Preparing for an age of automation: how policymakers can support young workers to succeed

12 October 2017

By Hannah Audino and George Mason

 Across the UK, young people aged 16 to 24 are almost four times more likely to be unemployed than adults. Despite falls in youth unemployment in recent years as the economy has recovered from the financial crisis, challenges around social mobility, a lack of vocational opportunities and an automated workplace are putting young people’s prospects high on the agenda of policymakers.

To explore the outcomes for young people in the UK relative to the rest of the OECD, we have just updated our PwC Young Workers Index – a weighted average of eight indicators that reflect the labour market prospects of young workers across 35 OECD countries.

This year, the UK achieved its best ranking since the index started in 2006, rising to 18th place from 20th last year as the economy has continued to create many new jobs for young people – but the UK’s performance is still middling within the OECD. The top three spots were again taken by Switzerland, Iceland and Germany. In this blog, we discuss what the UK can learn from these top performers to help its young people succeed in an increasingly automated world.

On the question of automation, we estimate, using a methodology developed in this earlier report, that up to 28% of existing jobs of 16-24 year olds in the UK could be at potential risk of automation by the early 2030s. As the chart below shows, this is lower than Germany and the US, but higher than countries such as Japan and South Korea.

Ywiblog

We find that the UK sector where the largest number of jobs of young people could be at risk of automation is wholesale and retail, where tasks are often relatively routine and so potentially automatable. In the UK, almost one in four young people are employed in this sector, which has a 44% risk of total job automation across all ages.

In contrast, just 5% of young people work within STEM industries (science, technology, engineering and mathematics) - but these industries have a much lower risk of automation (around 20%) according to our estimates and they are also where a lot of new jobs could be created as technologies like AI and robotics develop.

So what can governments and businesses do to support young workers?

  1. Invest in education and training for an automated world – governments should invest more in the types of education and training that will be most useful to people in light of increasing automation. This will require a greater focus on vocational training, offering qualifications in digital and STEM industries. The UK can learn a lot from countries such as Germany and Switzerland who allow students to pursue technical training alongside education. The UK government’s new T-level reforms are a promising start towards boosting vocational training, but it will take time to see what effect this is having on the economic performance of young people.
  2. Career development and re-training support – for those affected or likely to be affected by job losses linked to automation, governments need to offer careers advice and re-training, linking in with local businesses to ensure training matches the skills required. This may apply more to older workers, but young workers also need to develop skills that are adaptable as technology evolves. They will also need to focus on skills that are complementary to robots and AI systems, rather than easily substitutable by such technologies (e.g. jobs requiring social and managerial skills rather than data analysis or routine physical tasks).
  3. Invest in the digital sector to generate new jobs – to support the offsetting gains from technological progress, governments should invest in digital sectors that can generate new jobs.

As digital natives, many young people will be potentially well positioned to take advantage of the great opportunities we expect to be created by new automation technologies. But government and business need to work together to develop an education and vocational training regime that equips all young people – not just a lucky minority – to thrive in a digital age.

 

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