The future of work in South Africa: Digitisation, productivity and job creation

| Report

The advance of technologies such as machine learning, artificial intelligence, and advanced robotics will have a far-reaching impact on South Africa’s workplaces. Although digitisation will be disruptive, it has the potential to raise productivity and operational efficiency in businesses across sectors, to deliver better outcomes for both customers and citizens, and to create millions of high-quality jobs.

These are the findings of a new McKinsey paper, The future of work in South Africa: Digitisation, productivity, and job creation, which shows that the accelerated adoption of digital technologies could triple South Africa’s productivity growth, more than double growth in per capita income, and add more than a percentage point to South Africa’s real GDP growth rate over the next decade. It could also result in a net gain of 1.2 million jobs by 2030 (see exhibit). A large proportion of those jobs would go to women, and digitisation could trigger a breakthrough in women’s empowerment.

Digitisation and automation could result in a net gain of up to 1.2 million jobs by 2030.

The paper also shows that the accelerated adoption of technology could benefit several of South Africa’s core industries significantly if businesses act with sufficient speed and determination. In mining, it has the potential to increase margins by 15 percent. In retail, it could raise margins by two percentage points, reduce costs, and enhance the customer experience. In banking, digitization can cut cost-to-income ratios by ten percentage points, on average, by 2030.

Our paper suggests that while digitisation will disrupt the world of work, overall it will create more jobs than it destroys. But the new technology-enabled jobs will require higher skills levels than most of the jobs displaced. Digitisation could result in demand for an additional 1.7 million employees with higher education by 2030. Unless a higher percentage of South Africa’s graduates take technology-related jobs, much of that demand will go unmet—resulting in a serious skill shortfall across the economy.

The implication is clear. South African decision makers, across sectors, must move boldly to ensure that reskilling is sufficient to help reabsorb workers into the workforce. They also need to strengthen the education system to generate technology-related and life skills at sufficient scale. Only then will South Africa successfully manage the massive workforce transformation ahead. Indeed, these steps are essential if the country is to seize technology’s potential to unlock inclusive growth, improve lives, and reduce unacceptably high unemployment levels.

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