Upskilling the global workforce is key to stimulating the economic recovery from COVID-19, says new report from PwC and the World Economic Forum

PwC, in collaboration with the World Economic Forum, has launched a new report “Upskilling for Shared Prosperity” which makes a clear case for why leaders from all sectors should prioritise upskilling now.

The rise of automation and digitisation has transformed the world of work – increasing productivity but also creating a major societal problem: the stark mismatch of people with the right skills for available jobs. The COVID-19 pandemic has accelerated and exacerbated these trends. As a result, the need to upskill and reskill people so they can participate in the economy is more critical than ever before, in turn creating more inclusive and sustainable economies and societies where no one is left behind.

Looking at the country findings as a percentage for additional GDP potential due to upskilling, China (7.5%), India (6.8%), Spain (6.7%), Australia (5.9%) and South Africa (4.4%) topped the table.

Australia is one of the largest beneficiaries of closing the skills gaps in terms of the relative percentage boost to GDP. Although a gain of US$90bn by 2030 in the core scenario is relatively small, it equates to 5.2% of GDP. From an employment perspective, closing the skills gaps could generate an additional 200,000 jobs by 2030, equivalent to a gain of 1.6% in employment.

The nature of skills gaps in Australia supports the assumption of 7% uplift in labour productivity by 2030. The growth in GDP occurs largely through the expansion of business services, which contributes over a quarter of the total GDP gain. The remaining benefits are spread across a wide range of sectors with consumer services and energy and utilities also significant contributors.

PwC Australia’s Chief Economist Jeremy Thorpe, said, “In the post-COVID-19 environment, Australia’s economic imperative must be to lift national productivity to accelerate jobs and GDP growth. Investing in upskilling has the potential to maximise the economic performance of Australia’s labour force.

“Enhanced productivity through upskilling could add more than 5% to our national income. As such, it needs to be considered a core component of Australia’s next microeconomic reform agenda.

“Governments are actively seeking to minimise the risk of business failure and business-specific skills loss through a range of general interventions such as JobKeeper and other skills-specific interventions such as JobTrainer and Supporting Apprentices and Trainees wage subsidy.

“Organisations that are large enough (and that can afford comprehensive upskilling) will enjoy a competitive advantage in the post-COVID-19 world. But the millions of Australians who work in SMEs (small to medium enterprise), or in businesses which do not or cannot invest in upskilling, should not be disadvantaged. As such, the Federal Government’s $2 billion JobTrainer skills package, subsidising apprenticeships and providing training for school leavers and job seekers in growth sectors, is an important foundation."

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. The report estimates that if countries upskill their citizens in line with OECD industry best practices, this would lead to additional global GDP growth of $6.5 trillion and the creation of 5.3 million net new jobs by 2030.

Tim Rawlings, Director and Head of Training Product Development for PwC’s Skills for Australia, said, “Technology has always changed the way we work, creating more productive, higher quality jobs. Upskilling is the key to unlocking the economic and social benefits of technology change.

“This report highlights that if new technology is going to reward workers rather than replace workers, we need to upskill them. The report reiterated the key skills that will be necessary to take advantage of technology change. Skills like digital skills, creativity and complex communication skills will be critical over the next decade.

“Upskilling creates opportunities so that by the time one job is declining a person is ready for a new, better job.”

The report puts forward four recommendations for how to deliver a global upskilling agenda:

1. Governments, businesses, and education providers should work together to build a strong and interconnected ecosystem committed to a comprehensive upskilling agenda.
2. Governments should adopt an agile approach to driving national upskilling initiatives, working with businesses, nonprofits and the education sector. This includes providing incentives to create jobs in the green economy and by supporting technology innovation.
3. Businesses should anchor upskilling and workforce investment as a core business principle and make time-bound pledges to act.
4. Education providers should reimagine upskilling and reskilling and focus on lifelong learning to ensure everyone has the opportunity to participate in the future of work.

Recognising that GDP does not give a complete picture of how an economy is doing, the quantitative data in the report is complemented by qualitative analysis which demonstrates the broader advantages of developing good jobs - work that is safe, paid fairly, reasonably secure and motivating, and that emphasises the uniquely human skills and traits of workers, thus delivering higher levels of productivity. The development of transferable skills such as critical thinking and creativity is crucial to helping people prepare not only to meet the workplace demands of today but also for those of the future.

To download a copy of the full report and see the findings by country, region and industry, visit: www.pwc.com.au/upskilling-for-shared-prosperity.