To Participate in the Coming Recovery Workers Will Need New Skills

Thoughts about technology that is inclusive, trusted, and creates a more sustainable world

These posts represent my personal views on the future of the digital economy powered by the cloud and artificial intelligence. Unless otherwise indicated, they do not represent the official views of Microsoft.

The UN’s International Labour Organization estimates that from April through June of this year the world economy will have lost the equivalent of 305 million full-time jobs due to the coronavirus pandemic, or 10.5% of total working hours. In the United States alone 20 million jobs were lost in the month of April. It’s hard to find equivalent numbers for Europe as a whole, but the situation there is somewhat different because most European countries have preferred to subsidize wages to keep workers employed rather than pumping hundreds of billions of dollars into unemployment benefits as in the US. Thus for example by the end of April Germany was subsidizing the jobs of 10 million workers. But in both the US and Europe the damage has been terrible, leading to the worst drop in employment since the 1930s.

What will it take for the masses of newly unemployed or underemployed workers to regain work in the post-pandemic economy? Obviously there can be little certainty and no simple recipe. But we know the economy that emerges after the pandemic will be very different from the one we knew only a few months ago. The new economy will incorporate many new ways of working and doing business. Many of the changes will involve a greater role for technology in the way work is done. And that means workers will need to acquire new skills.

In some cases workers will need additional skills to retain existing jobs whose content has been transformed by technology. McKinsey describes the example of a pharma company that switched 10,000 sales reps from face-to-face selling to online sales. To continue being successful in their jobs, these reps must master not only the technology of online client sessions but also the new social skills required to sell effectively online. The company now expects to keep 30% of these jobs fully online even after the pandemic.

In other cases workers will need to acquire skills for entirely new jobs to replace old jobs that won’t be coming back. Many unemployed workers may find that they already have certain baseline skills that can be augmented by industry-specific skills to land a job in a completely different field. For example, a former restaurant worker might combine customer service skills with short-term vocational training to become a medical technologist. To facilitate this kind of industry-hopping, the Federal Reserve is developing “similarity scores” to document the skills overlaps between different kinds of jobs.

Even before the pandemic there was already a growing mismatch between skills in the workforce and skills needed by the emerging digital economy. In 2017 McKinsey estimated that as many as 375 million workers—14% of the global workforce—would have to switch occupations or acquire new skills by 2030 because of automation and AI. I’ve previously argued in this blog that digital transformation has the potential to create more jobs than it displaces. But this won’t happen by itself—employers, educators, and governments have to help people step into new roles.

The changing demand for skills reflects a fundamental transformation in the logic of careers in modern society. In the old model, people demonstrated an aptitude for employment by acquiring academic or vocational qualifications once and for all at the start of their careers. Then they went out and got a job matching the qualification, and carried on with it throughout their working lives. The World Economic Forum (WEF) calls this model “learn, do, retire.” Before the present disruption we were already moving to a system where the skills needed to get and keep a good job evolve continuously through a lifelong learning process accompanied by new and flexible forms of accreditation. Now the pandemic is forcing us to speed up the transition.

Fortunately employers and governments now have powerful analytical methods to guide them through this disruption. The WEF earlier this year published a report entitled The Jobs of Tomorrow that uses unique data from LinkedIn to peer inside the most in-demand jobs of the new economy and analyze their skills content. LinkedIn data scientists looked at 20 countries representing 45% of global GDP and identified job roles that have seen the fastest growth over the past five years. They grouped these jobs into five broad categories:

• Sales, marketing, and content production
• People and culture (which includes areas like recruitment and human resources)
• Product development
• Cloud computing and engineering
• Data science and AI

The LinkedIn team then teased out the mix of underlying skills required for success in each job category, classifying the skills into five clusters:

• Tech disruptive skills: advanced skills like machine learning, data science, and software development
• Tech baseline skills: things like mastering Microsoft Office or basic web site design
• Industry specialized skills: knowledge in a specific discipline such as radiology or accounting
• Soft skills: negotiation, persuasion, leadership
• Business skills: selling, marketing, budgeting, project management

The result of this analysis is illustrated in the bar chart below. An immediate conclusion is that every one of these most in-demand job categories requires both tech skills and non-tech skills. The proportions vary, but we can see that the post-pandemic economy will have room for very diverse skill sets. Not everyone will need the hardcore skills of a machine learning expert, far from it. But everyone will need to know their way around a computer and nearly all will need a grasp of basic business methods such as respecting a project timeline or a budget.

Getting the right alignment of the skills in the workforce and employer demand will add trillions of dollars in extra growth to the world economy. The McKinsey report cited above found that:

“Fully meeting the labour market demand for emerging professions and skills to meet the needs of the new technological era could add $11.5 trillion in GDP growth over the next decade.”

Microsoft CEO Satya Nadella observed a few weeks ago that the world has just gone through two years of digital transformation in two months. The shift in the job and skills landscape won’t be as sudden as the switch to remote work and distance learning we have just gone through. But it might be more profound—perhaps something like 20 years of change compressed into the next two or three years. Employers and governments need to commit the resources that will allow the millions of workers displaced by coronavirus to navigate that change with confidence.