Susan Lund is a partner of McKinsey & Company and a leader of the McKinsey Global Institute. As a PhD economist, her research focuses on globalization and trade, and the impact of technology on work and workers. She is also a leader of McKinsey’s team modeling the impact of Covid-19 on economic growth. Her most recent research explores how global value chains and trade flow are evolving, and on how digital flows are transforming globalization and creating new winners and losers. Dr. Lund has an active travel schedule discussing research findings with CEOs and other executives at global Fortune 500 companies and she is a frequent speaker at global conferences. She has authored numerous articles in leading business publications, including Harvard Business Review, The Financial Times, The Wall Street Journal, The Washington Post, and Foreign Affairs.
Susan is on the Economic Advisory Board of the International Financial Corporation; a Board Director of the National Association of Business Economics; and a member of the Center for Global Development Study Group on Technology and Development Prospects.
Susan holds a Ph.D. in applied economics from Stanford University and a B.A. in economics from Northwestern University. She has lived and worked in Africa and Asia and currently resides in Washington, DC. Capital linked up with Susan Lund for an inside look into MGI’s recent report titled, ‘Future of work after COVID-19.’Excerpts;
Capital: Over the past four years, the McKinsey Global Institute (MGI) has published a series of reports exploring aspects of the future of work in a time of technological change, including an analysis of jobs that could be displaced by automation and AI. What were the challenges observed while reporting on a global pandemic, that is relatively new, sudden and unpredictable?
Susan Lund: COVID-19 had an immediate and jarring impact on work, but its long-term impact is likely to be significant. We identified how COVID-19 has changed the trajectory of trends that shape the future of work. We know from McKinsey survey of consumers in April, for instance, that three quarters of the respondents using digital channels for the first time during the pandemic plan to continue using them when life becomes more “normal.” Also, we know from our colleagues at McKinsey that many companies are already planning to reduce office space and deploy their employees differently going forward because of their successful experience with remote work. Many companies say they will accelerate their use of automation and AI technologies coming out of the pandemic as well. In general, some changes that the virus forced on consumer behavior and business models turned out to increase convenience and efficiency, making them more likely to endure.
Capital: This research uses as highlighted the “micro-to-macro” methodology. Can you expound why you chose this approach?
Susan Lund: The value in the research done by the McKinsey Global Institute is that we try to examine and analyse microeconomics on the ground, inside companies, inside sectors, and in particular places. That micro understanding of how the business operation and how consumers make decisions then allows us to have a point of view on business and economics at a macro level. This is one of the benefits of being part of McKinsey & Company – it gives us access to this micro perspective that provides insight and understanding on a larger, broader scale.
Capital: What are the standout trends in the “Future of work after COVID-19” report that are accelerated by the pandemic?
Susan Lund: COVID-19 has highlighted the importance of physical proximity in jobs. It catalysed three trends – e-commerce and other virtual transactions, remote work and digital interaction, and automation and AI – that are likely to change the trajectory of the future of work over the next decade. To better understand the role proximity plays in work, we analysed the activities and tasks required in more than 800 occupations and assigned each to one of ten work arenas.
Capital: Women, young, less-educated workers, ethnic minorities, and immigrants may need to make more occupation transitions after COVID-19 as per your report. Can you brief us on the analysis that went into arriving to this?
Susan Lund: COVID-19 had an immediate impact on women in the workplace that is well documented. Research by the McKinsey Global Institute found that women’s jobs were 1.8 times more vulnerable to COVID-19’s impact that men’s jobs. Women make up 39 percent of global employment but accounted for 54 percent of overall job losses early in the pandemic. One reason for this greater effect on women is that the virus significantly increased the burden of unpaid care, which typically falls primarily to women.
In looking at how COVID-19 is likely to change the future of work, our research found the COVID-19 is likely to have its greatest impact in “work arenas” that are home to jobs requiring close physical proximity and human interaction. These arenas – onsite customer service, leisure and travel, and computer-based office work – are home to many of the low-wage jobs that are more vulnerable to disruption due to the three trends accelerated by COVID-19. These jobs, in retail sales, food service, customer service, and office administration, are disproportionately held by women, young people, ethnic minorities, immigrants, and less-educated workers.
We find that across the United States, France, Germany, and Spain, women are 4.1 times more likely than men to need to change occupations because of shifts COVID-19 has caused in the three trends. The virus’s impact may fall even harder on 15-to-24 year-old workers, requiring them to find jobs in new occupations 4.2 times more than workers aged 24 to 55. Blacks and Latinos in the United States could face occupation transitions 1.3 times more than white workers, while in France, Germany, and Spain, workers not born in the EU face 1.7 times as many transitions compared to workers born in those countries.
Capital: In alignment with your report, workers will need to learn more social and emotional skills, as well as technological skills, in order to move into occupations in higher wage brackets. Can you expound further on this with the analytical data and plausible recommendations for this trend?
Susan Lund: The long-term impact of COVID-19 on work means that many low-wage jobs will not return, while demand for the skills needed for higher wage jobs in areas like healthcare and the STEM professions will increase. This means that to find a job, displaced low-wage workers whose previous jobs involving primarily physical and manual tasks. In advanced economies, workers in the lowest wage bracket on average spend half their time engaged in such tasks and much less time, 13 to 17 percent, using higher cognitive skills. In higher wage jobs, workers in advanced economies spend one-third of their time on the job using cognitive skills and only 3 to 5 percent of their time doing physical and manual tasks.
Before the pandemic, middle-wage jobs in manufacturing and production were declining, but those displaced workers did not necessarily need retraining or new skills because low-wage jobs continued to grow, offering them a landing pad. Because of COVID-19’s impact on trends affecting the future of work, however, we project that low-wage jobs are also, for the first time, likely to decline. Both low- and middle-wage workers, therefore, may need to look for jobs one or two wage quintiles higher than they previously held and requiring different skills.
Businesses and policymakers thus face an urgent need for programs that train and educate mid-career and vulnerable workers for better paying jobs. Last fall, for instance, the EU established the Pact for Skills, which offers businesses and other stakeholders’ incentives to devise programs aimed at overcoming the mismatch between skills and available jobs. Under the pact, automakers have pledged €7 billion to retrain each year 700,000 auto workers whose jobs are at risk.
Capital: Your research looks into 8 countries which account to 62% of the global GDP. Will similar trends be translated to the African continent? If trends might differ, what are your projected trends on Africa?
Susan Lund: We did not include African economies in this analysis, but in general we find that the long-term impact of Covid-19 on work in developing economies will be lower because the structural changes going on in their economies are the more important drivers of change. This includes the shift out of agriculture and into manufacturing and services, and the fact that with growing populations, demand for all types of jobs will rise in the coming decade. The challenge for these countries will be to create enough good jobs for all the young people entering the workforce.
