Cumulative investments of governments and companies in upskilling and reskilling initiatives could boost global GDP by USD 6.5 trillion and create 5.3 million net new jobs by 2030, according to ”Upskilling for Shared Prosperity” report, launched at Davos by PwC and World Economic Forum. China will benefit the most from such an initiative, while the states of Central and Eastern Europe will benefit less, due in part to the structure of the economies and the level of education.
“The economies of Central and Eastern Europe still carry the burden of the transition to the free market namely: long-term unemployment, the lack of participation in labour markets, education systems that have not evolved at the same pace as labor market demand. That’s why they are more vulnerable to changes in new technologies that require high skills. Two years ago, we estimated that around 600,000 jobs in Romania will be affected, by 2029, by automation and digitization. We expect this process to be much faster in the new context, changed by the pandemic and we hope that both the government and companies will become increasingly aware that they need to invest more in education and upskilling”, said Ionut Simion, Country Managing Partner PwC Romania.
The report notes that unemployment is expected to rise as economies continue to experience the effects of the pandemic. Therefore, upskilling the global workforce is key to stimulating the economic recovery from COVID-19.
The broader advantages of upskilling are the raise in productivity, more better jobs, paid fairly, which in turn helps reduce wage inequalities, in particular those created by skillbiased technological change.
Other findings of the report
- The report calls on governments to adopt an agile approach to driving national upskilling initiatives, working with businesses, non-profits, and the education sector. This includes providing incentives to create jobs in the green economy and supporting technology innovation.
- Less developed economies as well as countries with larger skill gaps could see greater gains as a percentage of GDP. The biggest gains would be, for example, in China, the United States, India, Spain and South Africa.
- The potential uplift from large-scale upskilling in CEE is one of the smallest globally, at less than 2.1% in the accelerated scenario and 1.8% in the core scenario.
- Some of the more developed economies will see smaller gains ranging from 2% in Japan to 0.3% in Germany, given that their productivity and skills base are already stronger than in emerging markets.
- Sectors that have suffered from low-wage growth and output for decades could reap significant benefits from upskilling. Health and social care could add USD 380 billion additional GDP through upskilling by 2030.
- One of the most effective employment systems, exemplified in the report, is that of Denmark. Introduced 25 years ago, is based on enabling workforce adaptability via job mobility. People losing their job receive up to 90% of pay for a two-year period, subject to engaging in retraining or exploring entrepreneurial options or jobs in other cities. Few Danes lose their jobs because they are fired. Most take the initiative to leave and retrain or reskill themselves – taking advantage of these active labour market policies.
*From 25-29 January, the World Economic Forum (WEF) is holding its virtual Davos Agenda 2021, a week of sessions bringing together leaders from around the world to talk about how to restore trust in a post-COVID-19 world. “Upskilling for Shared Prosperity” released by PwC and the WEF, on the first day of this virtual meeting.