Technological development is accelerating the pace of change in the global economy. This has implications for issues ranging from how workers train to what the path of development will look like in the 21st century.
Helvetas Project Director Tim Sparkman, working on Enhancing Youth Employment, a Swiss Agency for Development and Cooperation (SDC) project in Kosovo, sat down with Dr. Vesselina Stefanova Ratcheva, a lead author of The Future of Jobs Report 2018, from the World Economic Forum, to discuss the report’s findings and its implications for development.
Tim: Can you give us an overview of the intention behind the report?
Vesselina: When our team in the Forum initiated this work in 2015, there was a lesser sense that, if you want to say it, the robots are coming – technology is starting to pervade our lives in the same way. And now there is a general consensus that there are going to be large implications for the labor markets and for companies and that things that we didn’t think were possible two or three years ago are going to be a reality soon.
What our team introduced to this year’s report edition is a much deeper focus on exactly how humans and machines are going to divide work in the future productively. How do we need to redraw the division of labor, conceptually and then pragmatically, within companies? A range of work in Centre for the New Economy and Society here at the Forum right now is focused on how to orient the different stakeholders - governments, businesses and individuals, to the changes. What reskilling initiatives do we need? What job transition initiatives do we need? And how do we start seeing the opportunities in this future?
T: Your methodology was surveys of CEOs and HR Managers, of members of the World Economic Forum. So these are actual operators, on the ground, making decisions about investment, or planning investments for the next few years. And I was surprised to see that the top 5 technologies that businesses were planning to invest in weren't necessarily automation. Well, machine learning was one of them, which is sort of automation, but the others were big data analytics, app- and web-enabled markets, IOT [Internet of Things] and cloud computing. And so, far from an impression that 'the robots are coming', it was more an impression of 'there's a huge increase in the volume of information that's going to be gathered across business operations, and what the workforce will need to show is an ability to deal with this tremendous volume of information and use it in a productive manner'. Was that also your impression from the findings?
V: Very much so. What we're seeing in the Forum research is that the world is producing more and more information, and some of it is useful, and some of it is yet to be made useful. And a lot of the augmentation of human labor is happening exactly in information processing, so technologies are expanding our ability to store information, to process information, and to make it into insight. And the robots are also coming, in a way, because what we see is a division between different kinds of technologies. Some technologies are mass-market, and there are technologies that are going to be taken up by a smaller set of companies. So our metric there was based on the question 'are you likely to invest in these technologies in your company on the horizon up to 2022.’ And there are technologies for which nearly 80 or 90 percent of companies are likely to say, yes, we are set to invest.
T: Right, like big data analytics, for example – thus the need for data scientists.
V: Yes, cloud computing, actually scaling up web-enabled markets – a broad push for digitalization. There is still a segment of about 25% of companies that are going to invest in robotics. Large auto manufacturing plants are using a range of stationary robots on the assembly line already and a lot of oil and gas companies are starting to think about how to utilize aerial and underwater robots to perform some of those tasks that are dangerous for human workers. But you also see that there are a lot of technological changes that will be completely pervasive for all businesses.
T: In the report, it was interesting to see the factors that companies considered most when deciding where to locate – mainly the availability of skilled labor. In Kosovo, where I work, we often point out that Kosovo's main competitive advantage at this stage is its extremely low wage rate. You're talking about an average monthly wage of less than €300 per month. In Kosovo you can get a software developer for €600 or €700 a month, entry to lower-mid level. However, there are very few qualified software developers in the country, just to take the case of the IT industry. So one of the things that your report reminded me of is a fear that I always have sitting in the back of my mind – that we're looking at the dawn of a permanent and widening gulf between lesser and more advanced countries. I find it hard to picture, in this dynamic economy – and it's growing more dynamic on a daily basis –a pathway for the next China to emerge and catch up quickly with developed countries. And I wondered whether that was something that came out of the research you had done as well - the challenge of a less developed country being able to make the steps toward being competitive in the long term with developed countries.
V: This is a key point of discussion for our work today in conversations with a range of leaders in the labor space - that the path to development is changing quite radically and there isn't going to be the next China. And so the conversations we are having today are very much about saying, 'what does the new path to development look like for countries? What types of jobs are going to emerge?' What is definitely the case is that a strong talent base is very important, and that did come out in our report, that a lot of the choices on the location are being determined by the strength of the talent in that country. So, what appears to be the case is that it is unlikely that the path to development is going to be through cheap and very unskilled labor. It is much more likely that it's going to be based on making the right investment in skills, and then attracting companies on the basis of those skills being present in the economy.
T: Right. But not just making that investment once, but making that investment continually, because that workforce has got to be as agile as the workforce in more advanced countries.
V: Yes, and we do know from the literature on reskilling, especially the literature on adult reskilling, that once individuals are used to reskilling there is an ongoing dividend. One consistent finding in most of the research is that people emerge from adult learning ready to learn again.
T: You wrote in the report that "those most in need of reskilling and upskilling are least likely to receive such training." So on the one hand, that's a refreshingly honest response from the individuals responsible for making these investments in companies. But it's not great news for the workers from whom the global economy requires the most flexibility. Can you tell us a little bit more - some examples of workers who are going to be in a situation like this, and what are your ideas of some appropriate policy responses?
V: Maybe it’s useful to ground this in three roles set to be disrupted: administrative workers, factory workers, and accountants. These are three roles that always come up in almost any piece of research we've seen on the topic, and they've definitely come up in our team’s research as well, as being automated. Now the importance of adding accountants to it is to know that this is not just about the lowest skilled.
T: It's not a blue-collar thing.
V: Yes, it's also a routine white-collar job thing. There is a risk of the middle falling out of the ladder of social mobility and the need to keep an eye on social mobility as these changes unfold. In the past, you could gradually reframe your history, your family background, and get into an accountant's job, or a lawyer job, or a higher end administrative support job. That starts becoming more unlikely with the unfolding changes today and that does have broader implications. And the difference is that employees in those jobs do have a different set of skills that can be repurposed. An accountant might have very strong quantitative skills and that might mean that if you're thinking of the similarity between an accountant's role and one of the rising roles like a data analyst, we could consider retraining accountants into data analysts. Maybe that's one possible solution for those professionals.
V: The big risk for those who remain mostly undereducated, and are going to be affected by those changes, is that you need to retrain and relearn. And that means taking some individuals back to the schoolroom - but a very different schoolroom. This poses big challenges to our whole education system because at the moment the education systems that we're used to are focused on a one-off investment early on in your life, and people either make it through that and get the necessary human capital investment to then convert that into better wages and better jobs in later life, or they fall out of the system. What is needed for this new world of work, because of the changes to jobs and the frequency with which people will need to reskill to roles with very different skills, is a much more agile system that is adapted to lifelong learning. That's a challenge to both policymakers, who have so far not really invested in those systems, but also a challenge to workers, themselves, to be ready to reskill.
T: Who do you think is best positioned to define that focus and lead the process? On the one hand, obviously employers have a significant role to play, but in the end, an employer is beholden to being commercially viable and will necessarily make decisions that support the commercial viability of the organization, and that's where the issue of prioritization of reskilling workers comes up. On the other hand, you have the government with a broader mandate to support the welfare of citizens. Who do you think is best positioned to lead this process?
V: I think it has to be collaborative. There are cases where there is a very clear business case for investing in reskilling because the talent is simply not there to fill the necessary roles and that then again produces a drag on productivity for companies. So some level of reskilling will be meaningful and important for all companies and that investment should partly come from business. The Centre for the New Economy and Society will soon publish a new piece of work that is looking at the return on investment for different kinds of reskilling. The objective is to shed some more light on how you balance that across different stakeholders.
T: In the report you talk about how investments in the HR function are going to be vital to address the challenges, and you specifically mention both talent management and, interestingly, workforce analytics. I was wondering if you could unpack that a little bit. And, what would you say a model HR function focuses on now?
V: So, in terms of actually what is necessary for this transition to the future of work, one dimension is definitely to understand the changes that a company is going through, strategically, and what that might mean in terms of roles and skills. And there is this classic line, which I think holds true, that the HR function is going to be a learning function. That does mean that HR becomes closer to strategy than it has been in the past, and it becomes much more important. You can't make that investment in technology without the right people.
T: One of the challenges for me, as an economic development professional working in Kosovo, is the lack of information. In the end, there are a lot of opinions about what is going on, but we have very little knowledge. And it gets in the way of basic decisions, such as where to put your resources.
V: It's actually the case everywhere. One would think that there is better data for Switzerland, for the UK, for the US. Sometimes that's the case, sometimes it really isn't. Our team has been doing a lot of work on understanding how to identify what the capacities of skills are across economies, and it has involved reframing the traditional ways of gathering facts. The Forum is increasingly working with new data companies, and new labor market insight companies, to gain a better perspective on what the skills and education levels of populations are. This is difficult to tell from traditional statistics.
T: What are some of the types of information that you would get from the other actors, not from traditional actors?
V: For example, with LinkedIn, our team worked to understand what types of degrees people hold across companies. Typically we know this about young people usually, from UNESCO data, but don't know it about the adult population across different geographies. Our team has been able to get unprecedented insight into what people studied, to begin with. We've been working a lot with a labor market information company who looks through job postings and distills information about the different needs of jobs today versus in the past, understands what skills are being asked for, what experience is being asked for. And then one of our other reports, called Reskilling Revolution 1.0 – there's a 2.0 coming out for Davos this year – was looking at exactly that data and the gaps between what skills are needed for a job that's disappearing today and what skills are needed for a job that is emerging in the future.
This interview appeared in the December 2018 issue of Helvetas Mosaic.
Helvetas Mosaic is a quarterly published by Helvetas Eastern European team for our email subscribers and website visitors. Our articles explore new trends and fresh ideas of international development work in Southeast Europe.