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Digitalisation, automation could deliver 1.2m net jobs – report

20th September 2019

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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A new report has revealed that technology-related gains could triple South Africa’s productivity growth, more than double the growth of per capita income and add more than a percentage point to its real gross domestic product (GDP) growth rate over the next decade.

‘The Future of Work in South Africa’ report, by McKinsey & Company, reveals that South Africa could gain a net 1.2-million jobs by 2030 as a result of digitalisation and automation and, subsequently, productivity improvements, strategic infrastructure development and the evolution of technology.

There has been much public debate about automation and technologies such as machine learning, artificial intelligence and advanced robotics destroying more jobs than they create.

“While the threat of digitalisation is real – and will result in significant displacement of jobs, especially in the manufacturing and retail sectors – McKinsey research demonstrates that digitalisation and automation are likely to result in a net gain in jobs,” explains McKinsey Johannesburg partner and report coauthor Nomfanelo Magwentshu.

South Africa now has the opportunity to increase its competitiveness in key sectors and reignite much-needed growth by leveraging technologies.

Yearly GDP growth averaged 2% a year in the period 2006 to 2018, a significant slowdown on the growth of 3.4% a year during the preceding decade.

The country’s stagnant productivity is one reason for the economic underperformance, as growth in productivity fell close to zero in the past decade.

The unemployment rate remains high and wage growth has been muted, further contributing to already high levels of inequality.

“The case for taking such action is urgent and compelling, given South Africa’s high levels of unemployment and the need to accelerate inclusive economic growth,” says Magwentshu.

“If leaders in the public, private and education sectors work together in bold and imaginative ways, they can harness digitalisation to catalyse a skills revolution in South Africa and create millions of new, high-quality jobs.”

The research suggests that, while the new digital revolution will disrupt the world of work, technology that had historically created large shifts or transitions in employment had ultimately increased productivity and, therefore, the creation of more new jobs than those destroyed.

“In South Africa, we estimate that digitalisation, machine learning and automation have the potential to create 1.8-million new jobs purely as a result of improved productivity – which, in turn, could increase income levels, consumer spending, investment in construction and infrastructure, and spending on education and healthcare,” the report states.

An additional potential of 1.2-million new jobs could be created in as-yet-unknown occupations as technology advances.

Productivity improvements, strategic policy implementation and the evolution of technology can potentially lead to the creation of 4.5-million new jobs, delivering a net gain on the expected displacement of 3.3-million existing jobs by 2030 as a result of innovation.

These gains imply significant workforce transitions in South Africa. Against the 4.5- million potential new jobs created, we estimate that these technologies could displace 3.3-million existing jobs by 2030.

“We estimate that there could be a net gain of more than 570 000 jobs in the healthcare and social-assistance sector alone, and a net gain of more than 260 000 jobs in construction,” the report shows.

However, new, technology-enabled jobs will require higher skills levels and greater application of expertise and management, which will necessitate a significant investment in human capital.

While automation will cause the demand for employees without matric to fall substantially, it will increase the demand for graduates, with estimations that there will be demand for an additional 1.7-million employees with higher education by 2030.

“If workforce displacement from automation is not managed effectively, and the graduate conversion rate in the country is not improved, the result could be a significant increase in overall unemployment. South African businesses would be hurt by both a slowdown in consumer demand and a shortage of critical skills,” says McKinsey partner and report coauthor Agesan Rajagopaul.

Unless South Africa’s graduate conversion rate improves, much of that demand will go unmet – resulting in a serious skills shortfall across the economy, the report concludes.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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