On the Future of Work: Creating more winners and fewer losers

For the past thirty years, we have celebrated the huge benefits of globalisation, with too little attention focused on its drawbacks. At the outset we should acknowledge that the benefits of globalisation have greatly exceeded the costs both globally as well as individual countries.

While the free flow of goods, services, information, and people delivered dramatically higher standards of living for hundreds of millions of people globally – globalisation has also produced large numbers of people who have been displaced and have been left behind by the speed of change. Their displacement and fear are real. We know that the negative impact has been concentrated on identifiable groups and individuals, whereas the positive impacts are on the whole more distributed. That is why it should be possible to improve the social safety nets for both globalisation and the adoption of new technology. We can and must do better to equip our citizens for change.

We are operating in a period of rapid change with extraordinary advances in technology – including automation, additive manufacturing, machine learning, and other forms of artificial intelligence – all of which will fundamentally reshape the nature of work in the coming decades but which also will produce new groups of winners and losers.

Our recent white paper on the future of work looks at the challenges facing Europe in the short-term and beyond. Specifically, it addresses how business and governments must collaborate to equip the workforce with the right skills and create support systems in society for those workers who are at risk of being impacted by automation.

Collaborating to Create More Winners

According to a study by independent think tank, the Bruegel Institute, 54 percent of Europe’s jobs are exposed to at least partial automation or redundancy in the next two decades. This does not mean that half of Europe’s jobs will disappear. It means that half of the types of jobs that Europeans do are exposed at some level to automation, and that exposure varies significantly among professions.

The most critical task for industry and governments is to ensure that European workers – not only young people, but those further along in their careers – are able to develop, hone and upgrade the right skills to thrive in a world where work is increasingly exposed to automation. This means creating a better and broader education of technical skills such as STEM (science, technology, engineering and math), digital literacy and information and communications technology fluency.

While these technical skills are necessary for European workers to harness the productivity-enhancing power of new technology, softer skills such as management and interpersonal skills are also essential.

These skills are less vulnerable to automation, and they command higher wage premiums across the labour spectrum. Working with industry’s insights, country and region-level education systems must better incorporate these “foundational” or “transverse” skills into their curricula while also expanding vocational training programs that directly align workers with employers.

For example, at GE Europe where we have 100,000 employees in the region, we have signed the European Alliance for Apprenticeships. We are committed to creating a minimum of 3,000 places for apprentices and interns and filling 30 percent of entry level positions with vocational training graduates. But it is also a question of more efficiently connecting people with jobs.

At a structural level, this means better-standardising skills credentials across the EU and creating greater mobility. Here, industry must work closely with Brussels and with national governments to develop the right criteria and mechanisms so that skills credentials can be easily transferred.

But the industry also needs to support those who are effected and potentially displaced by automation and recognising that we will have certain obligations and responsibilities when it comes to offsetting any negative impact of technological advancement.

If we fail to do this, we run the risk of social instability that undermines economic growth, creates disaffection by citizens and, likely, regulatory backlashes that stifle precisely the innovation that we believe will deliver long-term, broadly-distributed benefits to our societies.

This is a question of how to reform and adapt social safety nets to accommodate a world in which, for a sizable population, work may become increasingly precarious and poorly compensated. More broadly, it involves rethinking the very nature of the social contract between citizens and states.

Growth Through Innovation & Digital Transformation

Europe can and must harness the possibilities of innovation and digital transformation to reinvigorate sustainable growth in Europe. Broad-based growth is the most basic prerequisite for tackling the new challenges posed by technology.

Europe’s productivity growth has lagged in recent years – particularly by comparison with the US. Some European economies were slow to adapt to and embrace the last major wave of technological advancements in the 1990s – the consumer internet. This time around must be different, both in how Europe prepares to create winners in a new economy, and how it prepares to minimise the impact on the losers. The industrial internet could be the driver for that growth.

This article originally appeared on the U.S. edition of GE Reports.

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