[author: Anni Coonan]
In 2019, the Organization for Economic Cooperation and Development (OECD) issued a stark warning: Within 15 or 20 years, advancements in automation technology would fully eliminate 14% of the world’s jobs and radically transform another 32%. These numbers would have affected the employment of over 1 billion people globally, and yet they had not even factored in the dramatic effects of the AI explosion of the last few years. In 2023, reskilling and upskilling has become a necessity in every area of the economy – for employers seeking to find or train the right employees to enable their cutting-edge transformations, for employees looking to transition from obsolete roles or find higher-wage ones, and for governments hoping to foster economic transformation and stem what could be a wave of destabilizing job losses if automation takes the economy unawares. Luckily, governments and employers are well aware of the problem, and the toolkit for addressing upskilling and reskilling issues – from government funding to corporate strategies – is growing.
Training, reskilling and upskilling to create the workforce of the future is a priority for Washington, drawing funding and attention across several pieces of legislation. The Bipartisan Infrastructure Act of 2021 set aside $800 million for state and local government use in workplace development in an effort to provide employers “the skilled, diverse talent pool they need” both today, as employers struggle to fill traditional infrastructure-related jobs, and in the future, as the needs of the market change. Most prominently, however, the Biden administration’s 2021 economic stimulus plan, the American Rescue Plan Act, provided $130 billion in State and Local Fiscal Recovery Funds (SLFRF) – flexible funds meant to bolster the American workforce, which many cities and counties have used to execute reskilling and upskilling.
As part of this program, large cities and counties (those with populations over 250,000) have thus far directed nearly $1.2 billion to workforce development, including job training programs, tuition reimbursements, and apprenticeships. Beyond the scope of strict skill programs, local governments have also invested $3.6 billion in workforce-adjacent support that allows workers from all walks of life to benefit from reskilling efforts, such as child care, service delivery, public transportation enhancements, broadband expansion, and affordable housing. Jurisdictions have until the end of 2024 to obligate their SLFRF dollars and the end of 2026 to spend them, meaning that employers and workers across the country still have an opportunity to see these funds make an impact in their sectors and towns.
Corporations Training Workforce of the Future
Automation technology and artificial intelligence are poised to drastically transform the demands of the modern labor market, and companies realize that it is a strategic imperative to invest heavily in reskilling and upskilling their workforce – or be left in the dust. A recent survey by the Boston Consulting Group and Harvard University’s Digital Reskilling Lab interviewed the leaders of 40 companies investing in large-scale reskilling efforts. Many were devoting as much as 1.5% of their total budgets to reskilling, underscoring just how crucial the effort is. The problematic labor situation at the moment – as employers wrestle with a historically tight labor market and rising wages – demonstrates the difficulties posed by attempting to draw from a workforce that is not big enough, either because it is insufficient in numbers or lacking the correct skills. Infosys has reskilled more than 2,000 cybersecurity pros with various adjacent competencies and capability levels, while Vodafone has outlined goals to draw from internal talent to fill 40% of its software developer needs in the future. And Amazon, through its Machine Learning University, has enabled thousands of employees who initially had little experience in machine learning to become experts in the field.
Many companies now also consider reskilling a central element of the value proposition to their employees. Companies like Mahindra & Mahindra, Wipro, Ericsson, and McDonalds have policies, tools, and IT platforms that promote reskilling resources and available jobs in an effort to invest in employees and incentivize them to remain at their current company; McDonalds’ app, Archways, maps skills that employees already have onto potential moves within the corporation.
Building successful reskilling efforts requires significant effort on the part of employers. Employers could develop a “skill taxonomy” that identifies skills needed by employees and map those skills to existing and developing roles (an in-house taxonomy at SAP contained 7,000 discrete skills before they outsourced the task to a specialized firm with an even longer list). The taxonomy must contain existing skills, as well as those that leaders predict may become crucial in the future (among the hardest tasks in designing reskilling programs). Designing reskilling programs must take into account employee preference and existing workflow; a Harvard Business Review study, for example, found that middle managers can be resistant to reskilling programs due to worries about the impact on employee output. While the Boston Consulting Group found that 68% of workers are aware of coming disruptions in their fields and are willing to reskill to remain competitively employed, not every employee wants to learn artificial intelligence prompting or how to monitor autonomous tech. Programs like McDonalds’ Archways or Amazon’s Career Choice program, which allows employees to pursue everything from a bachelor’s degrees to certificates (and has over 130,000 participants), are examples of employee-driven skills matching.
The technology landscape is in the midst of a major shakeup, promising enormous changes for the labor market. Reskilling is a strategic imperative for companies hoping to maintain a competitive workforce, and large companies are already investing heavily to maintain and upskill their workforces to meet the demands of an AI-driven future. Paired with significant government investment, reskilling and upskilling will be a major element of the labor market in years to come.