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The future of work

What follows decades of change in three years?

  • Technological innovations look set to alter the nature of jobs in the economy…
  • …while greater flexibility in working locations and hours may continue…
  • …with widespread impacts on labour markets and urban areas

The pandemic completely altered the shape of the labour market. From the sharp changes in labour supply and demand to working habits shifting more quickly in a couple years than they would have been expected to in decades, the labour market today is quite different to back in 2019. We’ve seen an alphabet soup of new terms, from ‘quiet quitting’ to ‘ghosting coasting’ and rapid progress in artificial intelligence which potentially threatens the demand for many roles in the future. With profound, and potentially conflicting, implications for productivity and wage growth, these changing supply and demand dynamics mean it is already clear that we need to rethink how we look at the labour market in the years to come.

the role that automation and artificial intelligence play on the labour market will only increase – but the degree of which is uncertain

Some of these changes are going to be longer-term: the role that automation and artificial intelligence play on the labour market will only increase – but the degree of which is uncertain. Much of the developed world is running up against a shrinking working-age population – which could mean some upward pressure on wages if these technological developments don’t erode the need for many roles.

Of course, one of the biggest shocks from the pandemic has been where we work. Based on pre-pandemic trajectories, workers in the US and elsewhere have seen 40 years of growth in remote or hybrid work in the space of three years. This rapid change is one that continues to embed in working practices despite more firms calling on workers to return to offices, either entirely or for a majority of the week.

But it’s not just about where we work. The number of hours we work may change, too. The pandemic has accelerated (or for some, triggered) the rollout of the four-day week, with recent pilots proving seemingly entirely positive: output and productivity held up alongside big jumps in worker satisfaction.

These impacts are among the possible positives – but there are challenges. There may be less idea generation or mentoring. Younger staff may lose out on some development. Productivity may be hindered by these changes, and we may also see a drop in output per worker (if not per hour), limiting the productive capacity of economies. Many workers could be displaced by technology and the importance of investing in adequate training and skills will only increase.

While the impact on traditional economic metrics like employment, productivity and wages are hard to ascertain given competing drivers, changes in ways of working could lead us towards social benefits. More remote and flexible working can lead to more diverse workforces, more satisfied staff and better mental health outcomes.

How will this all evolve? The simplest summation is that there’s no one-size fits all approach for every firm or role. Greater flexibility and a stronger embedding of remote work seems likely, with impacts for how our urban areas function. For now, cities appear to be thriving still – but for activities not tied to office attendance – and that evolution looks set to continue.

Attitudes towards work may have been jolted by a once-in-a-generation event, and we cannot put that genie back into the lamp. The world of work already looks very different to before the pandemic and even more changes look likely in the years to come.

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