Navigating the future of work: The impact of AI, automation, and societal trends

As we approach the next decade, the workforce in Europe and the United States is poised for significant transformation. The latest report from McKinsey and Company provides a comprehensive analysis of these changes, forecasting shifts in labour demand driven by artificial intelligence (AI), automation, and broader economic trends. Here’s a closer look at what the future of work might hold and the strategies that could help us navigate these changes.

Key drivers of change in the workforce

AI and automation: The report highlights that by 2030, up to 30 percent of current hours worked could be automated, with generative AI playing a pivotal role. This technological advancement is expected to reshape the demand for various occupations. While STEM-related fields, healthcare, and high-skill professions are likely to see a rise in demand, traditional roles such as office and production workers, and customer service representatives might experience a decline.

Environmental and economic shifts: Efforts to achieve net-zero emissions, coupled with an ageing workforce, are anticipated to further influence job dynamics. Additionally, the growth of e-commerce and increased spending on infrastructure and technology will likely shift employment demand, necessitating new skills and job transitions.

Regional variations and occupational transitions: Up to 12 million occupational transitions may be required in Europe by 2030, doubling the pre-pandemic pace. The United States could see a similar scale, with transitions reaching almost 12 million. These figures are indicative of the high levels of labour market flexibility witnessed during the COVID-19 period, suggesting that such a scale of transition is manageable.

Challenges and opportunities

Skills gap and training: With the demand for physical and manual skills stabilising, there is a growing need for technological, social, and emotional skills. Surveyed executives report a shortage of critical skills like advanced IT , data analytics , critical thinking , creativity , and teaching . Businesses are increasingly focusing on retraining existing employees rather than hiring new ones to fill these gaps.

Wage polarisation and worker redeployment: Lower-wage workers face significant challenges as demand shifts towards higher-wage occupations. Without effective redeployment and reskilling, there is a risk of a more polarised labour market, with a surplus of lower-wage workers and a shortage of qualified candidates for higher-paying jobs.

Strategic recommendations for a productive future

Proactive redeployment and reskilling: To mitigate potential disparities and maximise productivity, it is crucial for policymakers and business leaders to prioritise worker redeployment and reskilling. Embracing accelerated technology adoption and investing in education and training programmes can help workers transition to new roles that are in demand.

Enhancing productivity growth: Choices made today will have a lasting impact on productivity growth. If Europe and the United States can effectively manage these transitions, they have the potential to see productivity growth rates of up to 3 percent annually through 2030. Conversely, slow adoption of technology and inadequate worker redeployment could limit growth to as low as 0.3 percent, similar to current levels.