How has COVID-19 affected the future of work? Which job categories will increase, which will decline, and how can businesses and communities successfully adapt to the next normal?
Long after the current health crisis has subsided, its impact on work, workforces, and the workplace will persist. The McKinsey Global Institute (MGI) studied the long-term impact of the COVID-19 pandemic on the demand for labor and the mix of occupations, as well as the workforce skills required, through 2030 in eight countries with diverse economic and labor market models: China, France, Germany, India, Japan, Spain, the United Kingdom, and the United States. During a McKinsey Live webinar, partners Susan Lund and Anu Madgavkar shared insights from the research, including which trends are reshaping the future of work, how the mix of occupations may shift, and what private- and public-sector leaders can do to support workforce transitions.
MGI’s previous research on the future of work accounted for disruptions caused by technologies and growing trade links; however, this new research also measured ‘physical proximity’ to better understand work after COVID-19.
Trends and disruptions
The pandemic (and the need for physical distancing) rapidly accelerated three work trends that were already underway: the shift to remote work and virtual interactions, the use of e-commerce and other digital platforms, and the deployment of automation and artificial intelligence.
During the pandemic, the work arenas experiencing the greatest disruption also had the highest physical proximity scores, and MGI found four work arenas could face the greatest postpandemic disruptions because of changes in consumer and business behavior:
- on-site customer interaction (including retail and hospitality)
- leisure and travel venues (including restaurants, hotels, and business travel)
- production and warehousing (including factories, kitchens, and warehouses)
- computer-based office work (including offices and corporate headquarters)
The number of healthcare and STEM-driven jobs is likely to increase, propelled by a greater need for healthcare as populations age and technology evolves. Lower-wage jobs in warehousing and transportation also may increase, as a result of the growth in e-commerce and the delivery economy, but those increases are unlikely to offset the disruption of low-wage jobs.
MGI estimates that more than 100 million workers across the eight countries will need to change occupations in the coming decade. This is 12 percent more than MGI’s prepandemic expectation.
The research also indicates that almost all growth in labor demand through 2030 will consist of high-wage jobs. To stay employed, more than half of displaced low-wage workers may need to shift to occupations in higher wage brackets. The most job transitions may be among the most disadvantaged workers, in part because they are disproportionately employed in the arenas most affected by COVID-19.
What can leaders do?
The solution in the coming decade will be to upskill workers so that they can successfully transition from declining to growing occupations and move into career pathways with higher wages. For instance, a cashier may be displaced by e-commerce or automation but could use customer-service skills to move to healthcare or sales management.
It is also essential for business leaders to go beyond retraining to reimagining work: where and how people work, the skills specific occupations require, and the organizational culture needed to help counter COVID-19’s regressive impact on vulnerable workers.
Policy makers can work with businesses, educators, and other stakeholders to facilitate workforce transitions. Among the possible goals of such collaboration are the expansion of digital infrastructure, new or expanded income support for workers who are switch occupations, benefits and protections for gig workers, and an employee mentality of lifelong learning.
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For more on this topic, please watch the webinar recording and read The future of work after COVID-19, the first of three MGI reports that examine the postpandemic economy.