How AI will affect Mideast workforce
What governments can do in the interim is help them improve their skill sets Special to Gulf News
s the world enters the age of the fourth industrial revolution marked by accelerating innovation and the adoption of ever more sophisticated automation technologies, the future of work has reemerged as a fundamental question among policymakers, business leaders, workers, and the wider public around the globe and indeed in the Middle East.
Most of the existing research has focused on the impact of automation in advanced, industrial countries and the policy and societal implications of this transition. However, understanding the local impact of automation is vital for the region’s policymakers and workers, in order to mitigate the potential negative effects of technology adoption and exploit the economic opportunities that the new future of work promises.
Ahead of the World Government Summit in Dubai, McKinsey analysed six countries in the region — Bahrain, Egypt, Kuwait, Oman, Saudi Arabia and the UAE — to determine the extent of the impact automation will have on workers in the region.
Job displacement from labour-intensive industries has been taking place for several decades, as countries move to higher-value-added activities and services. Our study predicts that this will accelerate between now and 2030 with 45 per cent of existing work in the Middle East potentially being automated.
At the same time, countries in the region are also poised to enjoy growth and increased productivity if artificial intelligence (AI) and automation are embraced and the workforce is prepared with the right skill sets to take advantage of this transformation.
With technologies like AI, automation and robotics quickly maturing, countries in the region must prepare for another wave of disruption to reap the benefits of these technologies. Automation’s potential translates into massive economic value and creates new opportunities. In all six Middle Eastern countries examined, $366.6 billion in wage income and 20.8 million full-time employees (FTEs) are associated with activities that are already automatable today.
Automation will be a progressive process with its potential varying substantially across industries and countries. The pace of change has been gradual, but is accelerating, and in countries like the UAE, Bahrain, and Kuwait, the projected adoption of automation by 2030 is higher than the projected global average of 32 per cent.
What should grab the attention of policymakers and the public is the link between displacement potential by automation and low-to-medium levels of education and experience. The challenge for the countries we examined is the nearly 57 per cent of workers today who have a high school education or less.
It is this group in particular which is most vulnerable to the shocks associated with automation. That number more than halves, falling to nearly 22 per cent, for employees holding bachelor or graduate degrees. We are already witnessing workforce transitions in different sectors in the region, with jobs changing as global and local companies disrupt traditional providers in transport, retail, media, travel and many more industries.
Our analysis predicts that expat workers in the region are more likely to be displaced by automation. More than 60 per cent of expat workers in industries such as services, administration, government, manufacturing and construction could see their jobs displaced by automation.
Those working in sectors where more human interaction is required — including the arts, entertainment, recreation, health care and education — will see a slower and less dramatic displacement.
How policymakers and business leaders respond to such an extensive transformation will determine whether automation will be a boon or a bane for local economies and societies.
To capture the workforce automation opportunity — which we estimate can add between 0.3- to 2.2 per cent in compounded annual productivity growth to the world economy by 2030. Leaders will need to embrace the speed of technological progress, equip workers with the rights skills, create new tech-augmented jobs, build new competitive advantages, and reinvest AI-driven productivity in communities most affected by the transition.
The stakes are high and this transition will crown many winners and also expose many losers. Governments and workers in the region need to start preparing now for the variety of challenging scenarios and find ways of unlocking new sources of innovation and growth in an economy that combines man and machines in new ways.
Jan Peter aus dem Moore is Associate Partner, McKinsey & Company. Jorg Schubert is Senior Partner and Vinay Chandran a Partner at McKinsey & Company.