Emerging Technologies and Workforce Evolution

December 26 2023 Hebatallah Mohamed.

Technology

The Impact of Emerging Technologies on Skilled and Unskilled Labor

There is a growing concern that AI and robotics will lead to the replacement of human labor. Technology is evolving rapidly, and the adoption of advanced technologies is creating markets with changing demands. These advanced technologies allow for information to travel quickly and spread widely. To maintain a competitive workforce, developing and improving human capital and skills is essential.
By 2025, machines will surpass human work hours globally, according to the World Economic Forum. Over 85% of firms surveyed identified the increased use of new and frontier technologies, as well as the expansion of digital access, as the developments most likely to drive organizational transformation.

Table of Contents

What are the current emerging technologies?

The term “frontier technologies” refers to a group of emerging technologies that leverage digitalization and connectivity, allowing them to synergize and amplify their effects.

Figure 1: The extent to which digitalization is expected to impact businesses

Source: constructed by the author using Statista data

The Internet of Things is expected to have the biggest impact on businesses. Companies are witnessing cost savings, enhanced efficiencies, increased production, mass customization, and, most crucially, new revenue and business models.
Furthermore, at the national level, artificial intelligence is estimated to boost annual global GDP by 7% and productivity by 1.5 percentage points over a ten-year period.

How have these technologies disrupted the labor market?

Improvements in the global economy would result from significant labor cost savings, new job creation, and higher productivity for non-displaced workers. However, the impact on the employed population could be significant. AI can replace 46% of administrative jobs and 44% of legal jobs. Over the next ten years, 25% of all current work tasks could be automated.
Companies have already started incorporating new technologies into their day-to-day work. For instance, finance companies have employed them to make credit assessments, manage risks, prevent fraud, facilitate trading, personalize banking services, and automate processes. Similarly, the manufacturing sector has leveraged emerging technologies for tasks such as predictive maintenance, quality control, and collaborative work between humans and robots.
Organizations estimate that machines perform 34% of all business-related tasks, while humans are responsible for the remaining 66%. Economists predict a net loss of 14 million jobs in the global labor market over the next five years if the trend persists. This is due to the creation of approximately 69 million jobs and the destruction of around 83 million jobs.

Figure 2: The distribution of the number of people employed in OECD countries by skill level in 2021

Source: constructed by the author using ILO statistics

In OECD countries, the majority of the employed population in 2021 were medium- and high-skilled workers, while low-skilled workers accounted for only about 10% of the total employed population. This indicates a significant disparity in the employment distribution based on skill level, with a greater demand for medium- and high-skilled workers.

Which skills are most in demand in the labor market?

Cognitive skills are rapidly gaining importance, indicating the growing relevance of problem-solving in the workplace. Based on business surveys, creative thinking is reported to be gaining importance at a slightly faster rate compared to analytical thinking. Additionally, technology literacy is identified as the third-fastest-growing fundamental skill. Finally, systems thinking, AI and big data, talent management, service orientation, and customer service complete the list of top growing skills. Between 2023 and 2027, companies will focus 10% of their training initiatives on analytical thinking and approximately 8% on fostering creative thinking.
As a result of these emerging technologies and newly demanded skills, developing countries’ governments need to equip their workforces with specialized expertise aligned with Industry 4. This necessitates the development of foundational knowledge and proficiencies in science, technology, engineering, and mathematics (STEM), as well as in design, management, and entrepreneurship.

Benchmarks of policies and programs targeted at upskilling workers.

Singapore:

The Tech Immersion and Placement Programme (TIPP) is a professional conversion programme designed to transition non-ICT workers into industry-ready ICT experts. Trainees will construct an excellent portfolio of ICT projects through the intensive IT training courses available in Singapore. They also have the opportunity to connect with prominent professionals in their respective fields, which will assist them in preparing for careers in the ICT industry, such as web developers, user experience designers, and data analysts.

United Kingdom:

The UK government is already funding 1,000 PhDs in artificial intelligence, as well as 1,000 scholarships for master’s degree conversion courses in AI and data science, in addition to supporting apprenticeships. The government has also established the Digital Skills Council, which collaborates closely with powerful private-sector partners to address the digital skills required for the workforce of the future. In addition, the Council will collaborate with industry partners to create reward and recognition programmes to promote employer-led training.

Australia:

The Australian government developed the Digital Skills Programme, which fosters creative practice with digital and emerging technologies through workshops and seminars. The government is collaborating with educational institutions, technologists, and professionals to offer learning opportunities for beneficiaries to thrive in a digital society.

Conclusion

To summarize, technology has had a significant impact on unemployment rates during the last few decades. Automation has reduced the need for human labor in several sectors, resulting in increased unemployment in some fields. On the other hand, technology has offered new job prospects in fields such as software and information technology.
While certain types of employment have been reduced as a result, the increased demand for more highly skilled occupations has resulted in additional opportunities for individuals with advanced skills and qualifications. Technology has also enabled firms to become more productive, which has resulted in greater job opportunities and a more efficient labor market.
Finally, the transition to frontier technologies and beyond will be an ongoing process. Governments and employers will need to adapt to emerging technologies by embracing change, fostering a culture of learning, and prioritizing continuous innovation.