Anewfutureofwork:Theracetodeploy AIandraiseskillsin Europeandbeyond Authors EricHazan AnuMadgavkarMichaelChuiSvenSmitDanaMaor GurneetSinghDandonaRolandHuyghues-Despointes May2024 AbouttheMcKinseyGlobalInstitute TheMcKinseyGlobalInstitutewasestablishedin1990.Ourmissionistoprovideafactbasetoaiddecisionmakingontheeconomicandbusinessissuesmostcriticaltotheworld’scompaniesandpolicyleaders.WebenefitfromthefullrangeofMcKinsey’sregional,sectoral, andfunctionalknowledge,skills,andexpertise,buteditorialdirectionanddecisionsaresolelytheresponsibilityofMGIdirectorsandpartners. Ourresearchisgroupedintofivemajorthemes: —Productivityandprosperity:Creatingandharnessingtheworld’sassetsmostproductively —Resourcesoftheworld:Building,powering,andfeedingtheworldsustainably —Humanpotential:Maximizingandachievingthepotentialofhumantalent —Globalconnections:Exploringhowflowsofgoods,services,people,capital,andideasshapeeconomies —Technologiesandmarketsofthefuture:Discussingthenextbigarenasofvalueandcompetition Weaimforindependentandfact-basedresearch.Noneofourworkiscommissionedorpaidforbyanybusiness,government,orotherinstitution;weshareourresultspubliclyfreeofcharge;andweareentirelyfundedbythepartnersofMcKinsey.Whileweengagemultipledistinguishedexternaladviserstocontributetoourwork,theanalysespresentedinourpublicationsareMGI’salone,andanyerrorsareourown. YoucanfindoutmoreaboutMGIandourresearchatwww.mckinsey.com/mgi. MGIDirectors SvenSmit(chair)ChrisBradleyKweilinEllingrudSylvainJohanssonOliviaWhite MGIPartners MichaelChuiMekalaKrishnanAnuMadgavkarJanMischkeJeongminSeongTilmanTacke Anewfutureofwork:TheracetodeployAIandraiseskillsinEuropeandbeyondii Contents Ataglance 3 Context:Laborshortagesandaslowdowninproductivitygrowth 4 Potentialforacceleratedworktransitionsahead10 Thevariedgeographyoflabormarketdisruptions22 Newskillsforanewera 26 Spotlight:Wholesaleandretailtrade 36 Spotlight:Financialservices 38 Spotlight:Manufacturing 40 Spotlight:Healthcare 42 Implicationsfortheworkforce44 Enhancingproductivityandhumancapitalinatimeoftechnologicalferment 52 Technicalappendix 60 Acknowledgments 65 Anewfutureofwork:TheracetodeployAIandraiseskillsinEuropeandbeyond1 Anewfutureofwork:TheracetodeployAIandraiseskillsinEuropeandbeyond2 Ataglance Amidtighteninglabormarketsandaslowdowninproductivitygrowth,EuropeandtheUnitedStatesfaceshiftsinlabordemand,spurredbyAIandautomation.OurupdatedmodelingofthefutureofworkfindsthatdemandforworkersinSTEM-related,healthcare,andotherhigh-skillprofessionswouldrisewhiledemandforoccupationssuchasofficeworkers,productionworkers,andcustomerservicerepresentativeswoulddecline.By2030,inamidpointadoptionscenario,upto30percentofcurrenthoursworkedcouldbeautomated,acceleratedbygenerativeAI.Effortstoachievenet-zeroemissions,anaging workforce,andgrowthine-commerceaswellasinfrastructureandtechnologyspendingandoveralleconomicgrowthcouldalsoshiftemploymentdemand. By2030,Europecouldrequireupto12millionoccupationaltransitions,doubletheprepandemicpace.IntheUnitedStates,requiredtransitionscouldreachalmost12million,inlinewiththeprepandemicnorm.BothregionsnavigatedevenhigherlevelsoflabormarketshiftsattheheightoftheCOVID-19period,suggestingthattheycanhandlethisscaleoffuturejobtransitions.ThepaceofoccupationalchangeisbroadlysimilaramongcountriesinEurope,althoughthespecificmixreflectstheireconomicvariations. Businesseswillneedamajorskillsupgrade.Demandfortechnologicalandsocialandemotionalskillscouldriseasdemandforphysicalandmanualandhighercognitiveskillsstabilizes.SurveyedexecutivesinEuropeandtheUnitedStatesexpressedaneednotjustforadvancedITanddataanalyticsbutalsoforcriticalthinking,creativity,andteachingandtraining—skillstheyreportascurrentlybeinginshortsupply.Companiesplantofocusonretrainingworkers,inadditiontohiringorsubcontracting,tomeetskillneeds. WorkerswithlowerwagesfacechallengesofredeploymentasdemandreweightstowardoccupationswithhigherwagesinbothEuropeandtheUnitedStates. Occupationswithlowerwagesarelikelytoseereductionsindemand,andworkerswillneedtoacquirenewskillstotransitiontobetter-payingwork.Ifthatdoesn’thappen,thereisariskofamorepolarizedlabormarket,withmorehigher-wagejobsthanworkersandtoomanyworkersforexistinglower-wagejobs. Choicesmadetodaycouldreviveproductivitygrowthwhilecreatingbettersocietaloutcomes.EmbracingthepathofacceleratedtechnologyadoptionwithproactiveworkerredeploymentcouldhelpEuropeachieveanannualproductivitygrowthrateofupto 3percentthrough2030.However,slowadoptionandslowredeploymentwouldlimitthatto 0.3percent,closertotoday’slevelofproductivitygrowthinWesternEurope.Slowworkerredeploymentwouldleavemillionsunabletoparticipateproductivelyinthefutureofwork. Anewfutureofwork:TheracetodeployAIandraiseskillsinEuropeandbeyond3 1 Context:Laborshortagesandaslowdowninproductivitygrowth ThisreportfocusesonlabormarketsinEuropeandtheUnitedStates,lookingatthe nextfewyearsto2030.Technologyandotherfactorswillspurchangesinthepatternoflabordemand,buttheseexpectedshiftsneedtobetakeninthecontextofdeep-seatedlabormarketchangesa