4 - The Future of Work After COVID-19 - McKinsey

19/2/2021 The future of work after COVID-19 | McKinsey
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McKinsey Global Institute
The future of work after COVID-19

February 18, 2021 | Report
The pandemic accelerated existing trends in remote work, e-commerce,

and automation, with up to 25% more workers than previously estimated
potentially needing to switch occupations.
By Susan Lund , Anu Madgavkar , James Manyika , Sven Smit , Kweilin Ellingrud , Mary Meaney , and
Olivia Robinson
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 Executive Summary (32 pages)  Full Report (152 pages)
T
he COVID 19 pandemic disrupted labor markets globally during 2020. The short-
term consequences were sudden and often severe: Millions of people were
furloughed or lost jobs, and others rapidly adjusted to working from home as o ces
closed. Many other workers were deemed essential and continued to work in hospitals and
grocery stores, on garbage trucks and in warehouses, yet under new protocols to reduce
the spread of the novel coronavirus.
This report on the future of work after COVID 19 is the rst of three MGI reports that
examine aspects of the postpandemic economy. The others look at the pandemic’s long-
term in uence on consumption and the potential for a broad recovery led by enhanced
https://www.mckinsey.com/featured-insights/future-of-work/the-future-of-work-after-covid-19 1/15
productivity and innovation. Here, we assess the lasting impact of the pandemic on labor
demand, the mix of occupations, and the workforce skills required in eight countries with
diverse economic and labor market models: China, France, Germany, India, Japan, Spain,
the United Kingdom, and the United States. Together, these eight countries account for
almost half the global population and 62 percent of GDP.
Jobs with the highest physical proximity are

likely to be most disrupted
Before COVID 19, the largest disruptions to work involved new technologies and growing
trade links. COVID 19 has, for the rst time, elevated the importance of the physical
dimension of work. In this research, we develop a novel way to quantify the proximity
required in more than 800 occupations by grouping them into ten work arenas according
to their proximity to coworkers and customers, the number of interpersonal interactions
involved, and their on-site and indoor nature.
This o ers a di erent view of work than traditional sector de nitions. For instance, our
medical care arena includes only caregiving roles requiring close interaction with patients,
such as doctors and nurses. Hospital and medical o ce administrative sta fall into the
computer-based o ce work arena, where more work can be done remotely. Lab
technicians and pharmacists work in the indoor production work arena because those jobs
require use of specialized equipment on-site but have little exposure to other people
(Exhibit 1).
Exhibit 1
We nd that jobs in work arenas with higher levels of physical proximity are likely to see
greater transformation after the pandemic, triggering knock-on e ects in other work
arenas as business models shift in response.
The short- and potential long-term disruptions to these arenas from COVID 19 vary.
During the pandemic, the virus most severely disturbed arenas with the highest overall
physical proximity scores: medical care, personal care, on-site customer service, and
leisure and travel. In the longer term, work arenas with higher physical proximity scores are
also likely to be more unsettled, although proximity is not the only explanation. For
example:
The on-site customer interaction arena includes frontline workers who interact with
customers in retail stores, banks, and post o ces, among other places. Work in this
arena is de ned by frequent interaction with strangers and requires on-site
presence. Some work in this arena migrated to e-commerce and other digital
transactions, a behavioral change that is likely to stick.
The leisure and travel arena is home to customer-facing workers in hotels,
restaurants, airports, and entertainment venues. Workers in this arena interact daily
with crowds of new people. COVID 19 forced most leisure venues to close in 2020
and airports and airlines to operate on a severely limited basis. In the longer term,
the shift to remote work and related reduction in business travel, as well as
automation of some occupations, such as food service roles, may curtail labor
demand in this arena.
The computer-based o ce work arena includes o ces of all sizes and

administrative workspaces in hospitals, courts, and factories. Work in this arena
requires only moderate physical proximity to others and a moderate number of
human interactions. This is the largest arena in advanced economies, accounting for
roughly one-third of employment. Nearly all potential remote work is within this
arena.
The outdoor production and maintenance arena includes construction sites, farms,
residential and commercial grounds, and other outdoor spaces. COVID 19 had little
impact here as work in this arena requires low proximity and few interactions with
others and takes place fully outdoors. This is the largest arena in China and India,
accounting for 35 to 55 percent of their workforces.
COVID-19 has accelerated three broad trends

that may reshape work after the pandemic
recedes
The pandemic pushed companies and consumers to rapidly adopt new behaviors that are
likely to stick, changing the trajectory of three groups of trends. We consequently see
sharp discontinuity between their impact on labor markets before and after the pandemic.
Remote work and virtual meetings are

likely to continue, albeit less intensely
than at the pandemic’s peak
Perhaps the most obvious impact of COVID 19 on the labor force is the dramatic increase
in employees working remotely. To determine how extensively remote work might persist
after the pandemic, we analyzed its potential across more than 2,000 tasks used in some
800 occupations in the eight focus countries. Considering only remote work that can be
done without a loss of productivity, we nd that about 20 to 25 percent of the workforces
in advanced economies could work from home between three and ve days a week. This
represents four to ve times more remote work than before the pandemic and could
prompt a large change in the geography of work, as individuals and companies shift out of
large cities into suburbs and small cities. We found that some work that technically can be
done remotely is best done in person. Negotiations, critical business decisions,
brainstorming sessions, providing sensitive feedback, and onboarding new employees are
examples of activities that may lose some e ectiveness when done remotely.
Some companies are already planning to shift to exible workspaces after positive
experiences with remote work during the pandemic, a move that will reduce the overall
space they need and bring fewer workers into o ces each day. A survey of 278 executives
by McKinsey in August 2020 found that on average, they planned to reduce o ce space
by 30 percent. Demand for restaurants and retail in downtown areas and for public
transportation may decline as a result.
Remote work may also put a dent in business travel as its extensive use of
videoconferencing during the pandemic has ushered in a new acceptance of virtual
meetings and other aspects of work. While leisure travel and tourism are likely to rebound
after the crisis, McKinsey’s travel practice estimates that about 20 percent of business
travel, the most lucrative segment for airlines, may not return. This would have signi cant
knock-on e ects on employment in commercial aerospace, airports, hospitality, and food
service. E-commerce and other virtual transactions are booming.
Many consumers discovered the convenience of e-commerce and other online activities
during the pandemic. In 2020, the share of e-commerce grew at two to ve times the rate
before COVID 19 (Exhibit 2). Roughly three-quarters of people using digital channels for
the rst time during the pandemic say they will continue using them when things return to
“normal,” according to McKinsey Consumer Pulse surveys conducted around the world.
Exhibit 2
Other kinds of virtual transactions such as telemedicine, online banking, and streaming
entertainment have also taken o . Online doctor consultations through Practo, a telehealth
company in India, grew more than tenfold between April and November 2020 . These
virtual practices may decline somewhat as economies reopen but are likely to continue
well above levels seen before the pandemic.
This shift to digital transactions has propelled growth in delivery, transportation, and
warehouse jobs. In China, e-commerce, delivery, and social media jobs grew by more than
5.1 million during the rst half of 2020.
COVID-19 may propel faster adoption of

automation and AI, especially in work
arenas with high physical proximity
Two ways businesses historically have controlled cost and mitigated uncertainty during
recessions are by adopting automation and redesigning work processes, which reduce the
share of jobs involving mainly routine tasks. In our global survey of 800 senior
executives in July 2020, two-thirds said they were stepping up investment in automation
and AI either somewhat or signi cantly. Production gures for robotics in China exceeded
prepandemic levels by June 2020.
Many companies deployed automation and AI in warehouses, grocery stores, call centers,
and manufacturing plants to reduce workplace density and cope with surges in demand.
The common feature of these automation use cases is their correlation with high scores on
physical proximity, and our research nds the work arenas with high levels of human
interaction are likely to see the greatest acceleration in adoption of automation and AI.
The mix of occupations may shift, with little job

growth in low-wage occupations
The trends accelerated by COVID 19 may spur greater changes in the mix of jobs within
economies than we estimated before the pandemic.
We nd that a markedly di erent mix of occupations may emerge after the pandemic
across the eight economies. Compared to our pre-COVID 19 estimates, we expect the
largest negative impact of the pandemic to fall on workers in food service and customer
sales and service roles, as well as less-skilled o ce support roles. Jobs in warehousing
and transportation may increase as a result of the growth in e-commerce and the delivery
economy, but those increases are unlikely to o set the disruption of many low-wage jobs.
In the United States, for instance, customer service and food service jobs could fall by 4.3
million, while transportation jobs could grow by nearly 800,000. Demand for workers in
the healthcare and STEM occupations may grow more than before the pandemic,
re ecting increased attention to health as populations age and incomes rise as well as the
growing need for people who can create, deploy, and maintain new technologies (Exhibit
3).
Exhibit 3
Before the pandemic, net job losses were concentrated in middle-wage occupations in
manufacturing and some o ce work, re ecting automation, and low- and high-wage jobs
continued to grow. Nearly all low-wage workers who lost jobs could move into other low-
wage occupations—for instance, a data entry worker could move into retail or home
healthcare. Because of the pandemic’s impact on low-wage jobs, we now estimate that
almost all growth in labor demand will occur in high-wage jobs. Going forward, more than
half of displaced low-wage workers may need to shift to occupations in higher wage
brackets and requiring di erent skills to remain employed.
As many as 25 percent more workers may need

to switch occupations than before the pandemic
Given the expected concentration of job growth in high-wage occupations and declines in
low-wage occupations, the scale and nature of workforce transitions required in the years
ahead will be challenging, according to our research. Across the eight focus countries,
more than 100 million workers, or 1 in 16, will need to nd a di erent occupation by 2030
in our post-COVID 19 scenario, as shown in Exhibit 4. This is 12 percent more than we
estimated before the pandemic, and up to 25 percent more in advanced economies
(Exhibit 4).
Exhibit 4
Before the pandemic, we estimated that just 6 percent of workers would need to nd jobs
in higher wage occupations. In our post-COVID 19 research, we nd not only that a larger
share of workers will likely need to transition out of the bottom two wage brackets but also
that roughly half of them overall will need new, more advanced skills to move to
occupations one or even two wage brackets higher.
The skill mix required among workers who need to shift occupations has changed. The
share of time German workers spend using basic cognitive skills, for example, may shrink
by 3.4 percentage points, while time spend using social and emotional skills will increase
by 3.2 percentage points. In India, the share of total work hours expended using physical
and manual skills will decline by 2.2 percentage points, while time devoted to
technological skills will rise 3.3 percentage points. Workers in occupations in the lowest
wage bracket use basic cognitive skills and physical and manual skills 68 percent of the
time, while in the middle wage bracket, use of these skills occupies 48 percent of time
spent. In the highest two brackets, those skills account for less than 20 percent of time
spent. The most disadvantaged workers may have the biggest job transitions ahead, in
part because of their disproportionate employment in the arenas most a ected by COVID-
19. In Europe and the United States, workers with less than a college degree, members of
ethnic minority groups, and women are more likely to need to change occupations after
COVID 19 than before. In the United States, people without a college degree are 1.3 times
more likely to need to make transitions compared to those with a college degree, and
Black and Hispanic workers are 1.1 times more likely to have to transition between
occupations than white workers. In France, Germany, and Spain, the increase in job
transitions required due to trends in uenced by COVID 19 is 3.9 times higher for women
than for men. Similarly, the need for occupational changes will hit younger workers more
than older workers, and individuals not born in the European Union more than native-born
workers.
Companies and policymakers can help facilitate

workforce transitions
The scale of workforce transitions set o by COVID 19’s in uence on labor trends
increases the urgency for businesses and policymakers to take steps to support additional
training and education programs for workers. Companies and governments exhibited
extraordinary exibility and adaptability in responding to the pandemic with purpose and
innovation that they might also harness to retool the workforce in ways that point to a
brighter future of work.
Businesses can start with a granular analysis of what work can be done remotely by
focusing on the tasks involved rather than whole jobs. They can also play a larger role in
retraining workers, as Walmart, Amazon, and IBM have done. Others have facilitated
occupational shifts by focusing on the skills they need, rather than on academic degrees.
Remote work also o ers companies the opportunity to enrich their diversity by tapping
workers who, for family and other reasons, were unable to relocate to the superstar cities
where talent, capital, and opportunities concentrated before the pandemic.
Policymakers could support businesses by expanding and enhancing the digital

infrastructure. Even in advanced economies, almost 20 percent of workers in rural
households lack access to the internet. Governments could also consider extending
bene ts and protections to independent workers and to workers working to build their
skills and knowledge mid-career.
Both businesses and policymakers could collaborate to support workers migrating

between occupations. Under the Pact for Skills established in the European Union during
the pandemic, companies and public authorities have dedicated €7 billion to enhancing
the skills of some 700,000 automotive workers, while in the United States, Merck and
other large companies have put up more than $100 million to burnish the skills of Black
workers without a college education and create jobs that they can ll.
The reward of such e orts would be a more resilient, more talented, and better-paid
workforce—and a more robust and equitable society.
ABOUT THE AUTHOR(S)
Susan Lund and Anu Madgavkar are partners of the McKinsey Global Institute,
where James Manyika and Sven Smit are co-chairs and directors. Kweilin
Ellingrud is a senior partner in McKinsey’s Minneapolis o ce. Mary Meaney is
a senior partner in the Paris o ce. Olivia Robinson is a consultant in the
London o ce.
This report was edited by Stephanie Strom, a senior editor with the McKinsey
Global Institute, and Peter Gumbel, MGI editorial director.
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19/2/2021 The future of work after COVID-19 | McKinsey

The future of work after COVID-19

The pandemic accelerated existing trends in remote work, e-commerce,

Jobs with the highest physical proximity are

transactions, a behavioral change that is likely to stick.

The leisure and travel arena is home to customer-facing workers in hotels,

The computer-based o ce work arena includes o ces of all sizes and

requires only moderate physical proximity to others and a moderate number of

COVID-19 has accelerated three broad trends

Remote work and virtual meetings are

done remotely is best done in person. Negotiations, critical business decisions,

transportation may decline as a result.

videoconferencing during the pandemic has ushered in a new acceptance of virtual

knock-on e ects on employment in commercial aerospace, airports, hospitality, and food

service. E-commerce and other virtual transactions are booming.

COVID-19 may propel faster adoption of

prepandemic levels by June 2020.

The mix of occupations may shift, with little job

As many as 25 percent more workers may need

Companies and policymakers can help facilitate

Policymakers could support businesses by expanding and enhancing the digital

Both businesses and policymakers could collaborate to support workers migrating

ABOUT THE AUTHOR(S)

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