Globally, countries are in different stages of confronting the pandemic, even as vaccine drives are kicking off all around the world, and could potentially mitigate some of the disruption COVID-19 has wreaked on the workforce.
McKinsey’s latest research finds that some trends spurred by the pandemic may continue to alter the ways of working for years to come.
The pandemic pushed companies and consumers to rapidly adopt new behaviors that are likely to stick, changing the trajectory of three groups of trends: remote work, e-commerce and automation. As a result, we find that, globally, more than 100 million workers in advanced economies, or up to 25 percent more workers than our pre-COVID-19 estimation, may need to switch occupations.
COVID-19’s impact on the future of work, however, may look different for some countries in Asia.
COVID-19 is changing the geography of work in Asia
Many Asian economies are becoming more service-based, and the creation of jobs relying on frequent human interaction or that are office-based is therefore likely to grow in the region. COVID-19 has had a particularly severe impact on jobs requiring high levels of physical proximity and face-to-face contact, such as waiters, shop clerks, and receptionists. As a result, these work arenas are likely to see some of the greatest acceleration in adoption of automation and artificial intelligence (AI).
The good news is this digitisation has also propelled growth in the gig economy, creating new demands for delivery, transportation, and warehouse jobs. While workers in manufacturing and production were displaced in China because of the pandemic, the growth of e-commerce created jobs in the delivery economy.
In the first half of 2020, just four Chinese e-commerce and delivery companies created 5.1 million new jobs, many of which were filled by factory workers and small business owners displaced by COVID-19.
Thus, we estimate a more moderate increase, of about 12 percent, in labor displacement due to COVID-19’s impact in Asia, or roughly half of the increase we expect in advanced economies.
Making the case for targeted reskilling
Among those whose occupations might be displaced, workers with low-wage jobs, in particular, might be hard hit. This trend is markedly different from the dynamics in many countries before the pandemic, when net job losses were concentrated in middle wage occupations, such as manufacturing, as automation took over routine tasks while growth continued in low- and high-wage jobs.
In India, for example, McKinsey research suggests the share of lowest paying jobs in the labour market will fall by six percentage points by 2030, while the highest paying jobs, such as those in healthcare, engineering, and science, will continue to grow. After the pandemic, jobs in the top 30 percent of wages, such as those in healthcare and the STEM professions, will continue to grow – but they require a very different mix of skills and credentials than the low-wage jobs most likely to decline.
This raises the bar for retraining and educating displaced workers, many of whom are women, young people, immigrants, and those without college educations.
Companies and policymakers moved with alacrity to address the constraints COVID-19 imposed on work, and the same urgency is needed to help these workers gain the skills they need for the jobs of the future.
Another McKinsey report published in January 2021 finds that China could triple the scope of its retraining programs to cover all workers and modernise the content so that the system develops the skills workers need for the jobs that are available.
Instilling a habit of lifelong learning in workers is increasingly important, given the speed of technological change. In Southeast Asia, countries are deploying a range of capability building programmes aimed at mid-career workers and adult learners. Singapore, for instance, introduced the SGUnited Mid-Career Pathways Programme, which provides mid-career jobseekers with training allowances and traineeships at companies to help them acquire relevant skills.
In Vietnam, skills-focused education reform programmes are introduced in collaborations between public and private sector players – including one that has trained 23,000 youth by the Ministry of Education and Training, UNICEF Vietnam and the Saigon Innovation Hub.
Cross-sector collaboration could uplift displaced workers to emerge stronger after the crisis
Leaders from all sectors should consider the changes that will punctuate the post-pandemic period: the next normal. Assuming a return to business-as-usual in pre-pandemic conditions is unrealistic. Doing so will forfeit real value and, perhaps even most worrying, could delay economic recovery.
During the pandemic, many governments extended extraordinary support to workers suddenly furloughed and displaced. Offering something similar to workers as they go through training and education to acquire new skills is one idea policymakers could consider. Such a programme might also support gig workers, as many people take on gig jobs to support themselves between more permanent employment opportunities.
Although most Asian countries are still facing uncertainties, leaders in the region can minimise the domestic impact of the global pandemic by making bold choices to educate, retrain and upskill segments of the workforce vulnerable to displacement, in anticipation for the next normal.
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