Training must be just the job

Better skills-building infrastructure is needed to meet the requirements of the 'postindustrial revolution'

The global economy is changing fast, and in unprecedented ways. Specifically, in a little more than a decade, advances in digitization, automation and artificial intelligence are expected to displace 400 million to 800 million jobs worldwide - 100 million of them in China alone. Repetitive, lower-skilled jobs are particularly vulnerable to automation - and this describes a substantial share of Chinese manufacturing, which accounts for 20 percent of its workforce. Based on today's technologies, the McKinsey Global Institute estimates that more than 40 percent of all work activities, and up to 31 percent of current work hours in China, could be automated by 2030 (although the more likely scenario is about half that).

This "fourth industrial revolution" or "postindustrial revolution" is different chiefly because of its speed. In previous transitions, the changes took place over decades, allowing older workers to retire and introducing new entrants gradually to new industries. In this one, midcareer workers will have to adjust, too.

China is no stranger to adapting to economic change, as its recent history demonstrates. It has also proved willing, even eager, to adopt new technologies. There are 800 million internet users in China, and it is both the largest producer and the largest user of industrial robots. Industries ranging from chemicals to real estate to cars to healthcare are already making good use of digital products and services, and almost half of consumer goods are bought electronically.

But even for China, which has made rapid economic progress look almost routine, coping with the postindustrial revolution is going to be a challenge. Most countries in the world are not prepared for this kind of change, including China. A Chinese government report on higher education, for example, found that "many employers are generally unsatisfied with their new hires' practical skills and professional ethics". Many students also feel unprepared. The OECD asked 150,000 recent Chinese college graduates who had been working for six months if their education prepared them for work. On 34 of 35 skills mentioned, there was a gap between how important the students considered a skill and whether they had acquired it at university. The pattern held true for vocational graduates. This does not even begin to include the country's "floating population" of more than 250 million people - many of whom work in informal and low-skilled jobs.

China will need to build better skills-building infrastructure, and the efforts need to begin now. The following are a few of the actions the country will need to take to build a strong talent foundation.

First, it will need to collect information on what skills will be most in demand. It is critical to work with both traditional and new sources of information, such as online job markets, to develop real-time data on automation, skills, wages, job openings and mobility, creating as accurate and nuanced a picture as possible.

Second, it will need to upgrade vocational training. The most recent China Talent Development Report noted that the country lacks "tens of millions" of senior technicians - precisely the kind of people needed to improve manufacturing productivity. While China has invested in vocational training, more will be needed to fill the looming skills gap. Part of this will require persuading students, and their aspiring parents, that college is not the only path to prosperity.

Third, use nontraditional learning methods to reach nontraditional learners. A hallmark of the fourth industrial revolution is that established workers will need to reskill on a large scale, or be left behind; the same is true for those who have left education without suitable qualifications. The potential of online education to help address this challenge is clear: it enables people to build skills on their own time and at their own pace. It also fosters training for the precise skills that employers want. Two formats are beginning to gain traction. One is "nano-degrees" that guarantee that those who complete a 6-to 12-month course of study have mastered the work; popular courses include digital marketing, robotics, and web development. One of early movers in this space, Udacity, works with companies - including China's Didi - to develop course content. The cost is typically low, and graduates get an industry-recognized credential; employers get new hires who can prove that they know what they are doing.

Fourth, build a "skills ecosystem". Not all that long ago, learning a skill was a once-in-a-lifetime endeavor; people got their college or vocational credential, and were set for the next few decades. Maybe they had to adapt after a layoff, or refine their skill as new techniques emerged, but that was about it. In the future, people who want to be employable for a lifetime will have to keep learning. It is in this regard that China is faltering (and it is far from alone).

Ideally, a network of workers, educators, and businesses working together could ensure that there are ways for individuals to learn what they need to find and keep good jobs. The reality is that the system is more like a puzzle, with pieces missing. For example, in a recent survey of Chinese education leaders, only half were actively seeking ways to upgrade their curricula to keep up with changing technologies - even though the great majority of those who did said they saw a positive outcome.

The fourth industrial revolution does not necessarily mean a looming jobs crisis. The lesson of economic history is that, in the long run, there will be more jobs, but they will be different jobs. In the Chinese context, middle-wage occupations such as service and construction jobs will likely see substantial job growth. In addition, China's growing middle-class - a status more than three-quarters of its urban population is likely to achieve in the next five years - will create demand in areas such as healthcare, retail, child care, education, and energy efficiency. All of this will compensate for automation-related employment losses.

But there will be disruptions, and for many people, these will be painful. The important question, then, is not whether the automation of that job is good or bad or whether automation should be stopped (it won't). The relevant issue is how well prepared people are for the jobs of tomorrow.

The author is global managing partner at McKinsey & Co. The author contributed this article to China Watch exclusively. The views do not necessarily reflect those of China Daily.

(China Daily 01/16/2019 page13)