McKinsey: Transition to New Occupations

Covid-19 has, for the first time, elevated the importance of the physical dimension of work. McKinsey finds that jobs in work arenas with higher levels of physical proximity are likely to see greater transformation after the pandemic, triggering knock-on effects in other work arenas as business models shift in response.

The short- and potential long-term disruptions to these arenas from Covid-19 vary. During the pandemic, the virus most severely disturbed arenas with the highest overall physical proximity scores were medical care, personal care, on-site customer service, and leisure and travel. In the longer term, work arenas with higher physical proximity scores are also likely to be more unsettled, although proximity is not the only explanation.

McKinsey finds that a markedly different mix of occupations may emerge after the pandemic across some economies. Compared to pre-Covid-19 estimates, McKinsey expects the largest negative impact of the pandemic to fall on workers in food service and customer sales and service roles, as well as less-skilled office support roles. Jobs in warehousing and transportation may increase as a result of the growth in e-commerce and the delivery economy, but those increases are unlikely to offset the disruption of many low-wage jobs.

Before the pandemic, net job losses were concentrated in middle-wage occupations. And these were in manufacturing and some office work, reflecting automation. Nearly all low-wage workers who lost jobs could move into other low-wage occupations—for instance, a data entry worker could move into retail or home healthcare. Because of the pandemic’s impact on low-wage jobs, McKinsey now estimate that almost all growth in labour demand will occur in high-wage jobs. Going forward, more than half of displaced low-wage workers may need to shift to occupations in higher wage brackets that require different skills to remain employed.

Given the expected concentration of job growth in high-wage occupations and declines in low-wage occupations, the scale and nature of workforce transitions required in the years ahead will be challenging, according to McKinsey research.

Policymakers could support businesses by expanding and enhancing the digital infrastructure. Both businesses and policymakers should collaborate to support workers migrating between occupations. Businesses can start with a granular analysis of what work can be done remotely by focusing on the tasks involved rather than whole jobs. They can also play a larger role in retraining workers, as Walmart, Amazon, and IBM have done. Others have facilitated occupational shifts by focusing on the skills they need, rather than on academic degrees.

In Malaysia, more needs to be done for transition to take shape. Output from universities and colleges must change to match future industry requirements. Engaging with industry experts and others to implement retraining programmes and providing adequate funding for industry to support initiatives are possible steps.  Are we nimble or still focused on irrelevant political issues?  

Reference:

The future of work after COVID-19, 18 February 2021, McKinsey