Some things I learned this week: 27/5/18

On my flight to NYC to spend the long weekend with my brother, I decided to read through McKinsey Global Institute’s whitepaper on the impending skills shift due to automation. Here’s what I took away:

  • Technological innovations will drive demand for three key workforce skill categories, while driving away hours spent on manual and basic cognitive jobs
      • 1. Technological (advanced IT, programming, basic digital skills)
      • 2. Social/emotional (management, entrepreneurship)
      • 3. Higher cognitive (complex information processing & interpretation)
    • This shift in skill demand will also drive needs for employee retraining, seek external workforce sources, and layoffs in obsolete skill areas
    • There will be an impending skill shortage/mismatch in the labor market, increasing labor costs and reducing productivity due to vacancies
    • Over the last 50 years, examples of job shifts include
      • Coal miners now operate machines that carry out the heavy and dangerous manual tasks they once did
      • Bank tellers spend more time in customer service and financial product selling than handling withdrawals and deposits
    • Impact of digital adoption on different economic sectors
      • Banking/Insurance: AI/ML techniques will improve predictive power, improving risk management and optimization of loan underwriting & fraud detection. Personalized targeting of financial products will also be a boon for marketing/sales departments. Jobs at risk: paralegals, underwriters, sales agents.
      • Energy/Mining: orgs that have integrated digital platforms have seen efficiency gains in their operations in three key ways: predictive maintenance to reduce equipment downtime, integrated digital platforms that facilitate the smooth flow of equipment and materials, and smart capital spending to reduce project costs. Jobs at risk: predictable manual work, machine operators, administrative jobs (data manipulation & meter readers).
      • Healthcare: real-time analytics, patient co-managment and connectivity will help serve the aging demographics in the United States and Europe. Jobs at risk: record keeping, administration, monitoring patient vitals and medical equipment.
      • Manufacturing: the value chain will see gains from predictive maintenance, automated supply chains, real-time production, smart robotics and autonomous machines as “Industry 4.0” disrupts the space. Jobs at risk: machine operators, assembly workers, office support.
      • Retail: self-checkout, robotic restocking and sensor-driven inventory management will benefit digital-forward retailers. Jobs at risk: drivers, packers, shelf stockers, data input/processing (partially offset by e-commerce fulfillment center job growth).

I also read an article in The Economist on China’s One Belt One Road initiative. My notes:

  • One bold addition to China’s growing global influence is its “One Belt, One Road” initiative launched in 2003. The program, which includes a planned $150B in annual Chinese investments in foreign infrastructure, serves a variety of Chinese economic interests.
    • Infrastructure investments may provide a more profitable allocation of China’s large reserves of foreign-exchanges, which in large part are low-interest American government securities.
    • Chinese companies (i.e. high speed rails, cement/metals producers with excess capacity) can benefit from new market opportunities.
  • The risks are significant as well: central Asian markets markedly more volatile than the safety of American government securities; the Chinese institutions involved in the initiative have various infighting problems, and elected governments in Sri Lanka and Myanmar are seeking project renegotiations that were previously approved by their authoritarian predecessors. However, there are no signs of slowdown so far by the Chinese; perhaps partially due to the significant investments already made.

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