- The World Economic Forum predicts that automation will displace 85 million global jobs by 2025.
- The shift to remote work could be an even bigger driver of job displacement in the near term.
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This week, the World Economic Forum (WEF) released its Future of Jobs report, highlighting the extent to which the coronavirus will accelerate automation efforts and reshape the world economy.
For the report, the WEF fielded 291 unique responses from business executives at global companies with 100+ employees, collectively representing more than 7.7 million employees worldwide.
Here are our key takeaways from the report:
- By 2025, 85 million global jobs will disappear as a consequence of automation. Employers expect that “increasingly redundant roles” (i.e., those that are easily automated) which now make up 15.4% of the workforce will decline to represent only 6.4% by 2025.
- Automation will also help create new jobs—just not for the same workers. The WEF predicts that between now and 2025, 97 million new roles will emerge that are better suited for a more heavily automated economy. WEF predicts there will be increased demand for roles like data scientists, AI and machine learning specialists, and process automation specialists; it projects a decline in demand for jobs such as data entry clerks, construction laborers, and postal service clerks. The business executives surveyed suggest that 40% of workers will require reskilling training that lasts six months or less. However, we’re skeptical of such efforts based on their historical lack of success. If we are correct in this prediction, developed nations could face an unprecedented structural unemployment crisis.
In the near term, we believe the shift to remote work will be an even bigger driver of job displacement than automation. When asked how they planned to adapt their business in response to the pandemic, 83% of the employers surveyed by WEC said they plan to provide more opportunities to work remotely, relative to only 50% who said they plan to accelerate automation.
The shift to remote work could displace existing workers, as companies look for ways to reduce costs by hiring workers in regions where labor costs are lower. For instance, according to a July 2020 report from The Information, Uber CEO Dara Khosrowshahi planned to shift the company’s engineering teams to India to reduce costs amid the pandemic.
Uber laid off over 6,700 employees in May, and as recently as October it announced that it would begin filling engineer roles in India. So while many high-salary employees in developed nations report enjoying remote work due to the greater flexibility it affords them, it may go against their long-term interests, as the growing irrelevance of worker location enables corporations to engage in mass labor arbitrage.
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