Automation may require as many as 375 million people to find new jobs by 2030

First up, conductors.
First up, conductors.
Image: Reuters/Remo Casilli
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Fears that automation and machine learning will cause massive job losses and make people obsolete are starting to wane (well, unless you ask Stephen Hawking). Instead, there’s a more optimistic prediction taking hold: that the new technology could actually lead to job gains. But the transition won’t be easy.

By 2030, up to 30% of the hours worked globally could be automated, according to a new report by the McKinsey Global Institute. Analysts in the consultancy’s research arm estimate that between 400 million and 800 million people could find themselves displaced by automation and in need of new jobs, depending on how quickly new technologies are adopted. Of this group, as many as 375 million people—about 14% of the global workforce—may need to completely switch occupational categories and learn a new set of skills to find work.

Of the countries McKinsey studied in depth, China would need to have the most workers—over 100 million of them—switch into a different type of job. But that’s a relatively small percentage of its workforce, and a smaller shift than the movement away from agriculture in the past few decades. In other advanced economies, the proportion of workers who will need to learn new and different job skills is much higher.

Notably, McKinsey argues that demand for work will increase as automation grows. Technology will drive productivity growth, which will in turn lead to rising incomes and consumption, especially in developing countries. Meanwhile, there will be more jobs in health care to meet the demands of aging societies and more investment in infrastructure and energy.

For these benefits to be realised, everyone needs to gain new skills, with governments and private companies taking on the unprecedented task of retraining millions of people in the middle of their careers. “Even if there is enough work to ensure full employment by 2030, major transitions lie ahead that could match or even exceed the scale of historical shifts out of agriculture and manufacturing,” the report says. 

There will be other challenges too. In advanced economies, there is a risk that automation will worsen the trend of income polarization, with demand for high-wage jobs increasing, and demand for medium-wage jobs falling. Also, displaced workers will need to find jobs quickly—preferably within a year—otherwise frictional unemployment (lots of people moving between jobs) could put downward pressure on wages.

Still, there is historical evidence to support the idea that more robots doesn’t automatically mean less work for humans. A study of the German labor market found that while the number of industrial robots quadrupled in the past 20 years, their effect on aggregate employment was “close to zero” once industry structures and changing demographics were taken into account.

Even as jobs will be lost, the majority of jobs will only be changed in some way, and more jobs will be created that don’t exist today. The possibility of 800 million people displaced by automation does not mean 800 million people without any work.