AMEinfo Davos: New skills for workers is a costly proposition
While the governments in the Middle East take initiatives to empower their populations with new skills amid the Fourth Industrial Revolution, the projects elsewhere could be used as a model that’ll help regional labor skills strategies.
It was revealed in Davos this year that the cost of re-skilling the 1.4 million US workers likely to lose their jobs as a result of the Fourth Industrial Revolution and other structural changes over the next decade will largely fall on the government, with the private sector only able to profitably absorb re-skilling for 25% of at-risk workers. This is the finding of a World Economic Forum report published today.
The report, “Towards a Re-skilling Revolution: Industry-Led Action for the Future of Work”, finds that it will be possible to transition 95% of at-risk workers into positions that have similar skills and higher wages. The cost of this re-skilling operation would be approximately $34 billion.
However, the report also finds that, of the 1.4 million workers at risk, the private-sector could only profitably re-skill 25%, or about 350, 000 workers. For the rest, at current rates of re-skilling time and costs and foregone productivity, it would be more cost-effective for businesses to replace them with workers with the correct skill-set.
The ability of the private sector to profitably absorb the re-skilling burden could rise to 45% of at-risk workers if businesses collaborate to create economies of scale. The report also finds that the government could re-skill as many as 77% of all at-risk workers, with a clear return on investment coming from increased tax returns and lower social costs such as unemployment compensation. For the remaining 18%, the costs outweigh the economic returns to government, while for 5% a similar-skills and higher-wage pathway is not available.
With 18% of all at-risk workers – 252,000 people – unable to be profitably re-skilled by either business or the public sector, the report’s findings imply that governments must consider expanding welfare and social support, paying for negative-return re-skilling due to its societal returns, and lowering the costs of re-skilling and retraining through incentives to and collaboration with the private sector and educators, including apprenticeships and online learning.