Digitisation poses economic risks

Johannesburg – A new report by McKinsey & Company shows that technology-related gains could triple South Africa’s productivity growth, more than double growth in per-capita income, and add to its real GDP growth rate over the next decade.

  However, the report shows that digitisation and automation will also result in significant displacement of jobs, especially in the manufacturing and retail sectors.

 A McKinsey & Company’s partner in the Johannesburg office Nomfanelo Magwentshu said they expect an increase in the number and quality of jobs with a net gain of up to 1.2 million across various sectors by 2030.

  “These gains are likely to come about as a result of productivity improvements, strategic infrastructure development and the evolution of technology. And by leveraging these technology investments to improve productivity and innovation, South Africa has the opportunity to increase its competitiveness in key sectors and reignite growth,” Magwentshu said.

  McKinsey’s researchers analysed scenarios for the pace at which automation could affect job losses and offset this against the labour demand created by seven catalysts, including infrastructure investment and energy transitions and efficiency.

  While the gains could be massive, they also imply significant workforce transitions.

  “Against the 4.5 million potential new jobs created, we estimate that these technologies could displace 3.3 million existing jobs by 2030. Our analysis of work activities indicated that there are few job types that are 100 percent automatable. For example, in data-processing roles such as payroll officers and transaction processors, 72 percent of activities are potentially automatable.”

  Jobs in these roles will, therefore, not be completely replaced, but they might decline in number as fewer people are required to perform the same roles, the researchers said.

  The research shows that in sectors such as manufacturing and retail, the jobs lost are likely to outnumber the jobs gained.

  “In a worst-case scenario, those job losses would come on top of about 900 000 through unemployment momentum, in other words, the continued increase in unemployment if current trends in population growth and employment levels continue. We should also emphasise that the new, technology-enabled jobs will require higher skills levels than most of the jobs displaced,” the researchers said.

  As a result, while automation will cause the demand for employees without matric to fall substantially, it will increase the demand for graduates, the researchers said.

  “There may be demand for an additional 1.7 million employees with higher education by 2030. Unless South Africa’s graduate conversion rate improves, much of that demand will go unmet, resulting in a serious skills shortfall across the economy.”

  Mckinsey said these numbers also pose big challenges for South African decision-makers.

  “If workforce displacement from automation is not managed effectively, and the graduate conversion rate is not improved, the result could be a significant increase in overall unemployment. That, in turn, would reduce tax revenues and increase spending on social support. Businesses would be hurt by both a slowdown in consumer demand and a shortage of critical skills.” BusinessTech

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