impact of automation.

Future proofing our workforce and businesses

Although automation may seem intimidating, there is no benefit in businesses and governments burying their heads in the sand. Automation is coming because of its power to raise productivity—globally by up to 1.4 percent a year, MGI finds. Beyond productivity, AI –
where machines or software mimic human behaviour and intelligence – has the power to help us tackle daunting problems from cancer to climate change. Countries that do not embrace AI could find themselves at a disadvantage.

But there are huge challenges ahead, notably the need to help support workers develop the skills they need to work successfully alongside machines, and tap into changing demand for different types of labour. Demand for manual labour will decline, while demand for tech, higher cognitive (linked with creativity and complex information processing), and social and emotional skills (associated with leadership and empathy with customers) will rise.

Singapore’s SkillsFuture initiative is a key effort to help Singaporeans to be proactive in developing their skills continuously throughout their lives. Complementing SkillsFuture is Workforce Singapore’s Adapt and Grow program, which provides support to mid-career jobseekers by placing them in new jobs and supporting them through re-training. As part of a broad effort to produce workers for the future of work, school curricula and the capabilities of educators need to be monitored closely and adapted to the needs of the labour market. Although here is an urgent need for more science, technology, engineering and mathematics skills, schools also need to place increased emphasis on creativity, critical and systems thinking, and adaptive and lifelong learning. 

The private sector needs to step up too, by reskilling workers or redesigning jobs to enable employees to move into higher value-added roles in the company rather than being displaced by automation. It is in companies’ interests not to simply use automation as an
efficiency tool, but to use it creatively to innovate new products and services. Changi Airport is an example of a forward-looking employer with plans to redesign or create 8,000 jobs by 2025, with more positions for professionals, technicians, and cabin crew, and to ramp up use of technology such as robotics to ease physically demanding and manual tasks in airport operations.

The challenges of reskilling and job redesign – alongside the cost of investing in automation technologies upfront and redesigning business processes – are significant, but the payoff is too. Being forward-thinking and creative about how our lives are organized and valued in the
future is key, but more so now as we move towards a new reality – where the role and meaning of work have started to shift.

The writer is the managing partner of McKinsey & Company’s Singapore office, where she is based.