The Future of Jobs in the Era of AI March 2021 By Rainer Strack, Miguel Carrasco, Philipp Kolo, Nicholas Nouri, Michael Priddis, and Richard GeorgeBoston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholdersempowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact. Our diverse, global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change. BCG delivers solutions through leading-edge management consulting, technology and design, and corporate and digital ventures. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, fueled by the goal of helping our clients thrive and enabling them to make the world a better place. Faethm AI is the worlds data source to understand the impact of automation on economies, industries, companies, jobs, tasks, skills and people. Faethms SaaS AI platform was launched in 2017 and has grown rapidly to now serve Governments and Companies in 21 industries and 26 countries from offices in Sydney, London and Austin. A sophisticated knowledge graph and multiple AIs underpin platform modules that deliver data and insights about automation, reskilling and retraining workers for new jobs, economic and investment scenario modelling and COVID resilience and remote working. In 2018 Faethm was one of the first companies globally to be invited to join the World Economic Forums Centre for the Fourth Industrial Revolution. Awards since include the Tech Rocketship award for AI from the UK Governments Department for International Trade, the Skills Bridge award from the Government of Luxembourg and Best New Tech Platform from the Australian Computer SocietyContents 01 Intr o duction 02 Three Components of Workforce Imbalances 05 A Closer Look at Three Markets 11 Growing Demand for Technological and Soft Skills 13 Sensitivity of Outcomes 17 Building an Adaptive Workforce 21 R ec ommendations f or Governments 23 R ec ommendations f or Companies 26 R ec ommendations f or Individuals 29 The Way Forward 31 Appendix A Methodology 33 Appendix B Seventeen Technologies Under Consid- eration1 THE FUTURE OF JOBS IN THE ERA OF AI The Future of Jobs in the Era of AI However, the real picture is more nuanced: though these technologies will eliminate some jobs, they will create many others. Governments, companies, and individuals all need to understand these shifts when they plan for the future. BCG recently collaborated with Faethm, a firm specializing in AI and analytics, to study the potential impact of various technologies on jobs in three countries: the US, Germany, and Australia. Using the underlying demographics in each country, we developed detailed scenarios that model the effects of new technologies and consider the impact of the pandemic on GDP growth. (See Appendix A.) One key finding is that the net number of jobs lost or gained is an artificially simple metric to gauge the impact of digitization. For example, eliminating 10 million jobs and creating 10 million new jobs would appear to have negligible impact. In fact, however, doing so would repre- sent a huge economic disruption for the countrynot to mention for the millions of people with their jobs at stake. Therefore, policymakers and countries that want to under- stand the implications of automation need to drill down and look at disaggregated effects. Understanding the fu- ture of jobs is a tall order, but the groundbreaking analysis we conducted helps governments, companies, and individ- uals take the critical first step to prepare for what is to come. The increasing adoption of automation, artificial intelligence (AI), and other technologies suggests that the role of humans in the econ- omy will shrink drastically, wiping out millions of jobs in the process. COVID-19 accelerated this effect in 2020 and will likely boost digitiza- tion, and perhaps establish it permanently, in some areasBOSTON CONSULTING GROUP X FAETHM 2 Three Components of Workforce Imbalances I n general, computers perform well in tasks that humans find difficult or time-consuming to do, but they tend to work less effectively in tasks that humans find easy to do. Although new technologies will eliminate some occupa- tions, in many areas they will improve the quality of work that humans do by allowing them to focus on more strate- gic, value-creating, and personally rewarding tasks. To understand the potential impact of new technologies on future workforces, we looked at three components of im- balances in the US, Germany, and Australia: Workforce Supply and Demand. We analyzed all elements that affect a nations full-time equivalent (FTE) workforce, including the number of college graduates and the rates of retirement, mortality, and migration. And we used standardized job taxonomies on a very granular level for both supply and demand. The taxono- mies were based on 22 common job family groups, and close to 100 job families, found in countries all around the world. The three countries we studied for our analy- sis, however, showed slight variations in the numbers of job families93 for the US, 86 for Germany, and 82 for Australiabecause of differences in their national taxon- omies. (See Exhibit 1.