25 January 2021 - The rise of automation and digitisation has transformed the world of work – increasing productivity but also creating a major societal problem: the stark mismatch of people with the right skills for available jobs. The COVID-19 pandemic has accelerated and exacerbated these trends. As a result, the need to upskill and reskill people so they can participate in the economy is more critical than ever before, in turn creating more inclusive and sustainable economies and societies where no one is left behind.
In a new report, Upskilling for Shared Prosperity, launched during the Davos Agenda 2021, PwC and the World Economic Forum make a clear case for why leaders from all sectors should prioritize upskilling now.
The report calls on governments to adopt an agile approach to driving national upskilling initiatives, working with businesses, non-profits, and the education sector. This includes providing incentives to create jobs in the green economy and supporting technology innovation. The report estimates that if countries upskill their citizens in line with OECD industry best practices, this would lead to additional global GDP growth of $6.5 trillion and the creation of 5.3 million net new jobs by 2030.
Key economics findings include:
● China ($1,986 billion) and the US ($902 billion), followed by India ($571 billion), Spain ($132 billion) and the UK ($119 billion), have the most to gain economically in absolute terms from closing their skills gaps.
● Looking at the country findings as a percentage of GDP, China (7.5%), India (6.8%), Spain (6.7%), Australia (5.9%) and South Africa (4.4%) top the table.
● From a regional perspective, Sub-Saharan Africa (7.8%) and Latin America (7.7%) are expected to see the biggest gains as a percentage of GDP if they start investing in upskilling now.
● Some of the more developed economies will see smaller gains ranging from 2% in Japan to 0.3% in Germany, given that their productivity and skills base are already stronger than in emerging markets.
● Providing an upskilled workforce could shift the global economy to be more knowledge intensive, with technology and machines taking over routine tasks and people working alongside them.
● Half of the additional GDP globally is expected to be gained in the business services, consumer services and manufacturing sectors.
● Sectors that have suffered from low-wage growth and output for decades could reap significant benefits from upskilling. Health and social care could add $380bn additional GDP through upskilling by 2030.
Recognising that GDP does not give a complete picture of how an economy is doing, the quantitative data in the report is complemented by qualitative analysis which demonstrates the broader advantages of developing good jobs – work that is safe, paid fairly, reasonably secure and motivating, and that emphasizes the uniquely human skills and traits of workers, thus delivering higher levels of productivity. The development of transferable skills such as critical thinking and creativity is crucial to helping people prepare not only to meet the workplace demands of today but also for those of the future.
Bob Moritz, Global Chairman, PwC, says:
“Crisis events, like the pandemic, can and should shape global economic thinking. They represent an opportunity to reflect, reimagine, and reset priorities. It is clear that our economies aren’t currently delivering what people need. By giving all people opportunities to build the skills they will need to fully participate in the future workplace, we can start to create more inclusive and sustainable economies where no one is left behind. We’re calling on governments, business leaders, and educators to join us in implementing an ambitious global upskilling agenda.”
Saadia Zahidi, Managing Director at the World Economic Forum, adds:
“To prepare workers and students for the labour markets of tomorrow we must address both the supply and demand — upskilling people while creating new, decent jobs. Achieving this will require concerted effort and collaboration among business, governments, and education providers. But as this report so clearly lays out, the benefits of investing in upskilling can not only drive the economic recovery but help shape a more inclusive and sustainable future of work.”
The report puts forward four recommendations for how to deliver a global upskilling agenda:
About PwC’s economic model
PwC has used a bespoke global Computable General Equilibrium (CGE) model in this study, which is designed to assess the economic impacts of different policy interventions. It captures the interactions
among the major players in an economy: households, government and businesses. The model gives a comprehensive view of economic activity – including production, consumption, employment, taxes and trade. It is underpinned by a number of datasets, the most prominent of which is the Global Trade Analysis Project (GTAP) Database.
PwC has modelled two scenarios to show how making upskilling a priority can spur growth:
● Accelerated scenario: assumes skills gaps are closed by 2028
● Core scenario: assumes skills gaps are closed by 2030.
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About the World Economic Forum
The World Economic Forum, committed to improving the state of the world, is the International Organisation for Public-Private Cooperation. The Forum engages the foremost political, business and other leaders of society to shape global, regional and industry agendas.
Launched at the World Economic Forum’s 50th Annual Meeting in January 2020, the Reskilling Revolution initiative aims to provide one billion people with better education, skills and jobs by 2030. The initiative turns one year old this month, having provided better education, skills and jobs to an estimated 50 million people already.