The World Economic Forum (WEF) published an analysis today on the technological and sociological drivers of employment.

The report, titled The Future of Jobs, validates the accelerating impact of technology on global employment trends, and also highlights serious concerns that job growth in certain industries is still very much outpaced by large scale declines in other industries.

The report surveyed senior executives and chief human resources officers of various companies “representing more than 13 million employees across 9 broad industry sectors in 15 major developed and emerging economies and regional economic areas.”

Executives were asked about employment trends and their drivers.  The WEF summarizes the trends with:

“According to many industry observers, we are today on the cusp of a Fourth Industrial Revolution. Developments in previously disjointed fields such as artificial intelligence and machine learning, robotics, nanotechnology, 3D printing and genetics and biotechnology are all building on and amplifying one another. Smart systems—homes, factories, farms, grids or entire cities—will help tackle problems ranging from supply chain management to climate change. Concurrent to this technological revolution are a set of broader socio-economic, geopolitical and demographic developments, each interacting in multiple directions and intensifying each other.”

The WEF report also stresses that socioeconomic drivers such as changes in work environment (more flexibility, on-demand work, remote work), a growing middle class, and urbanization in emerging markets contribute as much to the changes in employment trends as technology.

Technological Drivers of Employment Trends

Of the technological drivers, specific technologies highlighted in the short term (2015–2017) are mobile internet, cloud technology, cheaper computing power, and large scale data storage (“Big Data”). While their relative impact is expected to be small in the nearterm, hardware and physical technologies like robotics and the Internet of Things are expected to contribute most of their overall impact after 2018.

The impact of these drivers on employment rates in various industries is both promising and concerning. While technological innovation often leads to greater productivity and prosperity, the speed of change will put an unprecedented stress on a transitioning labor force. On the impact of job creation, the report states:

“…current trends could lead to a net employment impact of more than 5.1 million jobs lost to disruptive labour market changes over the period 2015–2020, with a total loss of 7.1 million jobs— two thirds of which are concentrated in the Office and Administrative job family—and a total gain of 2 million jobs, in several smaller job families.”

The Fourth Industrial Revolution

The report argues that the world is on the cusp of a “Fourth Industrial Revolution.”

The first revolution was spurred by the use of water and steam to power machinery, and the second replaced water and steam-powered machines with electrical power.

The third is the information technology revolution and the current revolution is described as an extension of the third, using a combination of hardware, robotics, and massive computing power to expand information technology beyond just software.

There’s great reason for Silicon Valley’s optimism in a future techno-utopia, these technologies have the potential to make enormous advances in productivity and solve challenging and previously intractable problems in every industry from healthcare to transportation.

Even if we take the surveys estimation of 5.1M lost jobs by 2020 with a grain of salt and trust that job growth can keep pace with job declines (albeit in different industries), it’s unequivocally clear at this point that the shift in employable skills will be a challenge for those on the losing end of that exchange.

This is a problem that we can prepare for though, and the WFE is rightfully ringing the alarm bell for employers and governments to prepare the global labor force for a sudden shift that could leave many workers at risk of losing their jobs. The WFE report writes:

“During previous industrial revolutions, it often took decades to build the training systems and labour market institutions needed to develop major new skill sets on a large scale. Given the upcoming pace and scale of disruption brought about by the Fourth Industrial Revolution, however, this is simply not be an option. Without targeted action today to manage the near-term transition and build a workforce with futureproof skills, governments will have to cope with ever-growing unemployment and inequality, and businesses with a shrinking consumer base. Moreover, these efforts are necessary not just to mitigate the risks of the profound shifts underway but also to capitalize on the opportunities presented by the Fourth Industrial Revolution. The talent to manage, shape and lead the changes underway will be in short supply unless we take action today to develop it.”