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Closing the future-skills gap

The emergence of digitization and automation is rapidly changing the requirements needed in the workplace, creating demand for a range of new skillsets. Future skills are needed now—skills that to some extent exist today like agile working and digital interaction, and skills that are only just emerging like blockchain technology development.

As it currently stands, 25 percent of the global workforce will either need to find new professional activities by 2020 or significantly broaden their technological skills as well as their digital citizenship and classic skills, including their cross-disciplinary skills. These skills include programming, agile working, and adaptability. Even elementary school students need to get ready for the change—by 2030, 85 percent of them will work in professions that do not yet exist.

In the Middle East, historical patterns of job destruction provide some lessons on what skills will be needed in the future jobs market. Digitization and automation technology could create new jobs, and most of them outside the technology sector itself. A 2018 McKinsey study predicts that this will accelerate between now and 2030, with 45 percent of existing work in the Middle East potentially being automated. In all six Middle Eastern countries examined, $366.6 billion in wage income and 20.8 million full-time employees (FTEs) are associated with activities that are already automatable today.

A newly-launched McKinsey paper called Future skills: Six approaches to close the skills gap analyzes over 30 current initiatives dealing with future skills. The paper looks for future skills solutions in Germany which, in five years, is expected to be short of 700,000 people possessing technological skills such as complex data analysis or web development. The report also predicts a gap of 2.4 million employees with the necessary cross-disciplinary skills.

The paper proposes methods that Germany can implement to close the future skills gap as quickly and in as targeted a way as possible. While some progress has been made, there are still significant challenges when it comes to the development of the future skills needed: first, there is a lack of underlying transparency regarding future skills training options; second, current education programs are still not focused enough on the needs of the future labor market; finally, despite the existence of some offerings, there is still no systemic future skills further training structure.

Examples from other countries such as China, Estonia, Finland, and Singapore and indeed, from Germany, offer inspiration for six concrete approaches to bridge the looming future skills gap and meet the three challenges.

First, a central future skills online platform can be developed to create transparency. The US platform, Portfolium, establishes transparency over the skill profiles of students and graduates by allowing users to supplement their resumes with examples of skills to submit to employers. The platform has reached 3.75 million students and 50,000 employers. The German federal government could offer an interactive future skills online platform where users could not only measure their future skills, but also determine which future skills are particularly in demand and find tailored training offerings. By taking in-built tests using the future-skills tracker, users could evaluate their development in technological and cross-disciplinary skills, thus gaining further transparency over possible future skills development potentials.

Second, technological skills materials and concepts can be taught at schools and universities. Schools in China already tailor their lessons to the demand for technological skills in future society. Many of their education institutes receive teaching materials to teach China’s students cross-disciplinary skills in the area of artificial intelligence. And, in the US, some primary and secondary schools integrate practical exercises on technological skills into their lessons, such as exercises on web development in numerous subjects including chemistry and even history.

Third, to schools and universities can also introduce cross-disciplinary teaching concepts. Finnish schools, for example, are committed to giving more prominence not just to technological skills, but also digital citizenship and classic skills. Finland, which is often seen as a role model for education measures thanks to its remarkable results in school performance studies, wants to introduce project-based learning instead of classic mathematics and history classes across the country by as early as 2020. The idea is to familiarize students with collaborative work and expand their problem-solving skills.

Fourth, future skills research hubs can be established. Frankfurt School Blockchain Center was founded in 2017 to ensure that research into future skills—a fundamental prerequisite in ensuring excellence in teaching—is promoted in addition to learning. The Center, established by the Frankfurt School of Finance & Management, is devised as a think tank and research center, and studies the implications of blockchain technology for businesses and administration. The Center also acts as a knowledge sharing platform for decision makers from start-ups and technology and industry experts.

Fifth, in Germany—and internationally—there are still too few systematic initiatives for future skills further training. Governments could introduce a measure under which employment contracts state which employees must develop their future skills every three years in-house or externally at a university for example. Alternatively, governments could introduce a future take-time—replacing existing training leave and replacing it with 80 days of annual leave to engage in targeted training in future skills.

Finally, governments can create financial incentives for the development of future skills for businesses and freelancers. For example, as an incentive to encourage private individuals to take up further training, Singapore’s Ministry of Education offers all citizens over the age of 25 an allowance of 500 Singapore dollars ($370) for subsidized courses in future skills such as web development. This financial incentive to enroll on certified courses is intended to help citizens continue with lifelong professional training. In total, 285,000 Singaporeans have taken advantage of these courses in the past two years. The Canadian government also offers companies financial incentives to drive forward further training. The Canada-Ontario Job Grant program offers businesses 10,000 Canadian dollars ($7,490), which they can invest in training for complex data analysis or agile working.

Implementing these proposals provides the drive needed to close the future skills gap permanently. According to initial estimates, the expected annual cost in Germany is around €5 billion, of which the introduction of future skills further training for all employees would assume the greatest share with €2.5 billion. The economic benefit of closing the future skills gap is huge—several billion euros according to one estimate.

It is incumbent on leaders to set the necessary impulses to ensure pupils, students and employees are and remain fit for the labor market of the future.

About the author(s)

Viktor Hediger and Jorg Schubert are senior partners in McKinsey’s Dubai office and Solveigh Hieronimus and Julia Klier are partners in the Munich office.

The authors wish to thank Tobias Enders, Julian Kirchherr, and Mathias Winde for their contributions to this article.