The Future of Work And How It Affects Foreign Investment
Coming back from Dubai with insight from international experts on the future of work in a transforming world of automation is highly inspiring. After moderating an exciting panel on “FDI and Human Capital” at Annual Investment Meeting 2019 let me share some views from the panelists:
The new era of automation is inevitable and we must face the challenge that artificial intelligence brings for the future of work. According to a 2015 study by Frey & Osborne 47 per cent of US jobs were at risk of automation over the next two decades. Recent data from Germany anticipates a similar scenario with more than 50% of jobs at risk. A senior executive at one of the Big4 was recently asked what keeps him awake at night – “when Google figures out how to do audits using their bots” came his reply.
Conversely, there are new jobs that will be created through productivity gains resulting in lower costs for products and services which in return will stimulate consumption. Companies will increase production and create new jobs. To date every innovation cycle has resulted in net gain of jobs – albeit different jobs rather than the same ones with higher GVA. And this will be even more challenging for the era of artificial intelligence in the next decades.
With this transformation, the foreign direct investment landscape will change accordingly . We are already seeing a strong trend over the last decade of lower job creation number and higher investments per project in the advanced manufacturing sector. This trend is expected to continue while the requirement for companies to find the “right” skilled labor is the main driver for investment decisions. Regions and Nations that can adapt quickly and provide the educational systems to develop, train and attract people will be the winners of tomorrow. There is an urgent need to develop the public coping strategies to provide the talent needed in new technology fields and integrate those that need to adapt their skills to stay attractive for international investors.
Lastly, an interesting aspect of skills and mindset was raised. The competency of the future is not only qualified skills, it much more so the mindset – critical thinking and creativity are increasingly important attributes in the future of work. Let’s get creative on how to positively develop the mindset of people – and therein lies a challenge for the mindset, targets and funding of educational establishment.