In a recently published McKinsey Global Institute (MGI) discussion paper, The Future of Work in Europe, researchers provided an in-depth forecast that looks ahead to 2030, highlighting that the current health crisis has accelerated certain shifts, such as automation, that had been on the horizon before the COVID-19 pandemic.
MGI’s projections bode well for accounting and finance professionals in Europe, with highly skilled accountants listed among the 15 fastest-growing occupations in the region.
While the global outbreak of COVID-19 has forced many finance leaders and policymakers to focus on short-term trends and activities, it is valuable to balance this approach with a longer-term view of regional workplace trends.
The report is a result of a detailed analysis of 1,095 local labour markets across Europe — including 285 metropolitan areas — and are categorised into dynamic growth hubs, stable economies, and shrinking regions.
Job growth concentrated in 48 cities
According to Susan Lund, an MGI partner and one of the authors of the report, many financial services jobs are concentrated within the dynamic growth hubs. The 48 cities within this category have a high share of what MGI terms “superstar” industries, which include information and communication; finance and insurance activities; and professional, scientific, and technical activities.
Dynamic growth hubs are home to 20% of the EU population and have the highest GDP per capita in the EU and strong innovation capabilities. They include megacities London and Paris, with populations of more than 10 million, and a young and highly educated workforce, as well as 46 other cities — among them, Amsterdam, Copenhagen, Madrid, and Munich — that have high-growth industries.
Since 2007, these 48 cities have generated a disproportionate 43% of the EU’s GDP growth, 35% of net job growth, and 40% of population growth — mainly by attracting workers from other regional clusters — the report noted.
By contrast, stable economies were home to roughly half of the EU population (just over 250 million people) and EU employment in 2018 and accounted for a 53% share of EU job growth between 2007 and 2018.
Shrinking regions — where 30% of Europe’s population lives — supported 27% of the continent’s employment in 2018 and created only 12% of new jobs. The report attributed the stark contrasts in regional employment outcomes to local differences in innovation capabilities, business dynamism, and available workforce skills.
“Dynamic growth hubs are also the locations where most of the job growth in finance and insurance activities will be until 2030,” Lund explained. “In addition, net job growth in this sector is above 10% for superstar hubs and even higher for megacities.”
Major skill shifts as ‘knowledge-intensive’ sectors outperform others
Across the region, the occupational mix is changing rapidly with the report finding that Europe has grown in knowledge-intensive sectors such as telecommunications, financial services, real estate, and education, while it has been declining in manufacturing and agriculture.
Automation is playing a major role in intensifying the shift towards more knowledge-intensive sectors, with three key sectors (education; information and communications technology; and human health and social work) likely to account for more than 70% of Europe’s potential job growth through 2030.
As a high-growth or “superstar” industry, financial and insurance activities encompass some of the highly skilled occupations forecast to be among the fastest growing in the region, Lund noted. These include accountants, financial and investment advisers, financial analysts, management and organisation analysts, credit and loans officers, and commercial sales representatives.
Overall, the sector is projected to see “significant positive job growth” by 2030 of more than 6%, or 400,000 jobs. Notably, accountants are among the 15 occupations that account for almost 30% of potential future net job growth in the MGI forward-looking scenario, while financial and investment advisers are among the top 20 fastest-growing occupations.
Tech skills should be top priority for financial services sector
With automation playing an increasingly prominent role across sectors, the report underscored that many workers will need different skills as machines take over some tasks.
Activities that require technological skills will grow in all industries, creating even more demand for workers with science, technology, engineering, and mathematics (STEM) skills (increasing by 39%), who are already in short supply.
“The demand for financial services professionals with technological skills will continue to increase significantly,” added Lund. “The financial services sector will need to work on attracting and retaining talent with tech skills (where there is strong competition with other sectors) and upgrade the skillset of its existing workforce toward advanced data analytics to allow integration of digital tools into all functions.”
Some roles and certainly back-office activities consisting of data entry work within the financial services sector are vulnerable to automation, and Lund pointed out that high levels of automation will lead to significant declines in accounting and bookkeeping clerk roles by 2030.
Looking ahead, as automation adoption continues to impact the world of work, the report noted that almost all of today’s 235 million European workers will face “at least some degree of change” as their occupations evolve — with up to 21 million potentially having to leave occupations on the decline.
“We estimate that 94 million workers (about 40% of the 2018 workforce) may not need to switch occupations but will nevertheless have to acquire new skills because more than 20% of what they do today can be handled by technology,” the report stated.
What employers can do
In the face of rapid automation in the workplace — accelerated in certain sectors such as retail by the COVID-19 pandemic — MGI recommended organisations tackle three sets of issues: strategy, skills, and social responsibility.
- Strategy. Business leaders need to have a strategic vision and determine if they can use new technologies to gain a competitive advantage or defend their market positioning. According to the report, the divergence of local economies across Europe is likely to shift patterns of consumer purchasing power and labour costs, which could require companies to rethink geographical footprints and real estate portfolios, for example.
- Skills. To address the looming skills challenges, MGI noted that organisations will have to assess existing workforce skills, determine future needs, and develop a road map to bridge the gaps. Here, the upfront evaluation of current skills is a critical first step in deciding what path individual workers might take. Also, there’s advantage in retraining high-performing employees, where it can be one-and-a-half to three times cheaper than hiring new talent, the report noted.
- Social responsibility. Leaders will have to begin to analyse and assess the impact of their decisions on the communities in which they operate. For example, if a company operates in a region that is losing workers to dynamic growth hubs, it should consider boosting investment into local educational institutions and providing access to targeted training programmes that can help workers develop the skills of the future. Additionally, companies can help to boost female participation in the European labour force, which remains significantly below that of men, partly because women in Western Europe still do two-thirds of all unpaid care work, the report noted. With this in mind, employers can attract and retain women by offering more flexible schedules, part-time work, and remote-work options.
— Jessica Hubbard is a freelance writer based in South Africa. To comment on this article or to suggest an idea for another article, contact Alexis See Tho, an FM magazine associate editor, at Alexis.SeeTho@aicpa-cima.com.