Future of Work and Its Implications on the Labour Market | Kingshuk Sarkar & D N Venkatesh

by Kingshuk Sarkar & D N Venkatesh *

Introduction

The future of work is a topic of great interest and speculation, as technological advancements and societal changes continue to shape the way we work. The basic idea of the future of work revolves around the notion that work and employment are undergoing significant transformations due to various factors, including technological advancements, societal changes, and economic shifts. The concept explores how these factors are reshaping the nature of work, the workforce, and the workplace.

The basic idea of the future of work can be summarized as follows:

1. Technological Disruption: Rapid advancements in automation, artificial intelligence, robotics, and other technologies are transforming the way work is done. Routine and repetitive tasks can be automated, freeing up humans to focus on more complex and creative endeavors. This disrupts traditional job roles and necessitates the acquisition of new skills and competencies.

2. Gig Economy and Flexible Work Arrangements: The rise of the gig economy, characterized by short-term contracts, freelance work, and platform-based jobs, is redefining traditional employment structures. Workers have the flexibility to choose their projects, work schedules, and work locations, often enabled by digital platforms. This shift towards more flexible work arrangements challenges the traditional 9-to-5 job model.

3. Skill Demands and Lifelong Learning: As technological advancements reshape industries, the demand for skills is changing. The future of work emphasizes the need for continuous upskilling and reskilling to remain employable. Lifelong learning becomes crucial as individuals adapt to new technologies, job requirements, and industry trends throughout their careers.

4. Human-Machine Collaboration: The future of work recognizes the importance of human skills that complement and augment technology. Rather than being replaced by machines, humans are expected to collaborate with them. This involves leveraging human creativity, critical thinking, emotional intelligence, and complex problem-solving abilities alongside the capabilities of machines and AI.

5. Workforce Diversity and Inclusion: The future of work emphasizes the value of diversity and inclusion in driving innovation, creativity, and productivity. Organizations are encouraged to create inclusive work environments that embrace diversity of perspectives, backgrounds, and experiences. This fosters a culture of equality and fairness, promoting better outcomes for both individuals and businesses.

6. Ethical Considerations: As work becomes increasingly intertwined with technology, ethical concerns arise. Issues such as data privacy, algorithmic bias, job displacement, and the impact on worker well-being need to be addressed to ensure a fair and sustainable future of work. Ethical frameworks and regulations are necessary to guide the development and implementation of technology in the workplace.

7. Flexibility and Work-Life Balance: The future of work is expected to prioritize flexibility and work-life balance. Remote work, flexible schedules, and a focus on employee well-being will be essential for attracting and retaining talent. Companies that prioritize employee satisfaction and healthy work-life integration are likely to thrive.

Overall, the basic idea of the future of work recognizes that work is evolving, and individuals, organizations, and societies need to adapt to these changes. It calls for proactive measures to navigate the challenges and leverage the opportunities presented by technological advancements and changing work dynamics.

Predicting the Future Trends

It’s important to note that predicting the future is inherently uncertain, and the actual course of the future of work may deviate from these expectations. However, these trends provide a general framework to understand the potential directions work might take in the coming years. Some of the probable changes are as follows:

1. Adaptation to Technological Advances: The future of work helps us understand and prepare for the impact of technological advancements on the job market. By anticipating the changes brought about by automation, artificial intelligence, and other emerging technologies, individuals, organizations, and policymakers can proactively adapt and make informed decisions to stay relevant and competitive.

2. Job Market Transformation: The future of work highlights the shifts in the job market and the skills required to thrive in the evolving work landscape. It helps individuals identify emerging job opportunities, understand the changing demand for skills, and make informed career choices. By being aware of these changes, individuals can proactively develop the necessary skills and competencies to succeed in the job market.

3. Economic Implications: The future of work has significant economic implications. The changing nature of work can impact employment rates, income distribution, and overall economic growth. Understanding these implications helps policymakers and economists develop strategies to address potential challenges and leverage opportunities that arise from these transformations.

4. Workforce Planning and Development: The concept of the future of work is crucial for organizations to plan their workforce needs effectively. By understanding the evolving skill requirements and technological disruptions, organizations can invest in upskilling and reskilling initiatives, adapt their talent acquisition strategies, and design workplace policies that attract and retain top talent.

5. Societal and Policy Considerations: The future of work has broader societal and policy implications. It prompts discussions and debates on issues such as income inequality, job security, worker rights, and social safety nets. By engaging in these conversations, policymakers can shape regulations, policies, and social support systems that address the challenges and ensure a just and inclusive future of work.

6. Well-being and Work-Life Integration: Understanding the future of work allows individuals and organizations to prioritize employee well-being and work-life integration. By recognizing the changing needs and preferences of the workforce, employers can design flexible work arrangements, promote work-life balance, and create environments that foster employee satisfaction and productivity.

In summary, the concept of the future of work is significant as it helps individuals, organizations, policymakers, and society at large navigate and prepare for the transformative changes occurring in the world of work. It enables us to anticipate, adapt, and leverage opportunities in a rapidly evolving work landscape.

The trends visible in Future of Work

The recent Statista Trend Compass found that 79% of executives expected contingent and freelance workers to substantially replace full-time employees in the coming years [1].

There has been a 78% increase in job posts mentioning ‘workplace flexibility’ since 2016. 37% of employees would switch to a job that allows them to work off-site at least part of the time. In 2019, globally 75% believed flexible working represented the new norm. This figure was as high 80% in Japan and as low as 68% in Germany.

In the gig economy, 79% of executives expect that contingent and freelance workers will substantially replace full-time employees in the coming years. Again, greater flexibility is often cited as an incentive to work as a freelancer. 92% of freelancers said the freelance status is either extremely (55%) or somewhat (37%) important to them. Similar important trends found in other studies and surveys are summarized below:

Remote work and flexible work arrangements:

According to a survey conducted by Gartner in 2020, 82% of company leaders plan to permit remote working at least some of the time after the pandemic. A study by the International Workplace Group (IWG) found that 85% of businesses confirmed that productivity had increased in their organization due to greater flexibility.

Automation and artificial intelligence (AI):

The World Economic Forum estimates that by 2025, automation and AI will displace approximately 85 million jobs but create around 97 million new jobs globally. A survey by Deloitte found that 53% of organizations have already started the process of integrating automation and AI into their workforce.

The gig economy and freelance work:

According to a report by Upwork and Freelancers Union, 59 million Americans freelanced in 2020, accounting for 36% of the total workforce. The European Commission reported that around 9% of EU citizens were engaged in some form of gig work in 2020.

Upskilling and lifelong learning:

A survey by LinkedIn found that 94% of employees would stay longer at a company that invested in their career development. The World Economic Forum predicts that by 2025, 50% of all employees will require reskilling or upskilling.

Remote collaboration tools and virtual teams:

Zoom, a popular video conferencing platform, reported a significant increase in its user base, with daily meeting participants reaching a peak of over 300 million in 2020. Microsoft Teams also experienced rapid growth, reaching 75 million daily active users in 2020.

Diversity, equity, and inclusion (DEI):

McKinsey’s "Diversity Wins" report found that companies in the top quartile for ethnic and cultural diversity outperformed those in the bottom quartile by 36% in profitability. According to LinkedIn’s 2021 Workplace Learning Report, 49% of talent developers said their organizations were investing more in DEI training and development.

Well-being and work-life integration:

The American Institute of Stress reported that 83% of US workers suffer from work-related stress. According to a survey by the Mental Health Foundation, 60% of employees experienced a negative impact on their mental health due to work-related stress during the COVID-19 pandemic.

World Economic Forum administered The Future of Jobs Report 2023 explores how jobs and skills will evolve over the next five years. This fourth edition of the series continues the analysis of employer expectations to provide new insights on how socio-economic and technology trends will shape the workplace of the future [2].

The Future of Jobs Survey brings together the perspective of 803 companies – collectively employing more than 11.3 million workers – across 27 industry clusters and 45 economies from all world regions. The Survey covers questions about macrotrends and technology trends, their impact on jobs, their impact on skills, and the workforce transformation strategies businesses plan to use, across the 2023-2027 timeframe.

Economic, health and geopolitical trends have created divergent outcomes for labour markets globally in 2023. While tight labour markets are prevalent in high-income countries, low- and lower-middle-income countries continue to see higher unemployment than before the COVID-19 pandemic. On an individual level, labour-market outcomes are also diverging, as workers with only basic education and women face lower employment levels. At the same time, real wages are declining as a result of an ongoing cost-of-living crisis, and changing worker expectations and concerns about the quality of work are becoming more prominent issues globally.

Technology adoption will remain a key driver of business transformation in the next five years. Over 85% of organizations surveyed identify increased adoption of new and frontier technologies and broadening digital access as the trends most likely to drive transformation in their organization. Broader application of Environmental, Social and Governance (ESG) standards within their organizations will also have a significant impact. The next most-impactful trends are macroeconomic: the rising cost of living and slow economic growth. The impact of investments to drive the green transition was judged to be the sixth-most impactful macro trend, followed by supply shortages and consumer expectations around social and environmental issues.

The largest job creation and destruction effects come from environmental, technology and economic trends. Among the macrotrends listed, businesses predict the strongest net job-creation effect to be driven by investments that facilitate the green transition of businesses, the broader application of ESG standards and supply chains becoming more localized, albeit with job growth offset by partial job displacement in each case. Climate change adaptation and the demographic dividend in developing and emerging economies also rate high as net job creators. Technological advancement through increased adoption of new and frontier technologies and increased digital access are expected to drive job growth in more than half of surveyed companies, offset by expected job displacement in one-fifth of companies.

Within technology adoption, big data, cloud computing and AI feature highly on likelihood of adoption. More than 75% of companies are looking to adopt these technologies in the next five years. The data also shows the impact of the digitalization of commerce and trade. Digital platforms and apps are the technologies most likely to be adopted by the organizations surveyed, with 86% of companies expecting to incorporate them into their operations in the next five years. E-commerce and digital trade are expected to be adopted by 75% of businesses. The second-ranked technology encompasses education and workforce technologies, with 81% of companies looking to adopt these technologies by 2027. The adoption of robots, power storage technology and distributed ledger technologies rank lower on the list.

The impact of most technologies on jobs is expected to be a net positive over the next five years. Big data analytics, climate change and environmental management technologies, and encryption and cybersecurity are expected to be the biggest drivers of job growth. Agriculture technologies, digital platforms and apps, e-commerce and digital trade, and AI are all expected to result in significant labour-market disruption, with substantial proportions of companies forecasting job displacement in their organizations, offset by job growth elsewhere to result in a net positive. All but two technologies are expected to be net job creators in the next five years: humanoid robots and non-humanoid robots.

Employers anticipate a structural labour market churn of 23% of jobs in the next five years. This can be interpreted as an aggregate measure of disruption, constituting a mixture of emerging jobs added and declining jobs eliminated. Respondents to this year’s Future of Jobs Survey expect a higher-than-average churn in the Supply Chain and Transportation and Media, Entertainment and Sports industries, and lower-than-average churn in Manufacturing as well as Retail and Wholesale of Consumer Goods. Of the 673 million jobs reflected in the dataset in this report, respondents expect structural job growth of 69 million jobs and a decline of 83 million jobs. This corresponds to a net decrease of 14 million jobs or 2% of current employment.

The human-machine frontier has shifted, with businesses introducing automation into their operations at a slower pace than previously anticipated. Organizations today estimate that 34% of all business-related tasks are performed by machines, with the remaining 66% performed by humans. This represents a negligible 1% increase in the level of automation that was estimated by respondents to the 2020 edition of the Future of Jobs Survey. This pace of automation contradicts expectations from 2020 survey respondents that almost half (47%) of business tasks would be automated in the following five years. Today, respondents have revised down their expectations for future automation to predict that 42% of business tasks will be automated by 2027. Task automation in 2027 is expected to vary from 35% of reasoning and decision-making to 65% of information and data processing.

Analytical thinking and creative thinking remain the most important skills for workers in 2023. Analytical thinking is considered a core skill by more companies than any other skill and constitutes, on average, 9% of the core skills reported by companies. Creative thinking, another cognitive skill, ranks second, ahead of three self-efficacy skills – resilience, flexibility and agility; motivation and self-awareness; and curiosity and lifelong learning – in recognition of the importance of workers ability to adapt to disrupted workplaces. Dependability and attention to detail, ranks seventh, behind technological literacy. The core skills top 10 is completed by two attitudes relating to working with others – empathy and active listening and leadership and social influence – as well as quality control.

Employers estimate that 44% of workers’ skills will be disrupted in the next five years. Cognitive skills are reported to be growing in importance most quickly, reflecting the increasing importance of complex problem-solving in the workplace. Surveyed businesses report creative thinking to be growing in importance slightly more rapidly than analytical thinking. Technology literacy is the third-fastest growing core skill. Self-efficacy skills rank above working with others, in the rate of increase in importance of skills reported by businesses. The socio-emotional attitudes which businesses consider to be growing in importance most quickly are curiosity and lifelong learning; resilience, flexibility and agility; and motivation and self-awareness. Systems thinking, AI and big data, talent management, and service orientation and customer service complete the top 10 growing skills. While respondents judged no skills to be in net decline, sizable minorities of companies judge reading, writing and mathematics; global citizenship; sensory-processing abilities; and manual dexterity, endurance and precision to be of declining importance for their workers.

Surveyed companies report that investing in learning and on-the-job training and automating processes are the most common workforce strategies which will be adopted to deliver their organizations’ business goals. Four in five respondents expect to implement these strategies in the next five years. Workforce development is most commonly considered to be the responsibility of workers and managers, with 27% of training expected to be furnished by on-the-job training and coaching, ahead of 23% by internal training departments and 16% by employer-sponsored apprenticeships. To close skills gaps, respondents expect to reject external training solutions in favour of company-led initiatives.

A majority of companies will prioritize women (79%), youth under 25 (68%) and those with disabilities (51%) as part of their DEI programmes. A minority will prioritize those from a disadvantaged religious, ethnic or racial background (39%), workers over age 55 (36%), those who identify as LGBTQI+ (35%) and those from a low-income background (33%).

How to adapt to the new situation

To adapt to the future of work, it’s important to embrace change, develop new skills, and stay ahead of emerging trends. Here are some key steps to consider:

Continuous Learning: The pace of technological advancements and industry changes requires individuals to engage in lifelong learning. Stay updated on industry trends, new technologies, and emerging skills through online courses, webinars, workshops, and other educational resources.

Develop Digital Skills: Digital literacy is becoming increasingly important in the workplace. Acquire skills related to data analysis, digital marketing, coding, artificial intelligence, and automation. Familiarize yourself with relevant software and tools to enhance your productivity and efficiency.
Cultivate Adaptability: Embrace a growth mindset and be open to change. The ability to adapt to new technologies, workflows, and job roles will be crucial. Develop flexibility, resilience, and a willingness to learn from failure.

Enhance Collaboration and Communication: As remote work and virtual teams become more prevalent, effective collaboration and communication skills are essential. Familiarize yourself with digital collaboration tools and practice clear and concise communication across various mediums.
Embrace Remote Work and Flexibility: Remote work and flexible work arrangements are likely to continue growing. Develop the necessary skills for remote collaboration, time management, and self-motivation. Adapt your work style to maintain productivity and work-life balance in a remote or flexible environment.

Emphasize Creativity and Problem-Solving: Automation and AI may replace certain repetitive tasks, but creativity, critical thinking, and problem-solving skills will remain highly valued. Cultivate these skills to differentiate yourself and find innovative solutions to complex problems.

Foster a Growth Network: Build and maintain a network of professionals who share similar interests or work in related fields. Engage in industry-specific communities, attend conferences, and participate in online forums to exchange knowledge, gain insights, and explore collaborative opportunities.
Stay Agile and Entrepreneurial: Embrace an entrepreneurial mindset by being proactive, seeking new opportunities, and taking calculated risks. Emphasize agility, adaptability, and a willingness to learn new skills or pivot career paths when necessary.

Prioritize Well-being: The future of work brings both opportunities and challenges. Prioritize your physical and mental well-being to maintain productivity and a healthy work-life balance. Set boundaries, practice self-care, and find strategies that work best for you.

The future of work is constantly evolving, and it’s important to stay informed, flexible, and adaptable. Continuously assess and update your skills to align with the changing demands of the workforce.

The opinions expressed above are that of the authors. Usual Disclaimer applies.

* (Authors: Prof Kingshuk Sarkar is a faculty at the Goa Institute of Management; Prof D N Venkatesh is Dean-academics at the Goa Institute of Management)