January 22.2019, Washington: Stefan Winzenried, CEO of JANZZ.technology, presented on January 22, 2019 for the Labor Global Solutions Group at
the World Bank in Washington the comprehensive features and the huge potential of powerful matching systems for different labor markets today and after the digital transformation.
In Japan, one person in five is 70 or older. According to last year’s data of the Internal Affairs and Communications Ministry, 26.48 million people are 70 or older, which accounts for 20.7% of the total population [1]. If you go to Japan, you will see many senior citizens still working in the shops or running around the streets in suits. There, the term “elderly” has been redefined. In fact, a group of academic societies suggested only considering people “elderly” as of age 75 and people from age 65 to 74 as “semi-elderly” who can actively contribute to society [2].
Due to the shrinking core labor force and the long lifespan of Japanese people, the number of employed senior citizens (65 and older) reached 8.07 million in 2017, which makes up 12.3% of the overall workforce [3]. Currently, the statutory retirement age in Japan is 60, however, few people are taking their pensions at that age. Due to the fact that citizens are able to receive a pension anytime between 60 and 70 most Japanese seniors choose to work beyond the age of 60. Last year, the Japanese government approved plans to raise the optional age for receiving pensions to 71 and older and they are also considering raising the statutory retirement age to 65.
Japan is not alone in this. The problem of population ageing is challenging governments worldwide. Many countries have carried out reforms aiming to increase the retirement age. According to the German federal government website, as of this year, the retirement age will increase from 62 to 65. Also, the Russian government has submitted a pension-reform legislation that proposes raising the retirement age from 60 to 65 by 2028 for men and from 55 to 63 by 2034 for women.
Some of the senior citizens are happy to continue working in order to help themselves stay mentally and physically fit. However, for those who have a hard-working life and are counting the days to retirement, the prospect of having to work until 70 is a dire one. Furthermore, this kind of development means that young graduates are worried about their job prospects.
Compared to young people, knowledge and experience are among the strengths of older workers. However, there are also many factors that make companies hesitate to employ them. Declining physical capacity prohibits seniors from continuing the kind of work that requires extreme physical fitness, such as fire fighting, construction work or gardening. What’s more, with the rapid changes in technology, it is especially difficult for the elderly to keep up with the newest developments.
Certain companies have discovered the value of the “silver employees”. The Japanese cosmetics company Pola is one of them. Many Pola employees are in their seventies and older. For example, Miyoko Sugiyama, an 83-year-old store director of one of the Pola shops. She knows all the preferences, ages, health status and shopping habits of her 30-odd clients. When new products come out, she goes to visit her clients personally by bike or train to inform them about these products. Sugiyama is one of Pola’s 50,000 “beauty directors”. Among them, 5,500 are in their 70s, 2,500 are in their 80s, 250 are in their 90s and recently one of their salespeople turned 100. [4]
Manufacturing companies are staring to realize the value of older workers, too. There, passing on the skills of experienced workers to younger workers is key. At, bearing manufacturer Isoda Metal this is well understood. About a decade ago, the company started allowing skilled workers who have passed the statutory retirement age to continue working. Grinding bearings requires accuracy within a 100th of a millimeter which takes years of experience and intuition to manage. Today a quarter of the company’s workforce is in their 60s to 80s and many of them double as instructors of younger workers. [4]
As pointed out by Peter Cappelli, director of the Center for Human Resources at the Wharton School at the University of Pennsylvania, “in Japan, it’s now less about keeping people working at the same companies longer and more about trying to get them into alternate jobs and to do other kinds of things” [5]. Furthermore, Professor Caitrin Lynch at Olin College of Engineering said that governments should create meaningful jobs for older workers that offer them satisfaction and a sense of meaning and of belonging, thus establishing a working environment and working conditions that keep them motivated for work. Even though this seems costly in the beginning, in the long run it pays off. [6]
For almost a decade, JANZZ.technology has been observing and working with many labor markets worldwide. Our matching engine “JANZZsme!” matches in a completely unprejudiced manner, as it is based on the relevance of competences, experiences, specializations, industries and more. It creates transparent and easy to understand gap analyses of the labor market. This will give you a clear idea of which skills are available and which ones should be expanded or redeveloped.
Write now to sales@janzz.technology
[1] The Japantimes. 2017. For the first time, 1 person in 5 in Japan is 70 or older. URL: https://www.japantimes.co.jp/news/2018/09/17/national/number-women-japan-aged-least-65-years-old-tops-20-million-first-time/#.XDR0PFxKiUk [2019.01.10].
[2] The Japantimes. 2017. Make is easier for elderly people to keep working. URL: https://www.japantimes.co.jp/opinion/2018/02/23/editorials/make-easier-elderly-people-keep-working/#.XDR9SFxKiUl [2019.01.10].
[3] Nippon. 2017. Senior-citizen workers in Japan top 8 million. URL: https://www.nippon.com/en/features/h00179/ [2019.01.10].
[4] Manabu Ito. 2016. Japan puts its seniors to work. URL: https://www.ft.com/content/7a879e66-6b78-11e6-a0b1-d87a9fea034f [2019.01.10].
[5] Richard Eisenberg. 2017. How these 3 countries embrace older workders. URL: https://www.forbes.com/sites/nextavenue/2018/05/10/how-these-3-countries-embrace-older-workers/#72b6c8171bd4 [2019.01.10].
[6] Caitrin Lynch. 2015. Create meaningful jobs for the elderly. URL: http://www.nira.or.jp/pdf/e_vision9.pdf [2019.01.10].
Due to digitization, jobs will disappear. This is old news to our ears. Yet, the predicted consequences made by the first comprehensive study on the effects of digitization by 2030 are devastating: In Switzerland alone at least 1 million jobs are said to disappear, which is a frightening figure for a population of about 9 million people. In fact, McKinsey & Company find that almost entire industries are affected – but they also anticipate that digitization enhances productivity and creates new jobs.
McKinsey & Company’s study “The future of work: Switzerland’s digital opportunity” predicts that 20 –25% of jobs in Switzerland are at risk of disappearing. Above all, it is manual and simple cognitive jobs such as cashiers, data collectors, warehouse clerks or production assistants that under digitization need no longer be performed by people. Thanks to a large number of small technological innovations, these jobs are already increasingly automatized today – this will increase considerably by 2030. Manual skills, too, will be increasingly less in demand, especially so-called low-skilled jobs. Statistical, reading and writing skills will also become highly automated by 2030. Likewise, there are already very good tools available for successful project management. This poses a particularly major challenge for the Swiss banking sector where many of these skills are crucial. There is already a growing number of bank customers who dispense with personal consulting and prefer instead the information portals of online banking. In numbers, the expected amounts of jobs that will disappear are about 50,000 jobs in the financial sector, 120,000 in the retail trade and 70,000–100,000 in the industrial sector.
Of course, digitization also requires new skills, which is why there is a simultaneous generation of new jobs and positions, particularly with regard to technological, scientific and social skills. After all, digitalization has to be carried out by humans, hence its very implementation stimulates the growth of new job opportunities during the transition period. Unfortunately, the newly created 800,000 jobs in these areas will not coincide with those in which positions are currently disappearing. Rather, “Digital Transformation Officers” and “Project Managers Internal Digitization” are now in demand.
So, jobs cannot simply be redistributed: for example, a machine operator will not be able to become a project manager without great outlay. Neither will a cashier just assume the tasks of a nurse. Therefore, it is important to take measures in training at an early stage; partly because retraining is costly, partly because it is difficult to perform with broad sections of the population. The same goes for skills and soft skills: technological understanding, or the empathy and strength to provide for elderly and sick people are not natural givens to everyone.
The increase in new positions will not only be in the technological sector, but also in healthcare. One decisive factor in this area are social skills. An important contributor to this development is the fact that society is ageing: by 2030, 23% of the Swiss population will be over the age of 65, compared to
18% today. Accordingly, the demand for nursing staff is increasing considerably. In the health sector an additional demand of up to 85,000 employees is expected, especially of health and trained nursing professionals. This is in contrast to the fact that there are both already too few people being trained and many who leave their jobs after a while; among health professionals, it is as many as three out of four. Among registered nurses, about half remain in their profession. There are many reasons for this: shift work, hard physical labor as well as low wages.
This shortage in healthcare professionals cannot only be found in Switzerland, but worldwide. A study finds that in near future the United States’ lack of health staff will increase by some 2 million people, especially with regard to nursing care at home and in retirement homes. Yet, it is exactly these jobs which have an extremely low pay, with some of them being way below the median American income. Likewise, it is precisely these kinds of jobs that include physically challenging and inconvenient shift work. Under the current circumstances it is very unlikely that the necessary positions will be occupied.
At first glance one would think that it is nice that especially physically challenging work will be made easier with the introduction of robots and other technological aids. Unfortunately, this also brings financial alleviation to health insurance funds. How, then, will we finance the future labor market, or, for that matter, road construction, schools or the necessary equipment for digitized world? Are we going to introduce a “digitization tax”? Will employers have to pay pension insurance “for” robots to compensate for the remaining human workforce?
The question also remains whether such a takeover by robots is even permitted. Changes that so far were monitored by human eyes will now be perceived by screens. Is this even legally defensible? Many procedures would furthermore require specific certificates. Thus, how can one secure a robot’s competence? Can robots, for example, pass driving tests?
The clarification of responsibilities is already difficult today, particularly when it comes to mistakes. Oftentimes, the determination of the responsible party requires months of assessment. Thus, will we soon be able to take out “robot insurance”?
As indicated, it is not only Switzerland that is facing the outlined challenges. In Germany there is already a MINT staff shortage of 300,000. In the US, a large-scale study examined 702 jobs for their probability of automatization and concluded that 47% of the American working population is highly likely to be affected. Jobs requiring a high level of social intelligence (e.g. press spokespersons), creativity (fashion designer) as well as good comprehension and operation (surgeons) are hardly at risk. The situation looks similar if one looks elsewhere. The investment group CBRE finds that until 2025 50% of jobs in Asia will be at risk, especially in manual and cognitive areas.
In Germany the gravity of the situation has been recognized. The country is introducing a law that simplifies immigration for skilled workers, a measure to counteract the growing shortage, particularly in the health sector. The law applies to citizens of third countries, that is, non-EU countries that already benefit from the free movement of persons. This means that anyone with a sufficient qualification for an employment contract can immigrate. There will also be a six-month visa for the time necessary for job search. The current measure, namely the check whether an EU-citizen can perform the job, is cancelled. There are similar ideas developing in the UK, where in early 2019 a new start-up visa will be introduced. The UK’s intention behind this is to make it easier for foreign technology entrepreneurs to set up new businesses
How should these challenges be met? Digitization pushes two tasks to the foreground. Firstly, the transformation of the economy ought to be supported decisively but should not be done too quickly.
Too rapid a transformation could lead to higher unemployment, if the situation arises that new skills have not been developed fast enough. Transformation also requires new processes and business models. For example, only 8% of trade in Switzerland takes place online, compared to 15% or 18% in Germany and the UK, respectively. If digitization succeeds, the Swiss economy in particular will be able to benefit considerably from the transformation and might increase productivity by up to one percent per year. Furthermore, higher real wages are likely to increase consumption and, in turn, to create new job positions.
Concurrently, the focus must lie on the fundamental training of employees and learners in the skills of the future. To this end, teaching should have much more technological content. For example, trainees should be able to perform more office tasks on the computer. Today, the demand for technology graduates in Switzerland is far from being met; in the future, the 3,000 graduates now available would cover less than half of the positions to be filled.
Furthermore, it has been shown repeatedly that social skills are fundamentally underestimated: they play a major role in the long-term successful development of the labor market. This is another area in which companies and educational institutions should start to provide comprehensive training. Overall, thus, a fundamental rethinking of the development of skills is indispensable.
For almost a decade, JANZZ.technology has been observing and working with many labor markets worldwide. Our matching engine “JANZZsme!” matches completely unprejudiced, as it is based on the relevance of competences, experiences, specializations, industries and more. It creates transparent and easy to understand gap analyses of your employees’ skills. This will give you a clear idea of which skills are available and which ones should be expanded or redeveloped. Contact us now for a consultation and we can accompany you with our know-how on your successful way to digitization.
Write now to sales@janzz.technology
[1] McKinsey Global Institute. 2018. The Future of Work: Switzerland’s Digital Opportunity. Zürich/Brüssel. URL: https://www.mckinsey.com/~/media/mckinsey/featured%20insights/
europe/the%20future%20of%20work%20switzerlands%20digital%20opportunity/the-future-of-work-switzerlands-digital-opportunity.ashx [2018.11.10].
[2] Hug, Daniel. 2018. Bis 2030 fallen in der Schweiz eine Million Jobs weg. In: NZZ am Sonntag, 6.10.2018. URL: https://nzzas.nzz.ch/wirtschaft/bis-2030-fallen-in-schweiz-eine-million-jobs-weg-ld.1426280?reduced=true [2018.11.10].
[3] AsiaOne. 2016. Top 10 careers that are dying a slow death. URL: http://www.asiaone.com/business/top-10-careers-are-dying-slow-death [2018.11.08].
[4] Frey, Carl Benedikt, Osborne, Michael A. 2013. The Future of Employment: How Susceptible are Jobs to Computerisation?. Oxford. URL: https://www.oxfordmartin.ox.ac.uk/downloads/academic/future-of-employment.pdf [2018.11.10].
[5] Oh, Soo. 2017. The future of work is the low-wage health care job. URL: https://www.vox.com/2017/7/3/15872260/health-direct-care-jobs [2018.11.10].
[6] MAMK/DPA. 2018. Arbeitgeber melden Rekord beim Fachkräftemangel. In: KarriereSPIEGEL. URL: http://www.spiegel.de/karriere/fachkraeftemangel-arbeitgeber-klagen-ueber-fehlende-mint-kraefte-a-1207636.html [2018.11.08].
[7] Bauer, Karin. 2018. Welche Jobs bleiben, welche verschwinden. In: Der Standard. URL: https://derstandard.at/2000078804017/Welche-Jobs-bleiben-welche-verschwinden [2018.11.09].
[8] Walser, Rahel. 2017. Beruf Fachkraft Gesundheit – Nach der Lehre die grosse Ernüchterung. URL: https://www.srf.ch/news/schweiz/beruf-fachkraft-gesundheit-nach-der-lehre-die-grosse-ernuechterung [2018.12.03].
[9] Böcking, David. 2018. Einwanderungsgesetz für Fachkräfte. Wer darf künftig zum Arbeiten nach Deutschland kommen? In: Der Spiegel. URL: http://www.spiegel.de/wirtschaft/soziales/fachkraefte-die-offenen-fragen-beim-einwanderungsgesetz-a-1239722.html [2018.12.05].
[10] Hoock, Silke. 2018. Abschiebung nach Mazedonien. Wieder eine Krankenschwester weniger. In: Der Spiegel. URL: http://www.spiegel.de/wirtschaft/abschiebung-krankenschwester-amela-memedi-muss-nach-mazedonien-a-1239890.html [2018.12.05].
[11] The Government of United Kingdom. 2018. New start-up visa route announced by the Home Secretary. URL: https://www.gov.uk/government/news/new-start-up-visa-route-announced-by-the-home-secretary [2018.12.03].