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The world of work is changing faster than before, and mapping, as well as recognizing new work models, is key to harnessing and directing that change towards stronger labor markets. More of the fundamental pillars that this is based on are:
Bolstering social protections could aid the switch from informal to formal employment for many workers, and a United Nations report has suggested that there has been a rapid expansion of social assistance programs in developing countries in the last 15 years, including non-contributory pensions and employment guarantee schemes.
New work models and technology disruption call for innovative regulation aligned with the needs of workers
Globally, only 55% of migrants receive social protection in their country of residence but have no access if they leave that country, 23% have access and portability, and 22% lack any at all, according to the Swiss Agency for Development and Cooperation (in some cases unilateral social protection programmed issued by origin countries mitigate non-transferability).
Adequate safety nets can provide workers with (at least) short-term buffers against periods of unemployment and skills that have become obsolete. These crucial protections help ensure human dignity in the face of the large-scale economic and social disruption triggered by the Fourth Industrial Revolution.
However, according to the International Labor Organization, only 29% of the global population currently enjoys social security coverage that is adequate for weathering labor market disruption. More than 220 million people do not hold citizenship in the country where they live - a group equivalent in size to the fifth-largest nation in the world by population - denying them many labor protections enjoyed by their peers - according to a study published in Oxford Development Studies.
Transnational social protections could help mitigate the vulnerability of workers, and of entire healthcare systems in host countries.
Government-provided social safety nets, where they exist, can be outdated. Meanwhile employer-based insurance systems for health, unemployment, and retirement may not be well suited for an era when workers no longer remain with a single employer throughout much of their careers.
The development of new instruments and new incentives could lead to greater related innovation. Indicators of the success of these tools may include the ability to ensure minimum income security, and to guarantee human dignity.
And a key question for any policy-maker looking to reform existing approaches will be how to introduce efficiencies while re-structuring benefits systems.
It will be critical for countries to carefully review their existing safety nets, in order to prevent labor market changes from worsening inequality - and to better ensure the efficiency and utility of worker benefits. Current systems vary in terms of balancing the responsibility for workforce protection between governments and employers.
Digital Work Design
Organizations have needs for flexibility, speed, and scalability that call for new ways of organizing work.
Organizations now need to be ambidextrous, in the sense of providing structure, culture, and processes for older, established work and products, while at the same time they provide new and different work designs for the technology-product-market combinations of tomorrow. One related trend that has only been accelerated by the advent of the COVID-19 crisis is the importance of being able to work globally in virtual teams.
Finding new ways to organize work - both within firms and at their fringes - has become a central factor in economic success or failure. As the focal point of organizations shifts alongside the global economy from an emphasis on products to information, a shift is also occurring from linear to exponential organizations.
Greater openness, for example, means companies will have more permeable boundaries, allowing permanent employees to work together with “free permanent” employees handling project-based work on a temporary contract - in turn giving both companies and workers the benefits of “flexicurity” (flexibility and security).
In addition, democratization and de-hierarchization will increase participation in decision-making at multiple levels and will involve everything from choosing team members and leaders to direct ownership through equity stakes.
This calls for new ways to ensure entrepreneurship, and for the identification of ways colleagues can function even while having never met face to face. One key to organizing this new work paradigm will be setting the correct defaults - as they are the most effective and efficient way to influence behavior.
As more companies (such as Twitter and Microsoft) announce that employees can now work from home at least part of the week indefinitely, a new work reality will take hold that is more bottom-up than top-down, and shifting from concentrated, large structures to distributed smaller structures, and from hierarchical organization to team-and-work-group-based structures across departments and even whole entities.
In some parts of an organization, control may be the best default, whereas in others it may be trust. Some parts of a company may flourish through bureaucracy and perfection, whereas others produce the most value possible through iteration and experimentation. Digital work design will be influenced by some developments that will continue indefinitely.
New Work Models
Current legal standards in many countries for what constitutes an actual employee, rather than a contractual worker, are vague at best. Worker classification and related labor model regulation require updating, in order to formally recognize the needs of growing segments of the global workforce. It is crucial that more related data, research, and information be made available, and that relevant terminology and measurement standards are harmonized within and across countries.
Temporary, part-time, and independent work remain overlooked in research and policy-making, even as they replace permanent employment.
Workers must rely on their prioritization skills to maintain a work-life balance and on their ability to cope with demands for near-immediate availability and instant comparisons (in the form of ratings) with their gig worker competition - which is constantly expanding. Customers are meanwhile exerting their own power via ratings and related algorithm tweaks, which creates more risk for individual workers than for the companies hiring them on a contract basis.
Global labor statistics tend to overlook temporary, part-time, and independent contracting work, and focus solely on full-time and permanent employment. Yet, research suggests that a significant portion of net employment growth since 2005 has occurred in the independent and self-employed categories - meaning that what was once deemed “non-standard” work is becoming the new norm.
Managers are now more likely to oversee diverse, geographically-dispersed teams, to assess worker performance with new types of analytics, and to expand their searches for new recruits to non-traditional environments. The rise of “platform” economies (based on broad, far-reaching digital entities like Amazon or Uber) has created more flexible work opportunities and a “gig” economy. However, this flexibility is only rarely an advantage for workers, and mostly only a benefit for contracting entities.
Concerns related to the lack of governance and legal protections for contractual work have increased, not least because its prevalence is poorly captured in current statistics. Most related studies have relied on data shared by relatively few digital talent platforms, and few countries have completed comprehensive labor market analyses that include these new forms of work.
Jobs Creation and Entrepreneurship
As economies become increasingly automated and machine-driven, their general ability to create new jobs will likely become more limited.
The changing global economy can quickly create value but is slow to generate sustainable jobs, calling for new approaches.
In order to address these challenges, creative entrepreneurship will no doubt be necessary. However, global entrepreneurship surveys suggest that actual entrepreneurial intention, stability, and feasibility differ greatly between and even within countries. Social-, infrastructure-, human- and financial capital need to be directed at increasing overall entrepreneurial activity.
The past 15 years in particular have seen the rapid and successful rise of firms equipped with new, digital business models that have departed from the more traditional methods of former market leaders. For much older and established firms, this period has not just been a referendum on their success, but on their survival - and their ability to preserve jobs and offer the employment opportunities that they have traditionally provided.
Many of the new, digital, and platform-based firms have been able to win both significant market valuations and large (often dominant) market shares both quickly - and with relatively few employees, and scant job opportunities. For example, Kodak, the one-time market leader in analog photography, once employed close to 150,000 people - whereas Instagram, a leader in digital imagery and sharing, had roughly a dozen employees when it was sold to Facebook in 2012 for about $1 billion.
Recent decades have witnessed a significant change in the ranks of the most predominant companies. In some places, up to 90% of the firms considered the strongest and most successful as of the 1980s no longer enjoy that status.
The private and public sectors, including the scientific community, need to work together much more closely, in order to enable the fundamental research at universities to either be commercialized by existing firms, or by new firms created for that specific purpose. Meanwhile, efficient startup ecosystems need to embrace all stakeholders, create regional networks, and provide necessary support and infrastructure.
According to the US Bureau of Economic Analysis, returns to capital and to labor in the US have diverged in the past - and the current prognosis is that both wages and the numbers of jobs available in classic industrial sectors will continue to decline, as automation and machines increasingly take over (and low-paying jobs are at particular risk).
Inclusive Labor Markets
The Fourth Industrial Revolution and demographic shifts require short-term reskilling to meet labor market demands.
According to the OECD, closing the skills gap will require a solid understanding of the current skill base, proactive talent management strategies, and sustained dialogue among companies, governments, and education providers.
Given the pace of the Fourth Industrial Revolution compared to those of the previous three, there is an uncomfortably short interval available to build the training systems and labor market institutions necessary to develop new skillsets. A report published by Gartner predicted net job creation through the use of artificial intelligence by 2020, and two million net-new jobs as a result of the technology by 2025.
Gaining formal qualifications alone will not equate to successful re-skilling, however; lifelong learning opportunities such as modular short-cycle courses, experience on the job, and exposure to new projects are necessary to help more people gain the skills that match labor market demand (certifications do enable workers to validate their skills wherever they may apply them, it should be noted).
Enabling the three billion members of the global workforce to navigate this industrial revolution requires a greater variety of adult training and learning opportunities. Only about 11% of adults in the European Union aged between 25 and 64 were participating in education and training programs as of 2019, according to a European Association for the Education of Adults report.
However, related public spending has fallen steadily for years in most Organization for Economic Co-operation and Development countries, according to the McKinsey Global Institute. The AI & Machine Learning Imperative, a guide published by MIT SMR in 2020, predicts a growing gap between the sophisticated tools companies can produce with technology and the parts of these companies that can actually use the tools in production - due to a lack of skills.
Businesses must now recognize and invest in their “human capital” as an asset, rather than see it as a liability, according to a World Economic Forum report.
Global demographic shifts are impacting economic growth tremendously, and drawing distinctions between established, rapidly ageing economies and developing regions with large, burgeoning populations of young people. Strategies for bridging this emerging division include automation (used extensively, for example, in Japan) and encouraging immigration flows (as has been the case in Germany and Italy) in older countries, and working to ensure that school systems are well funded in younger countries (such as in the Middle East and sub-Saharan Africa).
The technological disruption of labor markets creates both challenges and opportunities for people.
According to the World Economic Forum’s 2020 Global Gender Gap Report, there is a necessity for action as women occupy just 21% of the ministerial positions in the world, and spend at least twice as much time on unpaid work as men. Meanwhile the integration of migrants and refugees into labor markets requires linking up a wider array of stakeholders, supporting entrepreneurship, and facilitating the identification, assessment, and validation of skills.
There is more to addressing inclusion than simply reforming education - research has shown that qualified women often exit the technology industry because they have concerns about their work environment, and a lack of ethnic diversity and ageism have been documented at some of the fastest-growing companies.
The influence of TV and the media in general appear to be of particular importance in this regard, as evidenced by a Brazilian study on the effect of telenovelas on decisions about family size and female participation in the labor market made by their audiences. The COVID-19 pandemic has increasingly made work virtual, which has had an impact on teamwork and interaction. In addition, technologies such as blockchain have created greater entrepreneurship opportunities, as they make traditional intermediaries less relevant.
The creation of labor markets that enable everyone to participate regardless of race, ethnicity, or background has been a long-time goal of many organizations. While some advances have been made with regard to the share of women in the workforce, and laws barring discrimination, a lack of inclusivity has persisted - not least in relation to women and young people from developing countries.
In the coming years, we can expect that increasing globalization will give even more people the opportunity to work virtually (and independently) from anywhere in the world. This means that more will theoretically be exposed to employment opportunities that were previously inaccessible. In order to truly boost the inclusivity of labor markets, however, this trend must be accompanied by initiatives to re-regulate employment and bolster social protection systems. Some of the most common measures used to combat bias include diversity training - and it has been shown that shifting social norms and affecting the collective mindset can be more effective than solely focusing on changing individual outlooks.
WORKFORCE & EMPLOYMENT
The world of work is changing fast - and mapping out healthy new work models is necessary to channel that change into the creation of stronger labor markets and sufficient safeguards. Job creation was already high on the global agenda before the advent of COVID-19 which resulted in economic devastation, as was policy-making that can ideally help both workers and their employers. The most successful approaches will take into account shifting demographics and changing job roles, and will leverage disruption as a means to design workplaces that genuinely serve everyone’s needs.
While companies are accommodating these new trends, an asteroid named COVID-19 collided with the real world and ushered in a fundamental change in the way we (and perhaps, our children) work. This disruption revamped the future of the workforce entirely.
A few of them are the amplified use of artificial intelligence, employee well-being, and the expansion of the workforce to include remote and hybrid workplace models.
In 2022, International Labor Organization projections suggest that there will be a working-hour deficit equivalent to 52million full-time jobs owing to crisis-induced labor market disruptions. Although this figure is a sizeable improvement in 2021, when hours worked adjusted for population growth stood below their level in the fourth quarter of 2019 by the equivalent of 125 million full-time jobs (assuming a 48-hour working week), it remains extremely high.
Workforce trends accrue with the working environment over time. With increased connectivity, robotics, and cognitive tools modify the nature of work. Besides this, new talent search and the collaborative economy are reshaping the workforce. Now is the moment to reinterpret where, and how work is done to open up the boundless energy and possibilities of human potential.
Transforming the way we work has been and will continue to be challenging for many leaders. But there is no going back. The shift to more flexible and hybrid working environments is here to stay. With the adequate policies in place to assist the transition to flexible work, its long-term implementation will boost productivity, foster a better work-life balance, and open hidden pools of talent, that will help address the talent scarcity issue.
The relationship between companies and their employees is undergoing a radical shift. We’ve all witnessed “The Great Re-Evaluation” this year: workers are rethinking what is important in their working lives, which in some countries (like the U.S.) is leading to people leaving their jobs in record numbers. For the first time in years, employees have the upper hand.
There are two key parts to a successful digital transformation. The first is the transformation of industries and companies and the effect it has on skills (for example, looking at production and manufacturing), as discussed above. The second is the impact digitization has on the culture of an organization (for example: digital and remote recruitment, onboarding, and leadership).
In 2022, the employment-to-population ratio is projected to stand at 55.9 percent – that is, 1.4 percentage points below its 2019 level. Through their latest publication World Employment and Social Outlook Trends 2022, there is more on what the future of work looks like.
In order to get a glimpse of the journey of transformation that the Workforce has taken to date, the pwc publication Future of Work Report 2022.
It is crucial to accompany the digital transition and shift to flexible working models to make it inclusive, fair, and profitable. It’s about involving the organization as a whole.
In 2022, the social must be married with the environmental rather than see them as two distinct pillars. It’s time to take a human-centric approach to climate change mitigation and adaptation and prioritize investments in people to ensure that the oncoming green transition is a just and inclusive one.
All industries are going to become “smart industries”, and digital transformations are affecting all companies equally. It’s one thing to talk about the digital transformation, but it’s an entirely different thing to implement these changes. It’s not only a case of building the right tools, technology and infrastructures to facilitate this transformation, but also having the right people and skills to manage and work with them. Chief people officers and talent partners will play a crucial role in future-proofing organizations, defining the skills needed in the future. Studies show that 68% of HR leaders currently don’t have a strategy for the future of work. But workers want it. Our research found that 66% of workers believe they need to gain new skills to stay employable in the years ahead, and only 37% of non-managers feel their company is investing in their skills and career development.
The Green transition is here, and economies around the world will be impacted by the shift to a more sustainable future. In 2021, the conversation revolved around green skills, but failed to comprehensively address how to make that transition happen in a just way for people. The majority of alliances formed and the majority of commitments made neglected to address the “how”, beyond financing.
The first step for employers should be putting together a cohesive talent strategy. That starts with assessing the skills your organization will need in the next two to five years. For example, the Adecco Group is supporting key players in the automotive industry to upskill and reskill workers from mechanic specialists to software engineers to better prepare organizations for the electric revolution.