Education and Retraining Will Help Workers Adjust to Automation

The impacts of three overlapping waves of automation to the 2030s are examined in a new report published by PwC.

The research analysed the tasks and skills involved in the jobs of over 200,000 workers across 29 countries in order to assess the potential impact of automation on workers in different industry sectors and of different genders, ages and education levels.

On average across the 29 countries covered, the share of jobs at potential high risk of automation is estimated to be only around 3% by the early 2020s, but this rises to almost 20% by the late 2020s, and around 30% by the mid-2030s.

The study suggests that more women could initially be impacted by the rise of automation, whereas men are more likely to feel the effects in the third wave by the mid-2030s. This is due to the types of tasks that are more susceptible to automation and the current gender profiles of employment by sector.

The Algorithm wave is already well underway and involves automating structured data analysis and simple digital tasks, such as credit scoring. This wave of innovation could come to maturity by the early 2020s.

The Augmentation wave is also already underway but likely to come to full maturity later in the 2020s. That wave is focused on automation of repeatable tasks and exchanging information, as well as further developments of aerial drones, robots in warehouses and semi-autonomous vehicles.

In the third Autonomy wave, which could come to maturity by the mid-2030s, AI will increasingly be able to analyse data from multiple sources, make decisions and take physical actions with little or no human input. Fully autonomous driverless vehicles could roll out at scale across the economy in this phase, for example.

The estimated proportion of existing jobs with high potential automation rates by the mid-2030s varies significantly by country. These estimates range from only around 20-25% in some East Asian and Nordic economies with relatively high average education levels, to over 40% in Eastern European economies where industrial production, which tends to be easier to automate, still accounts for a relatively high share of total employment.

Countries like the UK and the US, with services-dominated economies but also relatively long ‘tails’ of lower skilled workers, tend to have intermediate potential automation rates. The estimated share of existing jobs with potential high rates of automation by the mid-2030s varies widely across industry sectors, from a median across countries of 52% for transportation and storage to just 8% for the education sector.

Transport stands out as a sector with particularly high longer term potential automation rates as driverless vehicles roll out at scale across economies, but this will be most evident in the third wave of autonomous automation. In the shorter term, sectors such as financial services could be more exposed as algorithms outperform humans in an ever wider range of tasks involving pure data analysis.

The analysis also highlights significant differences across types of workers and these will also vary across our three waves of automation. The starkest results are those by education level, with much lower exposures on average for highly educated workers with graduate degrees or above, than for those with low to medium education levels. In the long run, less well educated workers could be particularly exposed to automation, emphasising the importance of increased investment in lifelong learning and retraining.

More highly educated workers will typically have greater potential for adaptability to technological changes, for example in senior managerial roles that will still be needed to apply human judgement, as well as to design and supervise AI-based systems. Such workers should see their wages increase due to the productivity gains that these new technologies should bring.

Differences are less marked by age group, although some older workers could find it relatively harder to adapt and retrain than younger cohorts. This may apply particularly to less well-educated men as we move into our third wave of autonomous automation in areas like driverless cars and other manual labour that has a relatively high proportion of male workers at present. But female workers could be relatively harder hit in early waves of automation that apply, for example, to clerical roles.

Automation rates also differ across countries because ways of working differ. In particular, workers in countries such as Singapore and South Korea with more stringent educational requirements could have greater protection against automation in the long run. This is also true (particularly in Europe) for countries with higher levels of education spending as a percentage of GDP.