News; News & Events

International: McKinsey report identifies basic income as a potential response to automation

As many as 375 million people may have to switch jobs as a result of automation by 2030. This is according to a new report published by the McKinsey Global Institute (MGI), a private sector think tank and the business and economics research arm of McKinsey & Company.

According to MGI researchers, “the transitions will be very challenging – matching or even exceeding the scale of shifts of agriculture and manufacturing we have seen in the past.” Such dramatic shifts in the global labor market will demand proportionately dramatic responses from governments, businesses, and individuals. Specifically, the MGI report emphasizes the importance of providing transition and income support to workers.

The report, entitled “Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation”, builds on previous MGI research suggesting that 50% of global work activities could theoretically be automated by modifying existing technologies. While only 5% of jobs are at risk of disappearing entirely, 6 in 10 of jobs have 30% of constituent work activities that could be automated. According to MGI researchers, the question is not whether or not automation will alter the nature of work, but how long it will take.

Their analysis model potential net employment changes over 12 years for more than 800 occupations in 46 countries, focusing particularly on China, Germany, India, Japan, Mexico, and the USA. The report also accounts for several factors that could affect the pace of automation including technological and financial feasibility, demographic changes to labor markets, wage dynamics, regulatory responses, and social acceptance.

The report finds that 75 million to 375 million workers, or 3 – 14% of the global workforce, may be displaced by automation by 2030. These effects will be particularly felt in high income countries. In the most extreme scenario, 32% of American workers (166 million people), 33% of German workers (59 million people), and 46% of Japanese workers (37 million people) will be forced out of their jobs by 2030.

However, there may not be any shortage of new jobs available. MGI’s researchers note that new jobs will need to be created to care for aging societies, raise energy efficiency, address challenges posed by climate change, provide goods and services to the growing global middle class, and build new infrastructure.

Automation itself may also have the potential to create at least as many jobs as it destroys. Historically, transformative technological advancements have often led to significant jobs growth across industries.

The real challenge will be to ensure a smooth and stable transition between jobs. According to MGI research, automation is likely to disproportionately affect workers over 40, and sustained investments in retraining programs will be necessary to prepare midcareer workers for new employment opportunities. The report notes that this will require “an initiative on the scale of the Marshall Plan…involving collaboration between the public and private sectors.”

The MGI researchers also emphasize the need for increased financial support during transitions. Workers will need unemployment insurance to compensate for lost wages, as well as supplemental income to offset wage depressions typical in transitioning economies. A universal basic income (UBI) may be capable of satisfying both needs.

The report points to completed UBI trials in Canada and India, which showed no significant reduction in work hours and demonstrated increases in quality of life, healthcare, parental leave, entrepreneurialism, education, and female empowerment. The report also references ongoing and planned UBI experiments in the United States, Uganda, Kenya, Spain, the United Kingdom, and the Netherlands as programs to watch in the years to come.

The worldwide spread of automation may be inevitable, but according to researchers at the McKinsey Global Institute, the demise of human labor is not. Whether or not we can respond effectively to the needs of a changing economy will depend largely on our ability to ensure a secure and stable transition for displaced workers.

 

More information at:

James ManyikaSusan LundMichael ChuiJacques BughinJonathan Woetzel, Parul Batra, Ryan Ko, and Saurabh Sanghvi, “What the future of work will mean for jobs, skills, and wages”, McKinsey Global Institute, November 2017

 

About Micah Kaats

Micah Kaats has written 5 articles.

Share Button
The views expressed in this Op-Ed piece are solely those of the author and do not necessarily represent the view of Basic Income News or BIEN. BIEN and Basic Income News do not endorse any particular policy, but Basic Income News welcomes discussion from all points of view in its Op-Ed section.

2 comments

  • Expensive
    I am doing the master’s thesis at the University of Minho in Braga Portugal, Master’s degree in Political Philosophy and the Theme will be Technological Unemployment, by the subject I take the liberty of abusing your vast and odd knowledge, so could you contribute some advice to the topic?
    Thinking about the development of the theme as:
    1) Will this unemployment be cyclical or structural?
    2) What are the characteristics of these technological unemployment?
    3) What trends and projects will be developed to improve the continuing impact on world society?
    What do you think?
    Of course not being able to collaborate, I am already grateful for the content accessed on the web.
    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
    Caro,
    Estou realizando a tese de mestrado na Universidade do Minho em Braga Portugal, Mestrado em Filosofia Politica e o Tema será Desemprego Tecnológico, pelo tema tomo a liberdade de abusar do seu vasto conhecimento e impar, assim poderia contribuir com alguns conselhos para o tema?
    Pensando no desenvolvimento do tema como:
    1) Esse desemprego será cíclico ou estrutural?
    2) Quais as características desses desemprego tecnológico?
    3) Quais as tendencias e projetos a serem desenvolvidos para melhorar o impacto constante na sociedade mundial?
    O que o acha?
    Claro que não havendo condições de colaborar, fico desde já, agradecido pelo conteúdo acessado na web.

    • Andre Coelho

      Caro Altamiro,

      Obrigado pelas suas perguntas. Não vou poder demorar-me nas respostas, mas tento algo telegráfico, abaixo.

      1) Pensando em “emprego” no sentido tradicional do termo, o “desemprego” será estrutural daqui para a frente;
      2) Na ausência de um RBI, é relativamente óbvio que irá haver graves problemas, pelo que já se tem vindo a observar pelas consequências do desemprego nos Estados atuais. Com um RBI, eu diria que o desemprego tecnológico é até benéfico, libertando as pessoas de tarefas que podem (e se calhar devem) ser realizadas por máquinas, com mais eficiência, rapidez e menor custo;
      3) Quem sabe o que o futuro nos reserva? No entanto, a segurança financeira aliada ao RBI criará condições para libertar milhões de pessoas do stress diário associado ao emprego, ou falta dele, e em particular da luta constante pela segurança económica, sempre tão elusiva. Estou certo que essa segurança e confiança atribuída às pessoas – o RBI é principalmente uma afirmação de confiança nas pessoas – irá fazer florescer muitas ideias e projetos que hoje em dia estão adormecidos porque as pessoas não conseguem libertar-se da correria diária.

      Boa sorte para a elaboração da sua tese.

      Abraços,

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.