McKinsey: Automation Could Displace as Many as 800 Million Jobs, and Here’s Which Ones Will Go

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It may have started with pesky sales phone calls you responded to before realizing the “person” on the line was actually a bot, but now automation is creeping into more and more facets of life, manifesting in self-driving cars and algorithms that answer e-commerce related inquiries.

In its latest report, “What the future of work will mean for jobs, skills and wages,” McKinsey said there’s “a rich mosaic of potential shifts in occupation” coming round the bend.

“Our key finding is that while there may be enough work to maintain full employment to 2030 under most scenarios, the transitions will be very challenging—matching or even exceeding the scale of shifts out of agriculture and manufacturing we have seen in the past,” the report noted.

At present, McKinsey said roughly half of work activities are technically automatable. By 2030, between zero and 30 percent of hours worked globally could be automated, depending on the speed of adoption.

“While technical feasibility of automation is important, it is not the only factor that will influence the pace and extent of automation adoption,” the report noted. ‘Other factors include the cost of developing and deploying automation solutions for specific uses in the workplace, the labor-market dynamics (including quality and quantity of labor and associated wages), the benefits of automation beyond labor substitution, and regulatory and social acceptance.”

Jobs at risk versus job prospects

Not surprisingly, highly physical jobs, like manufacturing, will be most susceptible to automation, but collecting and processing data are job functions also likely to be at risk. These processes are increasingly being done better by machines, and that fact could “displace large amounts of labor” in areas like accounting and back-office transaction processing.

“It is important to note, however, that even when some tasks are automated, employment in those occupations may not decline but rather workers may perform new tasks,” McKinsey said. “Automation will have a lesser effect on jobs that involve managing people, applying expertise, and social interactions, where machines are unable to match human performance for now.”

There’s hope still for job creation—thanks largely to consumption.

In previous estimates, McKinsey had called for global consumption growth of $23 trillion between 2015 and 2030, with the bulk of that growth coming from consumers in emerging economies.

“The effects of these new consumers will be felt not just in the countries where the income is generated but also in economies that export to these countries,” McKinsey noted. “Globally, we estimate that 250 million to 280 million new jobs could be created from the impact of rising incomes on consumer goods alone…”

The influx of automation brings with it a host of new technical roles, and with spending on technology slated to increase by more than 50 percent over the 2015 to 2030 period, the tech trend could contribute to 20 to 50 million jobs globally.

Demand for more circular practices and use of renewable resources to combat climate change, could also create up to 10 million jobs in occupations including manufacturing, construction and installation.

Jobs that automation won’t likely be able to get its paws on? IT professionals and other tech specialists, managers and executives whose jobs can’t really be done by machines, and creatives (like designers).

“The changes in net occupational growth or decline imply that a very large number of people may need to shift occupational categories and learn new skills in the years ahead,” according to McKinsey. “The shift could be on a scale not seen since the transition of the labor force out of agriculture in the early 1900s in the United States and Europe, and more recently in China.”

Between 400 million and 800 million workers could be displaced by automation by 2030 and will need to find their way into new jobs.

For China, this reality may hit the hardest.

“In absolute terms, China faces the largest number of workers needing to switch occupations—up to 100 million if automation is adopted rapidly, or 12 percent of the 2030 workforce,” McKinsey said, adding, however, “While that may seem like a large number, it is relatively small compared with the tens of millions of Chinese who have moved out of agriculture in the past 25 years.”

Will the future provide enough work?

Looking to assuage fears that automation will render everyone jobless, McKinsey said, as history suggests, labor markets have, over time, adjusted to shifting dynamics and disruptions.

By 2030, 8 percent to 9 percent of labor demand will likely be in new types of jobs that didn’t exist before, and with sufficient economic growth, innovation and investment, McKinsey said there could even be enough new job creation to offset automation’s impact.

“A larger challenge will be ensuring that workers have the skills and support needed to transition to new jobs,” according to the report. “Countries that fail to manage this transition could see rising unemployment and depressed wages.”

In the future, workers will be spending more time doing things machines can’t do, or, arguably, can’t do as well as a human—like managing people, applying expertise and communicating. Predictable physical activities will command less of humans, as will collecting and processing data.

“The skills and capabilities required will also shift, requiring more social and emotional skills and more advanced cognitive capabilities, such as logical reasoning and creativity,” the report noted. “Wages may stagnate or fall in declining occupations. Although we do not model shifts in relative wages across occupations, the basic economics of labor supply and demand suggests that this should be the case for occupations in which labor demand declines.”

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