Future of Work Post Covid-19

Many companies and individuals are thinking about the future of work post Covid-19. How will jobs be affected? What different skills will be needed in the future? How can companies and individuals best prepare?

One outcome seems highly likely: there will be more disruptions and a greater need for reskilling than there was before Covid-19. In fact, in the U.S. alone, McKinsey Global Institute’s research suggests that 17 million workers may need to change occupations by 2030—not just changing employers but fully switching occupations, which typically takes longer, causes more disruption, and is more likely to require reskilling. That is 28% more workers changing occupations than had been forecast in pre-Covid-19 research.

The pandemic has accelerated three broad sets of trends that were visible before: Much greater reliance on remote work, including more virtual meetings and less travel; higher use of e-commerce and virtual transactions (including buy online–pick-up in store, restaurant delivery, online grocery, online education, and telemedicine); and greater adoption of automation. This included automation in warehouses that enabled companies to cope with higher volumes of e-commerce, or in manufacturing plants to ramp up production of items that saw demand spikes, such as food and beverage, consumer electronics, and masks and other personal protective equipment.

The changing nature of work

Remote work has seen particularly dramatic change. We believe work from home will likely continue at significantly higher rates than before Covid-19. In surveys, 72% of executives say that their organizations have started adopting permanent remote-working models. Similarly, 70% of employees say that being able to work from home for at least part of the week is a top criterion in selecting their next job.

McKinsey Global Institute’s Future of Work after Covid-19 report estimates that after even after vaccines are fully rolled out and workplaces return to the new normal, 22% of U.S. jobs could be done remotely for 3–5 days a week, while 17% of jobs could be done remotely 1–3 days a week—without loss of productivity. The remaining 61% of jobs could be done remotely only for 1 day a week or less.

These work-from-home estimates have implications for business travel, which may be up to 20% lower than before, as some meetings, conferences, and conventions are cancelled or done remotely. And that will have a downstream impact not just on airlines and hotels, but also on transportation, restaurants, and other businesses that benefit from business travel. Leisure travel, in contrast, may spike post-Covid-19 to much higher than pre-pandemic levels, as family and friends who have not seen each other in over a year get together again. Then we expect leisure travel to settle back into pre-pandemic levels.

Automation may also rise in indoor production and warehousing as companies strive to maintain social distance, replace sick workers, and adjust to surges in demand for manufactured goods. In outdoor production and maintenance, we see very little likely increase in automation given work like landscaping does not have the activities and work environment that lends itself well to automation. 39% of business leaders surveyed in the manufacturing sector said that in response to the crisis, they had leveraged digital solutions such as nerve centres or control towers to increase end-to-end supply-chain transparency.

All of this change will likely be greatest in occupations with high levels of physical proximity—one of the key effects of Covid-19. Frontline workers in occupations like retail service and sales or in accommodation and food service have been most affected, and will continue to see effects in the next normal as much of the newly implemented automation and digitization of interactions sticks. These occupations have seen some of the greatest drops in employment over the past year, and will likely take the longest to recover.

A skills-based road to recovery and equity

I’m concerned by the equity implications that these developments may have. The occupations that have been most affected by job loss due to Covid-19—retail service and sales, and accommodation and food service—also employ a disproportionate share of women and people of colour. This is one of the reasons that, while employment recovery may arrive in 2023 for most of the U.S. economy, it may take two additional years to recover to pre-Covid-19 job levels for women and people of colour. The effect of intersectionality on job recovery from Covid-19 is especially stark. For women of colour, employment recovery may take even longer—three or four years longer than the rest of the economy—and likewise for people of colour who have less than a college degree.

As we look ahead over the next 10 years beyond Covid-19, employment in some occupations will likely increase significantly—jobs like health aids and technicians, health professionals, STEM professionals, and transportation services. Employment in other job categories will shrink considerably—not only in customer service and sales and food services, as outlined above, but in fields such as office support (primarily administrative assistants). As companies look beyond the pandemic, they have an opportunity to reimagine work, their workforce, and their workplace by focusing on specific tasks and activities, not entire jobs. How can they apply automation to make work more engaging and less repetitive, and ensure that more of the time that workers spend is spent on higher value-add activities?

The skills that workers will need will also be quite different over the next ten years. For example, across occupations today, physical and manual labour and basic cognitive skills (basic data input and processing) take up roughly half of all time. We will likely need much less of that work in the future, as robotic process automation and related technologies could automate much of that work and do it faster and with fewer errors. On the other hand, we will need much more depth in social and emotional skills (interpersonal skills, leadership, etc.) and in technological skills (programming, , interacting with technology effectively, etc.). Those two skills areas together make up less than a third of the time spent across occupations today, but are projected to grow by about 20% over the next ten years. To help in shifting these skills over time, workers will also need to build their capacity to adapt and build an ability for lifelong learning given the increasing pace of change.

Reskilling and upskilling must be a collective priority

Given the scale and pace of occupational and skills change that is happening, what can governments, companies, and individuals do?

As many consumers embraced digital interactions much more broadly over the last year, companies without digital channels to reach customers quickly built them. In some cases, essential workers in manufacturing and utilities learned to use virtual reality headsets to guide maintenance and repairs from a distance. However, the challenge of retraining and redeploying workers into new occupations long-term is much longer-term than adapting to the crisis as it unfolded. It will require a successful reskilling and upskilling effort on a scale that we have never done.

The first step is to proactively define the future workplace that we want to return to—not let it be a reactive approach. This can help ensure that workplace culture and connections to other employees can continue to be strong. The second is to identify areas where reskilling will need to take place—at the national, regional, and local levels in terms of education, skill-building, and reskilling programs. Within companies, there is an urgent need to identify where there are opportunities are to reskill and upskill groups of employees for jobs that will be more needed in the future. For example, can some employees in Finance be retrained for analytics roles as some areas of reporting become automated? Some companies have been testing and scaling reskilling programs that can effectively build skills and help in new career pathing. Individuals can also invest in keeping their skills sharp and deepen their social and emotional skills and technological skills.

While a common way to describe this last year has been “unprecedented,” the amount of change to occupations, skills, and workers over the next ten years will be significant. The objective is to prepare for that change and minimize disruption and long-term unemployment for as many people as possible—particularly for more vulnerable groups, who will likely take even longer to recover to pre-Covid-19 levels of inequality in jobs (let alone to reduce the gender and racial gap in employment). To achieve that objective will require bold action and in many cases coordination across governments, companies, and individual workers.