Globally, labour markets are in a state of flux. Pandemic-induced shifts in consumer behaviour and supply-side disruptions are accelerating the pace of technology adoption across industries and job functions, consequently, transforming the world of work. As some jobs become obsolete, many more are being created. In this new context, there is a need for L&D leaders to step in and help their organisations understand and respond to these rapidly evolving changes in the labour market.

The Great Resignation? Or Reinvention?

The pandemic brought to focus the shift in worker motivations, preferences and attitudes. Several industry reports point to the “Great Resignation” as a manifestation of the inability of employers to fully fathom these shifts in their employee needs. Recruitment agencies point out that this problem is particularly pronounced in the Technology and Telecom sectors[1]. However, the pervasiveness of the Great Resignation in India is muted by at least two explanations. First, income support programs such as unemployment insurance supplements are rare, and therefore, employees have little financial wherewithal to be picky or slow to apply for and accept jobs. Second, several industry reports point to little decline in labour force participation rates.  For example, a Strategic Review report of the IT industry released by NASSCOM reports that the industry added 450,000 jobs in FY 2022, the highest addition ever. For the overall economy, the quarterly Periodic Labour Force Survey released in June 2022 notes that Labour Force Participation Rate increased from 40.1% in 2020 to 41.6% in 2021. Other labour market indices like the Naukri Job Speak report also show strong year-on-year hiring growth of nearly 40 per cent in May 2022.

A candidate explanation that reconciles these two sets of observations is that the observed voluntary attrition is not so much an outcome of employees electing to stay out of the workforce due to altered preferences as much as an outcome of seeking new opportunities and jobs that were not pervasive before the pandemic and are likely even triggered by it. Emergent industry reports emphasise this shift. For example, in their report titled, “The future of work after COVID‑19,” the McKinsey Global Institute notes that across eight countries - India, China, France, Germany, Japan, Spain, the United Kingdom, and the United States - more than 100 million workers, might need to switch occupations by 2030. In India, the share of total work hours expended using physical and manual skills will decline by 2.2 percentage points, while time devoted to technological skills will rise by 3.3 percentage points.

Technology-Driven Reinvention of Work

A key driver of new business models, work models and in turn, employment opportunities post the pandemic is technology. Research from the Indian School of Business shows that occupations, sectors, and regions with greater levels of investment in technology, especially Artificial Intelligence (AI) and Machine Learning (ML) prior to the pandemic demonstrated greater resilience during the lockdowns and also better recovery and growth from the pandemic. 

level of disruption across different districts in India during the lockdown

 

Figure 1a: The figure plots the level of disruption across different districts in the country during the lockdown. Districts with the least automation were most susceptible to disruption.

Source: ISB Research

the effect of sectoral exposure to AI during Covid lockdown

 

Figure 1b: The figure plots the effect of sectoral exposure to AI on payment count in the sector for the period surrounding the lockdown (depicted by the red line). Greater exposure to AI accorded economic immunity.

Source: ISB Research

Specifically, technology investments alleviated labour and skill shortages, helped cope with supply chain disruptions, and activated new products, services and business models or forms of business-to-consumer interactions. Education pivoted to ed-tech, healthcare to health-tech, and some companies moved their distributed infrastructures to the cloud, while others invested in conversational and messaging systems and bots as they transitioned from a 90 per cent in-person business to 100 per cent online interaction during the lockdown.

More importantly, organisations are likely to sustain a bulk of these investments as they recover from the pandemic. A study by PWC found that 52 per cent of companies accelerated their AI adoption plans because of the COVID-19 crisis and about 86 per cent, said that AI would become a “mainstream technology" at their company by 2021. Similarly, in a research study conducted by the Srini Raju Center for Information Technology and the Networked Economy (SRITNE) at ISB and Intel Corporation, titled “The Impact of AI on the Indian Labour Market[2],” over 90% of the survey respondents considered the adoption of AI as vital to their businesses, and over 50% of the medium and high revenue firms who were a part of the research expected a significant and sustained increase in AI investments, over the next five years. That is, organisations now view AI and ML as essential to gaining competitive advantage, efficiencies, scale and building resilience to future shocks and disruptions.

Nature of AI adoption in firms

Figure 1c: Importance of AI adoption for Businesses

Source: ISB SRITNE-Intel Survey

In a study on the impacts of AI and ML on the labour market[3], Brynjolfsson and Mitchell argue that while there has been much emphasis in the media on automation and substitution of labour, the biggest effect in the coming years will be on how ML will lead to a redesign of work. This is because while almost all occupations will be exposed to ML, in most cases, only some tasks are suitable for ML while others in the occupation will continue to need human labour. Not surprisingly, a study[4] by Oxford Economics and CISCO found that over the next decade, the average task would see a maximal addition of hours to “interacting with computers” towards task completion. 

The Need for a New Model of Learning and Development (L&D)

What shifts do we expect to see in the L&D function because of these trends in the labour market and workplace? The first effect is an emphasis on lifelong learning. Employees in the new economy must learn, in addition to skills and knowledge, the ability to continually learn and unlearn. Automation is driving the need for a new set of skills that effectively complement machines, notably, social and emotional skills. For example, the abovementioned study by Oxford Economics and CISCO found that making human connections and critical and creative thinking would require more workers over the next decade as a necessary corollary to automation. This effect of automation on redesign and reinvention of work is also manifest in the ISB SRITNE report, which indicates that over 70% of respondents across various firm categories expect their organisation’s headcount to increase in response to AI and that at least 80% of their workforce will need to undergo significant re-training due to the implementation of AI, over the next two years. However, as business models and work models evolve, this set of skills will also change. Organisations that provide the opportunity to their employees for lifelong learning will emerge as winners in the war for talent. Indeed, a LinkedIn survey[5] finds “opportunities to learn and grow” as the top driver of the corporate culture.

As skill requirements continually evolve, there is an urgent need for greater data and people analytics. The ability to collect and analyse high-frequency, high-resolution data is critical to identifying skill needs and gaps and enabling flexible skilling solutions that align with and keep pace with dynamic business needs. By understanding worker movement, and mapping skills and capabilities across declining and emerging jobs, one can design both career pathways to new, growing job opportunities and optimal skilling solutions. Identifying the gaps between the existing skill set, and the new skills needed to transition into these jobs of tomorrow, and creating learning trajectories to address these, will enable workers to pivot, and find newer routes to economic opportunity.

Businesses and Educational Institutions, together with local Governments, can help those in the workforce, most vulnerable to job displacements, to transition into the jobs of tomorrow, by designing and delivering informed and intuitive skill development programmes, through sustained and concerted, collaborative effort.

Finally, organisations need to begin their journey of redesigning the workplace and work models to bolster nimbleness and agility. Tapping into alternative labour pools and the gig economy allows the company to build a flexible workforce that responds to crises quicker and in a more agile manner.

As the world of work is being reinvented fundamentally, CHROs must emerge as change agents and role models in challenging the status quo, leading in new ways, and reimagining the HR function itself with digital strategies at the heart. Indeed, the great re-invention or resignation makes it imperative to upskill HR leaders with state-of-the-art knowledge, skills, and strategic, market-driven perspectives to manage next-generation organisations effectively.

  • https://timesofindia.indiatimes.com/life-style/relationships/work/86-indian-employees-are-expected-to-resign-in-6-months-recruitment-agency/articleshow/92105254.cms
  • https://newsroom.intel.com/wp-content/uploads/sites/11/2020/10/The-Impact-of-AI-on-the-Indian-Labour-Market.pdf
  • https://www.hoover.org/research/how-will-machine-learning-transform-labor-market
  • https://www.cisco.com/c/dam/assets/csr/pdf/The-AI-Paradox-How-Robots-Will-Make-Work-More-Human.pdf
  • https://learning.linkedin.com/resources/workplace-learning-report