Reskilling

Radical change is in full swing. In a few years from now, many jobs we know today won't exist anymore. More automation and more technologies will take over the activities that are currently executed by employees. The elimination of jobs doesn't equal the termination of people executing those jobs. Governments and organizations work hard to keep people employed because of future labor challenges. Critical to their activities are efforts to reskill workers. Everybody is aligned that the demand for people will remain high. It's in-demand skills that continue to change.

Conversations about the future of work often include the terms reskilling and upskilling. While there is obvious overlap, reskilling isn't the same as upskilling. Unlike reskilling, upskilling is about employees adopting or advancing in skills within their existing domain. Reskilling is then about preparing employees for different roles. Organizations run upskilling programs with a different purpose than reskilling programs. The upskilling programs are designed to keep employees engaged whereas reskilling programs are about keeping workers employed. Reskilling is likely more demanding than upskilling but an aging workforce, monumental global changes, and rapid innovation drive a strong need for organizations to pursue initiatives in both areas.

The need for reskilling is incredibly urgent. Back in 2019, the Organisation for Economic Co-operation and Development (OECD) predicted that workplace developments would eliminate 14% of jobs and severely impact 32% of jobs in the following two decades. These predictions were made prior to the launch of ChatGPT and the quickly succeeding ascend of AI. The Boston Consulting Group (BCG) (2023), estimates that well over 1 billion people will be affected by new automation and technologies. With nearly one in seven jobs disappearing, the people holding those jobs will have to change their skills to remain competitive and employed. No organization is looking to put these people out on the streets. After all, 77% of employers face difficulties filling existing roles (ManpowerGroup, 2023). Organizations are doing their best to facilitate reskilling programs and help employees take on in-demand roles but it might not be enough. Many jobs will stop to exist but the need for reskilling is exacerbated by the rise of new jobs. A quickly changing workplace and the overall growth of jobs push employees, organizations, and governments to accelerate plans to reskill.

The state of reskilling is questionable. Organizations, society, and governments share responsibility in addressing reskilling. Based on a study by ManpowerGroup, 71% of organizations are engaged in reskilling and upskilling the current workforce. In other words, 29% have not taken action yet to curve future employee turnover. According to the Boston Consulting Group (BCG) (2023), organizations invest around 1.5% of their revenues in learning and development. These investments scratch the surface of the problem but are not going far enough. Looking broader than companies, the percentage of global GDP spent on lifelong learning stocks at 0.5% while the potential of reskilling and upskilling the current workforce is estimated to boost GDP by $6.5 trillion (World Economic Forum, 2023). An underinvestment in reskilling is forcing people to take action on their own. Forbes (2023) indicates that there are millions of workers who are unable to participate in reskilling programs or unaware of them. The current state leaves much room for improvement and it's increasingly about allocating (sufficient) resources to enable reskilling.

Once organizations have freed up the means to shape reskilling initiatives, the focus shifts to ensuring their effectiveness. Comprehensive reskilling programs frequently have a positive economic impact on organizations. A study by McKinsey & Company (2020) on reskilling in the United Kingdom found that 75% of reskilling cases make economic sense. In the cases where reskilling was needed but didn't make economic sense there were other benefits that justified the investments. Effective reskilling initiatives help organizations tap into their own (new) talent pools, save resources on talent acquisition (including cost to hire, onboarding, etc.),  reduce salary costs, and boost employee morale. Reskilling internal talent avoids having to spend nearly 20% on salary that would otherwise go to external hires and a commitment to reskilling is a reason for 94% of employees to stick around longer, increasing retention rates. Organizations can calculate for themselves what the potential impact of reskilling initiatives is and therewith estimate a justifiable investment in such initiatives. 

Reskilling is vital to shaping the future workforce. Without serious investments in reskilling, a large number of employees will see their jobs evaporate and lose their ability to compete in the labor market. Unless organizations engage in reskilling their employees, they'll see their problems in attracting skilled labor worsen. Thus far, organizations, society, and governments have not done enough to tap into the potential of reskilling or meet their ambitious objectives. Hopefully, more studies on the (economic) benefits of reskilling motivate change,  strengthen the commitment to reskilling, and accelerate much-needed investments.