The future of work and reskilling in Europe

| Video

McKinsey: When it comes to the future of work, what’s keeping Europe from staying competitive?

Tera Allas: Well, the first thing to know is that the whole reskilling and upskilling agenda is really at the heart of the sustainable, inclusive growth agenda. For example, if we want to move along the path to net zero, we’re going to need something like 18 million people to be retrained in clean tech sectors, like the installation of heat pumps.

But more broadly, we really need technology adoption and automation to create productivity growth. And that, of course, has big implications for the workforce. Overall, we think that something like 50 million jobs in the European workforce could be automated by 2030, and that’s almost 20 percent of the workforce. That doesn’t mean there are going to be fewer jobs. There will be new jobs created as well, but they will be different jobs.

And many of these new jobs will require fresh skills and more education. So that means we need to really up our game in terms of reskilling and upskilling the people already in the workforce. Why? If we look ahead to 2030, about 80 percent of the people who will then be in the workforce are already in it. So they’re not at school, they’re not at university, and they’re not in the actual education system.

They’re at work, so it’s going to be critical that employers as well as governments create ways in which people can build those skills during their working lives. We know that more than 50 percent of peoples’ human capital is actually formed during their working lives, from training, upskilling, learning, and creating new skills. So both employers and governments will have a huge role to play.

The European system starts from a really positive place. We have fantastic educational establishments, we have good schools, and we have a good basic level of literacy and numeracy pretty much everywhere. So people have the basic ingredients for learning, but we do need to accelerate the degree to which people get that learning as they go along in their working lives.

The average age of a person who needs reskilling is about 40 years old. So it’s unlikely they’re going to go back to college or university, because they have other commitments in life. So we need to make it easy for them through more bite-sized training.

We do have more active labor market policies in countries like Denmark, with a flexicurity system where people are encouraged not just to look for a new job, but to look for new skills that then provide a platform for a new career and a new set of opportunities. And many governments can probably learn from that and think about what flavor of active labor market policy makes sense in their particular context.

But businesses also have a huge role to play. They have a lot of opportunities, especially in today’s tight labor market, to look within and identify people they can reskill for roles where they’re facing shortages. One of the pieces of analysis we did recently suggests that up to 75 percent of upskilling initiatives actually create value for the business. So, yes, the employee benefits, but so does the business, so it’s a huge win-win. So we think that both governments and businesses have an enormous role to play in this crucial reskilling agenda.

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