McKinsey Global Institute’s (MGI) latest report, ‘The future of work after COVID-19’ , is the first in a series that MGI is releasing over the next few weeks, exploring the pandemic’s long-term impact on the economy and the future of work.

With a targeted approach to identify the lasting impact of COVID-19 on labor demand, the mix of occupations, and workforce skills, the report explores the trends across eight countries – US, UK, Germany, France, India, Japan, China, and Spain – that are home to almost half of the global workforce and account for more than 60 percent of global GDP.  

Read on for highlights from the report.

Paradigm shifts in business models and consumer behaviours

The report revealed that COVID-19 has fueled the acceleration of three paradigm shifts in consumer  behavior and business models that will persist to varying degrees: 

• Rise of remote work
• Increased embrace of e-commerce and virtual interactions
• More rapid deployment of  automation and AI technologies

According to the report, these trends will further exacerbate the reshuffling of jobs in the  economy over the next decade, and as a result, “more than 100 million workers, or one in 16, may need to  find jobs in new occupations by 2030 -- and the shifts will require more advanced skills and intensify the  retraining challenge.”  

The jobs landscape juggles with redundancy and opportunities

The jobs landscape has been severely disrupted by the pandemic by making certain jobs redundant and at the same time creating an altogether new market and demand for specialists and gig workers. The impact on jobs is largely uneven, forcing organizations and workers alike to rethink how they approach the future.

• Independent and gig work is likely to expand: The delivery economy and remote work have  already expanded work opportunities for independent workers. Roughly 70 percent of 800 global executives surveyed by McKinsey in July 2020 said they expected to hire more  independent workers for projects over the next two years.
• Physical proximity can make jobs redundant: In the backdrop of the largest  immediate disruptions to jobs that required working closely with customers or co-workers in crowded  spaces, the report found that jobs with higher proximity, such as cashiers in stores, servers and line cooks in restaurants,  and receptionists in hotels, may experience the greatest disruption after the pandemic because of  changes in customer and business behavior that will stick.

“The trends propelled by COVID-19 could create much larger job  losses in lower-wage occupations in food service, customer service, and hospitality, offset only partially by more net job growth in transportation and delivery. On the other hand, high-growth occupations in  healthcare and the STEM professions are likely to expand strongly. To qualify for those occupations,  though, the report advises workers displaced from low-waged jobs to acquire different and higher skills."

"Some workers will need to find jobs in much higher wage brackets that demand specialized skills like technological skills and higher socioemotional capacity. On the other hand, the requirement of physical  and manual skills as well as basic cognitive skills will reduce.” 

Commenting on the findings, Susan Lund, a Partner at the McKinsey Global  Institute and co-author of the report said, “The long-term effects of the virus may reduce the number of low-wage jobs available, which previously  served as a safety net for displaced workers. Going forward, these workers will need to prepare themselves to find work in occupations with higher wages that require more complex skills, such as jobs in health  care, technology, teaching and training, social work, and human resources.”

Remote work is here to stay

As organizations work towards building hybrid work models, MGI estimates that roughly 20 to 25 percent of workers in advanced economies could do their jobs from home most of the time. “This could affect custodial jobs in offices, public transportation, and restaurants and retail in urban areas, if fewer workers commute to office  jobs.” 

The report found that in India, about 5 percent of the workforce could potentially work remotely for over three days a week, and this share is as high as 70 percent for key sectors like financial  services and IT.

The geography of work could shift 

In the pre-COVID era, highly skilled workers often migrated to cities and remained open to move across the urban landscape in search of their next big opportunity. The pandemic has disrupted the trend. With remote work making a strong business case, facilitated by digital tools, employees now have the opportunity to work from anywhere, while companies benefit from accessing talent pools beyond the limitations of geographical borders.

Additionally, with business travel expected to decline, the MGI report noted that virtual meetings could replace 20 percent of business travel, having knock-on effects for restaurants,  hotels, and airlines.  

E-commerce and virtual transactions follow a new trajectory 

Highlighting the drastic shifts in e-commerce and consumer behavior, here’s what the report found: COVID-19 forced consumers  and businesses to rapidly migrate to the digitally enabled “delivery economy,” which is shifting  low-wage jobs from retail shops and restaurants to warehouses and transportation. Share of e-commerce grew as much in 2020 as the previous three in India, and grocery and food delivery,  online banking, telemedicine, and streaming entertainment soared. 

“About 70 to 80 percent of consumers in India say they will continue using these channels because of the convenience they offer.”

Automation and AI could see an uptick 

The rapid digital adoption fueled by 2020 is for all to see, and this trend may further accelerate as the  economy recovers. With call centers having already deployed chatbots, the greatest growth in automation may occur in indoor production and warehousing, as companies seek to increase space  between workers and yet keep pace with surges in demand, suggested the report.

McKinsey’s July survey showed that 68 percent of executives indicated they have plans to increase adoption of automation and AI, and similarly large shares of respondents indicated they expect more deployment of digital  working tools, e-commerce platforms, and digital supply chain platforms. 

Reskilling to become challenging

The report points towards a dearth of employment opportunities for low-wage jobs as industries pivot to a digital mode of work.

In order to sustain through these rapid shifts, workers will require adequate upskilling to not survive through the disruption but be able to scale their skill sets for the uncertainties that lie ahead.

Urging employers to recognize the challenge, Anu Madgavkar, MGI Partner and co-author of the report, said “The pandemic will make the reskilling challenge more daunting. Its effects will fall heaviest on the most vulnerable workers. This creates a new urgency for companies and policymakers to help these workers gain the skills most needed in the future.”

The industry had long been preparing for the future of work, but was not ready to land in the forced overnight shift to this future. However, with an agile approach and creative methodologies to keep work going, communication consistent and people productive and engaged, economies across the world have been able to sustain through the crisis, although with persisting struggles. While aspects like flexibility and new ways of working continue to experience friction from age-old established norms of working, how employers adapt and respond and to the changes that are here to stay will impact their ability to develop and grow business and people alike, in times to come.