The global economy faces significant shifts in the coming decades. The key drivers for this change are megatrends such as Covid, Brexit and technology which will shape the future labour market. Governments, the education sector, employers, and workers will need to adapt.i
These shifts are likely to have a large impact on the role of workers, both in terms of the jobs they do and the knowledge and skills they need. They include:
(a) Covid-19: The pandemic accelerated some underlying trends in working practices, such as remote working, and encouraged greater online retailing. These patterns are likely to continue.
(b) Brexit: Which has changed the shape of the economy and movement of people.
(c) Technological developments: These will displace certain types of roles or parts of jobs which are more routine. However, they will likely create new job opportunities too.
(d) Climate change and environmental issues: The government’s ambitious target of reaching its ‘net zero’ carbon commitment by 2050 is altering the occupational and skills composition of the UK labour market.
(e) Demographic: The composition in the labour market is changing considerably because of an increasing ageing population and a growing number of women in work.
Although nobody can predict the future with precision and certainty, everyone can plan and prepare for the future. Understanding the types of skills needed most for future work, and how this demand will be met is important to support long-term planning across government, education, and employers. However, the issues are not well understood and there are gaps in the evidence base. This poses a real risk that the current skills mismatchii will be further exacerbated. In turn, this may lead to under-employment and unemployment, along with enduring social and economic problems.
Emerging evidence from The Skills Imperative 2035: Essential skills for tomorrow's workforceiii, a five-year strategic research programme led by NFER and funded by the Nuffield Foundation, is producing a robust data-driven understanding of the future skills needs, shining a new light on this pressing issue and the challenges ahead.
For part of our research programme, a series of future labour market projections were producediv to estimate how the world of work will be reshaped by the megatrends.
These projections reveal the economy is changing slowly but steadily and inexorably. By 2035, the structure of the labour market will have changed substantially.
Of particular importance, and as mentioned above, there will be more women in work. Of the 2.6 million new jobs there are projected to be by 2035, the majority are forecast to be filled by women. Conversely, the jobs most vulnerable to automation are currently mainly held by men.
Two million jobs are likely to be displaced due to the adoption of new technologies in the labour market by 2035. Those that are most vulnerable to displacement are those in lower skilled roles. This is, therefore, a key group who are likely to need re-skilling or upskilling so they can find jobs elsewhere.
However, far from being all doom and gloom, faster technological change and improving the provision of social services will also create many more job opportunities. Most new jobs created by 2035 — nearly 90 per cent — will be higher skilled jobs in professional and associate professional occupations.
The level of replacement demand will continue to grow (17.1 million job openings created by workers leaving the workforce for reasons such as retirement, caring, etc.) so there will be job openings even in areas which are expected to see significant job losses. The future labour market will continue to be very dynamic, creating new employment opportunities even in declining sectors and occupations.
More young people are forecast to stay in education longer and acquire more / higher level qualifications. By 2035, the number of economically active people with a postgraduate degree level and equivalent (QCF level 7-8) will almost double to 8.3 million.
The changes to the structure of the 2035 labour market will be reflected in significant changes in the skills required to succeed in the future labour market.
Our review of the literaturev identified a range of skills which will become more important in the face of technology and more widespread for jobs across the economy. We refer to these as “essential employment skills”. These include analytical/creative skills (such as problem solving, decision making, critical thinking, analysis, and innovation/creativity), interpersonal skills, self-management skills and emotional intelligence skills.
Our research is now looking at this in more depth based on our projections and the mapping of skills classificationsvi with our standard occupational classificationsvii to identify the essential skills most used in employment today and in the future.
Higher education (HE) undoubtedly has a role to play in preparing for the anticipated changes in the future labour market. There is an urgent need for the sector to engage with our projections to anticipate where the future jobs will be and then to work with employers and industry representatives to identify what knowledge and skills will be needed and plan their courses in future.
The specific challenge for HE is how best to support individuals to develop the right blend and range of knowledge and essential employment skills to build a sustainable future supply of workers to meet the needs of the labour market. As our findings indicate there will be an increase in employment opportunities for highly skilled professionals and associate professionals. Unless plans are put in place and action is taken soon, there is likely to be a supply shortage of workers with the skills sets needed for these new opportunities.
There will also be an increased need for training and education to support those workers who are already in the labour market, who are likely to need upskilling and reskilling to enable meaningful engagement in the labour market. Workers will be more likely to actively participate in life-long learning, to progress in the new world of work than they do currently. Solutions as to how, alongside government and industry, HE could support and enable this may include the provision of more modular, flexible, and accessible options.
An integral part of this challenge, as well as a key opportunity, is to consider how education supports and fosters not just the acquisition of knowledge but also the development of the essential skills needed to apply that knowledge in the workplace.
In the next stages of our research, we will be examining how different educational trajectories lead to individuals entering particular professions and sectors. This will enable us to identify which specific educational trajectories could be expanded to help meet future labour market demand. These insights will also help shape improvements to careers advice and guidance, as well as shining a light on any further adaptations that HE may need to make.
To recap, there will be significant changes to the global economy over the next 10-15 years, that will transform employment and thus revolutionise the essential employment skills that people will need to positively participate in the labour market. Getting the skills mix right will be essential for the UK, but this needs an evidence-based understanding of what skills with be required and how can we ensure that employers demand for essential employment skills can be met.
Our Skills Imperative 2035 research sheds new light on the changes in the size and composition of the future labour market and the scale of the challenge ahead in meeting skills demands. Through the Journey to a Million, the role of HE (and the wider education system) in supporting the delivery of a sustainable pipeline of appropriately qualified and skilled young people, as well as flexible and accessible lifelong learning opportunities for workers to upskill and reskill, will all be vital in ensuring that the workforce is equipped for the needs of a much-changed future economy.
Research Director: Optimal Pathways Development, National Foundation for Education Research (NFER)
Lisa is a Chartered Psychologist with over 25 years’ experience as a researcher and an impact and policy professional. In her role at NFER, she leads research strategy development in NFER’s optimal pathways portfolio, which includes both social mobility and education to employment. Lisa is also the Stakeholder Engagement and Influencing lead for the Skills Imperative 2035 research programme. Prior to joining NFER, Lisa was Director of Policy and then Head of Research and Impact at the British Psychological Society.