As the World Economic Forum kicks off in Davos, new research from Accenture highlights a key topic on the table: the impact of digital technologies on jobs and economies.
It’s an important topic for South Africa as new local research indicates that more than a third of jobs in this country may be automated.
A new Accenture report, Reworking the Revolution: Are you ready to compete as intelligent technology meets human ingenuity to create the future workforce?, indicates that by investing in intelligent technologies and human-machine collaboration, businesses could boost revenues by 38 per cent by 2022 and raise employment levels by 10 per cent. The report comes at a critical juncture for South Africa – new South Africa-specific research, indicates that one in three jobs in South Africa (5.7 million jobs) is currently at risk of total automation.
The Reworking the Revolution research estimates that investing in AI and human-machine collaboration could collectively lift profits by US$4.8 trillion globally. For the average S&P500 company, this equates to US$7.5 billion of revenues and a US$880 million lift to profitability. South Africa has much to gain.
Digital is a growth multiplier. Digital technologies are ushering in a new economic era by overcoming the physical limitations of capital and labour, exposing new sources of value and growth, increasing efficiency and driving competitiveness. However, for countries like South Africa that are less prepared for human-machine collaboration, digital technologies may bring more job losses than gains.
The 35 per cent of jobs at risk of automation that the research identifies is high compared with more digitally advanced countries such as Germany (24 per cent), and second only to Brazil (46 per cent) in this study. With a fragile economy and growing unemployment, especially youth unemployment, further job losses in South Africa could have a crippling effect.
Job losses will impact not just individuals and their families, they impact the economy. Workers are also customers. Without an income, they have little to no purchasing power to drive demand for utilities and the products and services of government and the private sector. This can bring economic growth to a standstill. This makes creating jobs and ensuring technological competitiveness a vital for South Africa.
The challenge for businesses, and for South Africa, is to move from merely applying digital technologies to improve efficiencies – realising the full promise of digital technologies and truly boosting economic growth depends on humans and machines working together to develop differentiated customer experiences, and create new products and services for new markets.
South Africa slow to ‘run with the machine’
Accenture’s research shows that at its current rate of learning, South Africa will shift to ‘running-with-the-machine’ activities (those that require more human-like skills) slower than other developed countries. To understand the risk, Accenture developed an econometric model using labour data from Statistics South Africa (Stats SA) and identified the share of job activities in each category that can be automated.
For South Africa, initial findings show that:
- 35 per cent of all jobs in South Africa are currently at risk of total automation, meaning machines can perform 75 per cent of the activities that make up these jobs;
- Both blue and white-collar jobs are at risk. The jobs of clerks, cashiers, tellers, construction, mining and maintenance workers all fall into this category. Hard-to-automate jobs (those with less than 25 risk of automation) include tasks like influencing people, teaching people, programming, real-time discussions, advising people, negotiating and cooperating with co-workers; and
- By 2025, jobs at risk in South Africa will reduce to 20 per cent as workforces evolve with new digital demands across occupations.
The good news? The research indicates that:
If South Africa can double the pace at which its workforce acquires skills relevant for human-machine collaboration, it can reduce the number of jobs at risk from 20 per cent (3.5 million jobs) in 2025 to just 14 per cent (2.5 million).
South Africa cannot hesitate – it must start now. To succeed, leaders must act swiftly to re-imagine work, pivot the workforce and scale up ‘new skilling’.
What actions can leaders take today to prepare for tomorrow? They need to:
• Re-skilling people – prioritise skills for development, re-skill at the top of the house and keep building;
• Pivot the workforce to areas that create new forms of value – create a more flexible workforce model and use automation to fuel growth by reinvesting savings in the workforce;
• Strengthen the talent pipeline from its source – bring personal influence to bear on industry groups and collaborate with academia. However, a clear collaborative multi-stakeholder approach is needed;
• Government needs to be at the forefront of creating opportunities for its citizens to access digital technologies. It must also set policy to regulate action across areas where the digital revolution is likely to have the most impact;
• Corporate South Africa must work at using technology to enhance growth beyond achieving efficiencies, developing its people;
• Organised Labour needs to accept that digital technologies bring the potential for economic growth and global competitiveness. The course of the digital revolution cannot be changed but it can be smartly managed; and
• Institutions of Learning will need to pivot too. To produce graduates that are innovative, internationally-oriented and have the problem-solving capabilities to address issues that are global and multi-disciplinary. We need new systems of learning for both what and how we learn.
Businesses risk missing major growth opportunities unless CEOs take immediate steps to pivot their workforces and equip their people to work with intelligent technologies. But this is equally true for South Africa as a country. With one in three jobs at risk of automation, South Africa’s commitment to what is called Applied Intelligence – the ability to rapidly implement intelligent technology and human ingenuity to secure growth – will be vital to secure economic access for all its people and drive the economy forward.
Dr. Roze Phillips is the Managing Director for Accenture Consulting.