A new Davos report using Burning Glass Technologies jobs data answers a basic question about technology and the future of work: in many cases, it’s cheaper to reskill workers than to hire new ones.
The report is the second one on the future of work issued by the World Economic Forum and Boston Consulting Group with Burning Glass Technologies. The first report identified practical pathways to new jobs for the 1.37 million U.S. workers at risk of being replaced by technology over the next 10 years.
This new report, Towards a Reskilling Revolution: Industry-Led Action for the Future of Work, makes the business case for reskilling these at-risk workers, both for business and governments. In effect, the report creates a balance sheet for retraining existing workers against firing them and bringing in workers with new skills. From both perspectives, the financial benefits of reskilling large numbers of these workers outweigh the investment in training costs, the report found.
Both government workforce agencies and corporate human capital management are struggling with how to deal with the massive disruptions likely to occur as automation and artificial intelligence redefine jobs. Workforce agencies want to ensure workers find new, well-paying careers, while corporate HR managers want to ensure their business has the talent it needs to adapt to whatever the future brings. In both cases, there’s a strong business case for reskilling workers, the report concluded.
“We find that there is a compelling financial and nonfinancial ‘business case’ for companies and governments to reskill at-risk workers,” the report said. “More broadly, we find that companies across all industries should consider a triple investment today—reskilling at-risk workers, upskilling their broader workforce and building structures for a learning organization—to prepare for both the short-term and long-term future of work.”
The report looked at five industries in-depth: Aerospace; Aviation, Travel and Tourism; Consumer; Financial Services; and Oil and Gas.
Key findings include:
- To reskill all 1.37 million American workers at risk would cost $34 billion, or about $24,800 per worker.
- The report compared the costs of firing workers and rehiring ones with new skills vs. the costs of retraining existing workers. The balance sheet for rehiring include severance, hiring, wages and benefits, but also factor in gains in productivity. The comparison for retraining workers include reskilling, wages and lost productivity while the worker retrains; but also include post-training gains in productivity.
- The U.S. private sector could reskill 25% of all workers in disrupted jobs for $4.7 billion and have the financial benefits outweigh the costs.
- The cost-benefit analysis becomes even better if public-private partnerships become involved. The report concluded if such partnerships reduced the cost of retraining by 30%, then roughly half of all at-risk workers could be reskilled at a financial gain to employers.
- The financial analysis works for government as well. For $19.9 billion, the U.S. government could retrain 77% of potentially displaced workers and see a positive return on investment in terms of lower social welfare costs and higher tax income, the report concluded.
The full report is available at the World Economic Forum website.
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