More than one in five survey respondents said that introducing more agile ways of working will be a high-priority organizational change, and a similar proportion described more cross-functional collaboration as a key going forward. Unlike traditional hierarchies, which are mainly designed for stability, agile organizations are designed for both stability and dynamism. They typically consist of a network of teams and are notable for rapid learning and fast decision cycles.

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A well-trained workforce equipped with the skills required to adopt automation and AI technologies will ensure that our economies enjoy strengthened productivity growth and that the talents of all workers are harnessed. Failure to address the demands of shifting skills could exacerbate social tensions and lead to rising skill-and-wage bifurcation. The ability to ensure the former scenario—and ward off the latter—will depend in large part on how well the workforce is trained and how adaptable companies and workers will prove to be in the face of multiple new challenges from automation adoption.

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The need for some skills, such as technological as well as social and emotional skills, will rise, even as the demand for others, including physical and manual skills, will fall. These changes will require workers everywhere to deepen their existing skill sets or acquire new ones. Companies, too, will need to rethink how work is organized within their organizations.

Our survey shows that the functions that are already the most automated are experiencing the largest skill mismatches. These functions include data analytics; IT, mobile, and web design; and research and development (Exhibit 2). This finding holds true across almost all sectors, with the notable exception of manufacturing, in which skill mismatches are expected to be largest in production and manufacturing operations.

Skill shifts have accompanied the introduction of new technologies in the workplace since at least the Industrial Revolution, but adoption of automation and artificial intelligence (AI) will mark an acceleration over the shifts of even the recent past.

More work will be done by freelancers and other contractors, a shift that will boost the emerging “gig” or “sharing” economy. In our survey, greater use of various types of freelancers and temporary workers is one of the top organizational changes; 61 percent of respondents expect to hire more temporary employees.

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Automation and AI will change the interaction among patients and healthcare professionals. The demand for care providers, such as nurses, will continue to see growth, while the demand for office-support staff will see decreases because of automation of tasks related to record keeping and administration.

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About 77 percent of the respondents in our survey expect no net change in the size of their workforces in either Europe or the United States as a result of adopting automation and AI technologies (Exhibit 3). Indeed, more than 17 percent expect their workforces on both sides of the Atlantic to grow. The composition of jobs and skills will shift, however. Some jobs will shrink after automation, while others will expand. And about 6 percent of companies foresee an overall decline in the size of their European and US workforces.

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This briefing, part of our ongoing research on the impact of technology on the economy, business, and society, quantifies time spent on 25 core workplace skills today and in the future for five European countries—France, Germany, Italy, Spain, and the United Kingdom—and the United States and examines the implications of those shifts.

The need for most physical and manual skills will decline, but they will remain the largest category of workforce skills. The demand for physical and manual skills has been declining for 15 to 20 years, and this decline will continue with automation. Between 2016 and 2030, demand for these skills will fall by 11 percent overall in the United States and by 16 percent overall in Europe. The mix of physical and manual skills required in occupations will change depending on the extent to which work activities can be automated. For example, operating vehicles or stocking and packaging products are more susceptible to automation than are assisting patients in a hospital or some types of cleaning. Physical and manual skills will nonetheless continue to be the single largest category of skills (measured by time spent), shrinking from 31 percent of workers’ time in 2016 to 25 percent in 2030 across the United States and Western Europe.

To harness the new technologies to their full effect, companies will need to retool their corporate structures and their approaches to work. That change will require redesigned business processes and a new focus on the talent they have—and the talent they need.

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454 kg (1001 lbs) or more gross weight of a corrosive material. Although the corrosive class includes both acids and bases, the hazardous materials load and segregation chart does not make any reference to the separation of various incompatible corrosive materials from each other. In spite of this, however, when shipping corrosives care should be taken to ensure that incompatible corrosive materials can not become mixed as many corrosives react very violently if mixed. If responding to a transportation incident involving corrosive materials (especially a mixture of corrosives), caution should be exercised.

A survey of more than 3,000 C-suite executives in seven countries—Canada, France, Germany, Italy, Spain, the United Kingdom, and the United States—that we conducted as part of our research confirms our quantitative findings. Advanced IT and programming skills are viewed as the most important skills needed in the next three years. Higher cognitive skills and social and emotional skills will also be more in demand, while the need for physical and manual skills, particularly for gross motor skills and strength needed for occupations such as moving, machine feeding, and warehouse packing, will likely decline. Executives also expect declines in the need for basic cognitive skills, particularly the basic data-input and -processing skills used by data-entry clerks and typists and in a range of back-office functions.

We looked at skill shifts in more detail in five sectors. This analysis highlights many similarities in changing patterns of skills requirements but also some variation. For example, while social and emotional skills will be in growing demand across all five sectors, the need for basic cognitive skills will decline in banking and manufacturing, stay flat in healthcare, and only fall back slightly in retail.

There will be a shift in demand toward higher cognitive skills. Our research also finds a shift from activities that require only basic cognitive skills to those that use higher cognitive skills. Demand for higher cognitive skills, such as creativity, critical thinking, decision making, and complex information processing, will grow through 2030, by 19 percent in the United States and by 14 percent in Europe, from sizable bases today. However, work activities that require only basic cognitive skills, such as basic literacy and numeracy, will decline as automation advances. Basic data-input and -processing skills will be particularly affected by automation, falling by 19 percent in the United States and by 23 percent in Europe in the 2016 to 2030 period. The decline will be in nearly all sectors as machines increasingly take over straightforward data-input tasks.

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Download Skill shift: Automation and the future of the workforce, the full discussion paper on which this article is based (PDF–2.55MB).

For now, many companies tend to think in isolation about their retraining programs. For example, in our survey, only 37 percent of respondents considered it important to build partnerships with educational institutions for effective retraining, compared with 47 percent who planned to perform retraining internally. At the same time, a range of higher-education institutions and other experts have called for universities, colleges, and other educators to play a more active role in filling the needs of the labor market, including by increasing data-science and other high-tech courses.

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Our findings suggest that organizations will change in five key areas—mind-set, organizational setup, work-activity allocation, workforce composition, and C-suite and HR understanding and functions.

Policy makers will need to clarify the roles of individuals, companies, and state agencies. Examples of such action include revamping labor agencies; several European countries, including Germany, have changed the way their national labor agencies operate by shifting public-employment policy from “passive” (unemployment compensation) to “active” (employment agencies becoming job centers that manage and facilitate retraining of the unemployed). Other initiatives include boosting mobility by moving to portable benefits, which are not tied to a particular job or company and are owned by workers.

Over the next ten to 15 years, the adoption of automation and AI technologies will transform the workplace as people increasingly interact with ever-smarter machines. These technologies, and that human-machine interaction, will bring numerous benefits in the form of higher productivity, GDP growth, improved corporate performance, and new prosperity, but they will also change the skills required of human workers.

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The share of predictable manual jobs, such as driving, packing, and shelf stocking, will substantially decline. Jobs that remain will tend to be concentrated in customer service, management, and technology deployment and maintenance. Demand for all physical and manual skills and for basic data input and processing will decline, while growth will be strong in demand for interpersonal skills, creativity, and empathy. Advanced IT skills and programming alongside complex information processing skills will also see a surge in demand.

All technological skills, both advanced and basic, will see a substantial growth in demand. Advanced technologies require people who understand how they work and can innovate, develop, and adapt them. Our research suggests that through 2030, the time spent using advanced technological skills will increase by 50 percent in the United States and by 41 percent in Europe. We expect the fastest rise in the need for advanced IT and programming skills, which could grow as much as 90 percent between 2016 and 2030. People with these skills will inevitably be a minority. However, there is also a significant need for everyone to develop basic digital skills for the new age of automation. We find that among 25 skills we analyzed, basic digital skills are the second-fastest-growing category, increasing by 69 percent in the United States and by 65 percent in Europe.

Working together as social partners, associations and unions have traditionally played central roles in training efforts in several European countries. Both sets of stakeholders have potentially significant roles to play in addressing shortages of certain skills and retraining in the automation era.

Jacques Bughin is a senior partner in McKinsey’s Brussels office, Eric Hazan is a senior partner in the Paris office, Susan Lund is a partner in the Washington, DC, office, Peter Dahlström is a senior partner in the London office, where Amresh Subramaniam is a consultant, and Anna Wiesinger is an associate partner in the Dusseldorf office.

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Healthcare is the only sector in our analysis in which the need for physical and manual skills will grow in the years leading to 2030. This variation reflects the gross motor skills and strength needed for occupations such as elder care and physical therapy and the fine motor skills required of registered nurses.

To measure skill shifts from automation and AI, we modeled skill shifts going forward to 2030—and found that they accelerated. While the demand for technological skills has been growing since 2002, it will gather pace in the 2016 to 2030 period. The increase in the need for social and emotional skills will similarly accelerate. By contrast, the need for both basic cognitive skills and physical and manual skills will decline (Exhibit 1).

Altering work allocation will allow companies to make the most effective use of different qualification levels in their workforce. In our survey, 40 percent of companies describing themselves as extensive adopters of automation and AI expect to shift tasks currently performed by high-skill workers to lower-skill ones. Unbundling and rebundling work raises company efficiency and can also create a new set of middle-skill, “new-collar” jobs. For example, registered nurses and physician assistants now do some of the tasks that primary care physicians once carried out, such as administering vaccinations and examining patients with routine illnesses.

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Respondents also said that individuals with a college degree are more likely to be hired or contracted, more likely to receive retraining, and less likely to be displaced.

A key to companies’ future success will be in providing continuous learning options and instilling a culture of lifelong learning throughout the organization. In our survey, this cultural change was ranked by companies across most sectors as the change most needed for developing the workforce of the future.

The next wave of automation and AI in manufacturing will disrupt production functions in factories through better analytics and increased human-machine collaboration. It will also have an impact on product development and on marketing and sales.

Demand for advanced IT skills, basic digital skills, entrepreneurship, and adaptability will see the largest double-digit cumulative growth. However, demand for skills such as inspecting and monitoring patient vitals and medical equipment will stagnate, despite the overall growth in healthcare, as machines take over more routine tasks.

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Smart automation and AI will continue to reshape the revenue and margins of retailers as self-checkout machines replace cashiers, robots restock shelves, machine learning improves prediction of customer demand, and sensors help inventory management.

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Not for profits have the flexibility to develop innovative approaches to issues relating to skills, and some have been testing novel approaches. Markle, for example, is piloting a program called Skillful that aims to help workers without a college degree upgrade and market their skills.

Geography also plays a role in determining which workforce-skill decisions to make, with a net difference between European and US companies. In Europe, just fewer than half of the companies we surveyed aim to focus primarily on retraining the existing workforce, whereas in the United States, that proportion is just over one-quarter. In the United States, by contrast, hiring is an attractive choice, with 35 percent of companies planning to improve workforce skills only or mainly by hiring versus just 7 percent in Europe (Exhibit 4).

Financial services have been at the forefront of digital adoption, and the banking and insurance sector is likely to see significantly shifting demand for skills through 2030. The financial-services sector contains a range of potential uses for AI, especially in forecasting risk and personalizing the marketing of products to customers. The number of workers such as tellers, accountants, and brokerage clerks will decline as automation is adopted. The need for a workforce that uses only basic cognitive skills, such as data input and processing, basic literacy, and basic numeracy, will likely decline, while the number of technology experts and other professionals will grow, as will the number of occupations that require customer interaction and management. This increase will drive strong growth in the demand for social and emotional skills.

The overall need for physical and manual skills in the sector is decreasing at more than twice the rate of that for the whole economy. The need for basic cognitive skills is also declining as office support functions are automated. The number of professionals such as sales representatives, engineers, managers, and executives are expected to grow. This will lead to growth in the need for social and emotional skills, especially advanced communication and negotiation, leadership, management, and adaptability. The need for technological skills, both advanced IT skills and basic digital skills, will increase as more technology professionals are required. Demand for higher cognitive skills will grow, driven by the need for greater creativity and complex information processing.

Automation and AI are enabling companies to tap into new reserves as well as increase extraction and production efficiency. Predictable manual work and administrative jobs that involve data manipulation, such as meter reading, will be susceptible to being displaced, while demand for technological jobs will be buoyant. The demand for physical and manual skills along with basic cognitive skills are expected to decrease, while demand for higher cognitive, social and emotional, and technological skills should grow.

The need for finely tuned social and emotional skills will rapidly grow. Accompanying the adoption of advanced technologies into the workplace will be an increase in the need for workers with finely tuned social and emotional skills—skills that machines are a long way from mastering. In aggregate, between 2016 and 2030, demand for social and emotional skills will grow across all industries by 26 percent in the United States and by 22 percent in Europe. While some of these skills, such as empathy, are innate, others, such as advanced communication, can be honed and taught. The rise in demand for entrepreneurship and initiative taking will be the fastest growing in this category, with a 33 percent increase in the United States and a 32 percent rise in Europe. The need for leadership and managing others will also grow strongly.

From the results of our survey, we can already see the beginnings of intensified competition for top talent. About one in four respondents said they would try to use connections to industry associations, offer more attractive wages than competitors, directly hire from other companies, or broaden their talent sources to attract the talent they need.

In our survey, 19 percent of respondents said their top executives lacked sufficient understanding of technologies to lead the organization through the adoption of automation and AI. In addition, HR will need to change as technology alters the way organizations work as well as the size and nature of the workforce. Nearly all business leaders we surveyed (88 percent) said they believe HR functions will need to adapt at least moderately.

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Some companies have launched philanthropic initiatives or work with foundations on skills-related issues. For example, Generation is an independent, not-for-profit youth-unemployment initiative that seeks to close the skills gap for young people by providing them with training for one of 20 professions across four sectors.

In Sweden, job-security councils funded by companies and unions coach individuals who become unemployed. They provide temporary financial support, transition services, and retraining to help the unemployed quickly find new jobs.