PwC: Automation could hurt global youth employment


Automation promises to bring efficiencies never seen before to the world’s markets and industries.

But it will also make entire professions a thing of the past, a displacement that will weigh heavily on future economies and governments.

A recent PwC report on automation’s effects on youth population, which is expected to be hardest hit by automation, estimated that 30% of today’s jobs will be gone by the 2030s.

Countries that stand to minimise the labour market effects of automation are those that are already gearing their youth towards highly skilled jobs and professions, according to the detailed PwC analysis.

For countries with high levels of youth not in training, education, or employment (referred to as NEET in the report), the effects of automation could compound an already troubling situation once robots begin serving fast-food customers and ringing up retail customers.

In the UK, an estimated 28% of jobs held primarily by younger workers (ages 16–24) are at risk of automation by the 2030s, according to the study.

How PwC calculated automation risks

The firm’s young workers index compiled labour market data to determine the impact of workers ages 16–24 in the 35 mostly European countries enrolled in the Organisation for Economic Co-operation and Development (OECD). The review also looked at youth employment in the US, Australia, South Korea, Japan, Mexico, and Turkey.

The index found that countries such as Iceland, Germany, and Switzerland showed strong prospects for young workers, with low unemployment and strong engagement in education. Nations such as Turkey and Italy didn’t fare as well on the analysis, and were found to have a third of 20- to 24-year-olds neither enrolled in school nor working.

As automation takes over the jobs currently filled by low-skilled workers, large populations of disengaged youth could create a drain on a nation’s GDP.

The PwC analysis held up Germany as an economic leader and looked at what would happen to the various OECD nations if they were able to employ and educate youth at the rates of that nation.

If the UK’s youth were to take on jobs or enroll in school at the same levels as their German counterparts, it would boost the economy by £43 billion, according to the PwC analysis.

The US could also see a large boost by following the German model, with an estimated GDP increase of 2.2%.

Helping youth populations

Young workers will face the brunt of automation’s effects, with many disproportionately filling low-skilled jobs in the food service, retail, and accommodation industries, areas that are ripe for transformation through automation, the PwC analysis found.

It may be unrealistic to shift social programmes and national economies to absorb all youth, but the report offers some advice on what businesses and governments can do to prepare for automation.

The PwC report predicted that youth with strong backgrounds in science, technology, engineering, and mathematics will emerge with the skillsets to adjust and find employment.

Increase apprenticeships

Having students pair their education with vocational training will better prepare young workers for the fast pace of change automation will bring, the report suggested. Countries such as the UK have a shortage of apprenticeships, and increasing offerings will open career pathways for low-income youth shut out of higher education because of rising tuition.

Some countries are already doing this. In Germany, half of students participate in a dual-education system with apprenticeships while one-third of Swiss businesses offer apprenticeships to youth.

Sarah Ovaska-Few is a freelance writer based in North Carolina. To comment on this article or to suggest an idea for another article, contact Jack Hagel, an editorial director for FM magazine.