Wednesday, March 27, 2019

FUTURE SPECIAL ...Navigating a world of disruption PART III


Navigating a world of disruption PART III

Third, workplaces and work flows will change as more people work alongside machines. This will be challenging both to individual workers, who will need to be retrained, and to companies, which must become more adaptable.
Finally, automation will likely put pressure on average wages in advanced economies. Many middle-wage jobs in advanced economies are dominated by highly automatable activities in fields such as manufacturing and accounting, which are likely to decline. High-wage jobs, especially for high-skill medical and tech or other professionals, will grow significantly. However, many of the jobs expected to be created, such as teachers and nursing aides, typically have lower wage structures. The wage pressure is likely to be lower in emerging economies, where relatively low wages for many workers make the business case for adoption less compelling.
Increasingly unequal societies are polarizing, and the social contract is perceived to be broken
Despite growth in incomes and wealth across economies, variability and inequality in outcomes have also risen, and in some advanced economies, a portion of the population perceives the social contract as broken. This has helped fuel growing political and social tensions, which have been manifested in various ways, including the rise of antiestablishment parties promising to break the mold in some countries, Britain’s 2016 vote to leave the European Union, and recent protests by yellow-vest-wearing gilets jaunes in France. Our research found that in 2005 to 2014, real market incomes were flat or fell for between 65 and 70 percent of households in advanced economies. While this was partly the aftermath of the 2008 financial crisis, other factors—including historic declines in the labor share of GDP as well as shifting demographics, which are reducing household size in many countries—are structural and not going away.
Stretching the period to 2017, in the labor market, we see increasing real income per capita but little change in average income inequality. In the capital market, we see an increase in real wealth per adult and lower old-age poverty but greater wealth inequality, an increase in the number of heavily indebted households, and lower net pension-replacement rates.
Environmental stress is increasing, with implications for the most vulnerable countries, industries, and people
Increasing levels of economic activity at a global scale are having impact, both positive and negative, on the environment. Rising levels of carbon emissions from energy production and use are linked to increasing risks to endangered environments and higher levels of environmental stress. At the same time, breakthroughs in AI, batteries, and renewables are enabling a more carbon-efficient growth path.
Migration flows linked to the environment are on the rise. The number of refugees and asylum seekers rose by 2.5 million between 2005 and 2010, then jumped by 8.1 million between 2010 and 2015. In the future, climate change and other environmental stresses may drive more people from their homes.
Higher requirements for sustainability in industry are forcing companies to rethink how they design and deliver products, services, and projects to increase focus on waste reduction and abatement of carbon emissions. By 2030, for example, the share of electrified vehicles could reach as much as 50 percent of new-vehicle sales in some places, with adoption rates highest in developed, dense cities with strict emission regulations and consumer incentives.
 1.       Moving toward a more inclusive society
Rekindling inclusive growth so that more people will benefit from future economic growth and global flows will be an imperative. As thought starters for further discussion, we sketch out what a more sustainable society might look like.
Adopt a pro-growth mind-set and a business–public sector agenda that leads to rapid and sustained GDP per capita growth
All economies—both advanced and developing—can learn from the pro-growth agendas across both the public and private sectors put in place by outperforming emerging economies. These include steps to boost capital accumulation through industrial policies and savings, deeper connections to the global economy, creation of the impetus for competition, and building of greater competence, agility, and openness to regulatory experimentation in governments themselves.
Capture the net positive economic impact of AI and automation
The largest economic impacts of AI will likely be through labor-market effects, including labor substitution, augmentation, and contributions to labor productivity. AI will also create positive externalities, facilitating more efficient cross-border commerce and enabling expanded use of valuable cross-border data flows. Inclusive application of technology can raise GDP and bring real benefits in traditional areas, such as agriculture, healthcare, and transportation.
Address the labor-market implications of technology adoption, including through large-scale retraining and transitioning of workers
Workers will need to acquire new skills and be more adaptable as they work ever more closely with evolving machines. Some companies—such as Walmart, SAP, AT&T,  and emerging market companies including Tata, Infosys, and Tech Mahindra—are adopting broad reskilling initiatives, but a much larger societal push is needed to revamp education to make it relevant for the workplace of tomorrow, as well as to provide midcareer workers with new skills. A new emphasis is needed on creativity, critical and systems thinking, and adaptive learning.
Address societal concerns on AI and automation
Along with the widening economic gaps that might emerge as an unintended consequence of AI deployment, business leaders and governments will need to address other areas of concern, including misuse of AI and data privacy.
Pave the way for a rise in independent work
About 20 to 30 percent of the working-age population in the European Union and the United States is engaged in independent work. While only about 15 percent of independent work is conducted on digital platforms now, that proportion is growing rapidly as people use these platforms to learn, find work, showcase their talent, and build personal networks. Policy makers and business leaders can do more to facilitate new work opportunities and to accelerate changing orthodoxies of work.
Increase gender parity for a potential boost to growth for most economies
Our research on gender equality has found that a “full potential” scenario, in which women participate in the economy identically to men, would add as much as $28 trillion, or 26 percent, to annual global GDP in 2025 compared with a business-as-usual scenario. This impact is roughly equivalent to the size of the combined Chinese and US economies today. An alternative “best in region” scenario, in which all countries match the rate of improvement of the best-performing country in their region, would add as much as $12 trillion in annual GDP in 2025, equivalent in size to the current GDP of Germany, Japan, and the United Kingdom combined (Exhibit 6).
Exhibit 6 IN THE ORIGINAL ARTICLE

Remaining challenges include notably low labor participation in high quality jobs, weak senior representation in the pipeline, high financial and digital exclusion, entrenched social attitudes about women’s roles, and pervasive problems of violence against women and girls.
Integrate migrants effectively to realize a positive impact on global productivity and reduce economic and social gaps
Workers moving to higher-productivity settings contributed roughly $6.7 trillion, or 9.4 percent, to global GDP in 2015—some $3 trillion more than they would have produced in their origin countries. North America captured up to $2.5 trillion of this output, while up to $2.3 trillion went to Western Europe. Narrowing the wage gap between immigrant and native workers to 5 to 10 percent, from 20 to 30 percent, through better economic, social, and civic integration would translate into an additional $800 billion to $1 trillion in global annual output.
Each of the disruptive forces we highlighted would be challenging on its own; taken together, they can seem daunting. Yet the opportunities for the economy, business, and society that these global forces generate are equally compelling and are already creating new prosperity for those quick to harness them. Embracing the trends while mitigating their negative impact on those who cannot keep up and on our environment is the new imperative of our era.
By Jacques Bughin and Jonathan Woetzel
https://www.mckinsey.com/Featured-Insights/Innovation-and-Growth/Navigating-a-world-of-disruption?cid=other-eml-alt-mgi-mck&hlkid=0323073a393344368f946fa1bc81342d&hctky=1627601&hdpid=8c5b3b5c-022f-4c79-8da0-043e3db0e82a


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