How did the pandemic change the labour market?

The pandemic has changed the labour market in Europe and the perception of remote work. In a study by McKinsey Global Institute entitled The future of work in Europe it has been estimated that up to 59% of European jobs, or 26% of the total, are at risk in the short term due to reductions in hours or wages, temporary holidays or permanent layoffs. 

The labour market after the pandemic

Many people lost their job and were forced to change it or retrain themselves. And many started to work remotely. Whether we talk about a full-time job or having own business, the remote working model has proved to have many advantages, both for employees and employers:

• allows employees to save time and money on commuting, 
• gives employees greater control over their schedule and work environment, 
• may enable employers to save on renting office space. 

The impact of COVID-19 can accelerate workers’ transition to a skill-intensive work model. The crisis also increases European countries' inequalities within people with varying educational backgrounds and among young people.

In 2020, McKinsey Global Institute published a document that examines the trends that have taken place in Europe in recent years and that will continue until 2030. It has been achieved through an analysis of 1095 local labour markets, including 285 metropolitan areas. The results are as following:

1. progressing power of automation, 
2. increasing geographical concentration of employment, 
3. contraction of labour supply, 
4. the changing mix of sectors and occupations. 

European labour market until 2030 acc. to McKinsey Global Institute:

1. Automation – a great force, but not the only one 

Automation has already triggered changes in the area of ​​employment and related skills. It strengthens the shift towards knowledge-intensive sectors such as information and communication technologies, education, real estate, financial services and human health and social work. The research shows something more: it is not the only force shaping the labour market.

• The impact of automation on work in Europe may not be the only one and is not as significant as it is believed to be. 
• A large group of occupations likely to supersede in the long term are also at risk of the Covid-19 crisis in a short time. 

Threatened jobs as a result of COVID-19 and automation 

The risk is unevenly distributed in Europe, with important differences between sectors and occupations. And consequently, also between demographic groups and local labour markets. Three occupational groups account for half of all jobs at risk: customer service and sales, food services and construction occupations. About 24 million jobs, or almost 50%, will suffer from both COVID-19 and automation.

The study scenarios predict that further development of automation in the decade ahead will mean that most of the current 235 million European workers will face change as their professions evolve. The occupational and geographic mismatch is likely to be the main challenge. It is assessed that: 

• 21 million people will have to leave declining jobs; 
• 94 million workers may not have to change their profession but should acquire new skills (about 20% of what they are doing now will handle technology).

Sectors most at risk of job losses due to the pandemic overlap to some extent with those most at risk of resettlement through automation.

This overlap is distributed differently across sectors. For example, in wholesale and retail, almost 70% of places are at risk from both automation and COVID-19. Out of these, 80% (46 million) are people with no higher education. 

2. Geographical change in employment in Europe 

EU labour mobility is increasing as people migrate from lower-income regions to dynamic cities. COVID-19 and the increased automation triggered by the pandemic could accelerate this trend, according to the study. Many of the largest job categories have the strongest resettlement potential. They include support positions in the office and production.

Low-paid customer service and sales classes, such as cashiers and clerks, will collapse as many of their tasks are systematically automated. However, only 10 of the 400 occupations surveyed – including retail, administrative and sales employees – account for 20% of likely movements. 

The McKinley report predicts that by 2030, three sectors will account for over 70% of potential employment growth in Europe.

The biggest ones concern human health and social work, where 4.5 million jobs can be expected to emerge. The next ones are occupied by specialistic, scientific and technical services – 2.6 million places, and education – 2 million.

3. A new stage of work and changes in the professional model 

The analysis reveals that the future of work is at a new stage, which started to develop even before the pandemic. Between 2003 and 2018, total employment in the 27 countries of the European Union, as well as Switzerland and the United Kingdom, increased by almost 10%, reaching a record level. At the same time, the professional composition has changed.

The increase in employment favoured people with the highest skills, e.g. lawyers and health care workers, while those with an average level, e.g. bank tellers, have stagnated.

In the new employment model, many of the growing occupations require increasingly higher skill levels. And so, by 2030, professional roles will increase by 20–30% in the following areas: 

• STEM (science, technology, engineering and mathematics) 
• business, 
• legal, 
• creative. 

In this model, only 15 occupations account for almost 30% of potential future employment growth. These include programmers, nurses and marketing specialists.

4. Demand for new skills 

It is already known that the tasks will change within individual professions as some of them are taken over by machines. However, there are activities for which they are not a good substitute. Hence, the focus will increase on roles requiring human interaction, care, teaching and training. As a result, the demand for new skills will rise. 

By 2030, the cross-section of the demand for specific activities will change. Demand for those requiring physical and manual skills will drop by 18%, and for cognitive skills – 28%. However, there is expected to be a significant demand for socio-emotional skills. 

All industries will considerably increase activities that require technological skills. They will create a significant demand for STEM employees (approx. 39%), primarily programmers, actuaries, and data scientists, which are already missing. A large part of the currently fastest growing remote workplaces is related to STEM, which already increased by 50% in 2018. Distance employment has also increased in industries such as finance, banking, insurance, healthcare and real estate. Filling the existing and created jobs in these areas will be a huge challenge in the next decade. 

Summary 

To prepare current and future employees for the upcoming change and enable them to succeed, each country in Europe needs to create more training and career paths. Emphasis should be placed on the new skills required for specific occupations, especially STEM skills. This involves the mobilisation of education systems, employment agencies, training infrastructure and new digital technologies.

Governments and organisations need to be mindful of long-term trends in labour markets and prepare their communities for the post-pandemic era. The greatest challenge is helping individuals find new opportunities and prepare for tomorrow's work.