Advancements in technology are moving faster than companies can adjust to the other changes that become necessary as a result of the improvements that come along with technology. Fourth Industrial Revolution technologies, particularly in the case of artificial intelligence and big data analytics, are beginning to replace humans in many capacities. Without the necessary artificial intelligence workforce management and a skills retraining plan, millions of workers will lose their jobs.

As workers leave their jobs by the millions, it’s bound to have a negative impact on the economy. The World Economic Forum met in Davos, Switzerland, to discuss how to keep workers employed, what the costs of retraining will be and whether companies will be able to incur those costs.

The World Economic Forum released a report entitled “Towards a Reskilling Revolution: Industry-Led Action for the Future of Work,” which states that it will be possible to transition 95% of at-risk workers into positions that require similar skills and pay higher wages. The main question that remains is how to decide who can be retrained and who will bear the cost of retraining.

Where Should Funds to Retrain Workers Come From? 

The financial impact of retraining workers will be steep. Companies are rightly questioning whether they’ll be able to absorb the costs of retraining workers. The U.S. Bureau of Labor Statistics estimates that 1.4 million workers could lose their jobs due to automation. They also estimate the cost to reskill those workers at $34 billion over the next 10 years. Oxford University and the McKinsey Global Institute agree that these numbers are a fraction of what prior major forecasts had estimated.

Saadia Zahiddi is the managing director of the World Economic Forum, and she believes that businesses will only be able to cover about 25% of the costs efficiently. However, if businesses collaborate with each other, they may be able to cover up to 45% of the costs. If these estimates are low, the actual retraining costs could be much higher. Businesses would then have to look to social services within their governments to cover the rest.

What Will Retraining Look Like?

Thousands of workers will need retraining, and many of them will need to be retrained in entirely different careers. It’s possible that governments will need to financially support about 252,000 workers, which is about 18% of the workforce.

World Economic Forum partner companies have promised to reskill or upskill 17 million workers across the globe by the year 2020. This number exceeds the 2018 target to reach 10 million workers. Their report also indicates that the government could reskill around 77% of the workers who are considered at-risk. The retraining costs would ultimately be offset by funds from increased tax returns and decreased payouts for unemployment compensation. About 18% of the at-risk workers would outweigh the costs to the government, and for 5% of the workers, there would be no similar skills training with a higher wage path available.

The general consensus of the forum is that with numbers as high as 252,000 not being in a position to get training through a business or the public sector, the burden would fall to governments. The belief is that governments would have to consider expanding welfare and other social support programs and incur the cost of negative returns due to reskilling. They’d also decrease the costs of reskilling and retraining by offering incentives to the private sector and educators and collaborate with them on such initiatives as apprenticeships and online learning.

What Is the Likely Impact of Creating New Roles?

While artificial intelligence and big data analytics will soon be leaving thousands of workers without jobs, advanced technologies will also create jobs. In the report “The Future Jobs 2018,” the World Economic Forum figured that up to 133 million new job positions could be created through automation between 2018 and 2022 while 75 million workers would be displaced at the same time. These numbers could prove to be true, provided workers receive the skills they need to fill the new roles. Corporate boards need to be aware of the need to reskill thousands of workers and to upskill the majority of their workers. Now is the time for companies to start to prepare for the future of work. Boards need to focus on reskilling, as that may be the biggest challenge moving forward.

Toyota came out of the gate with new training and educational programs to stay ahead of the curve of training workers. Kentucky Governor Matt Bevin recalled meeting President Trump’s daughter Ivanka at a dinner three years ago. She grilled him on the topic of workforce development and how Toyota could get people actively engaged in the workforce to prepare them for the jobs of the future. Ms. Trump toured Georgetown’s Toyota Motor Manufacturing plant in Kentucky recently to learn more about how their training program was changing and improving lives. She’d heard about the amazing apprenticeship program that was happening across the country and she’d heard great things coming especially from the Kentucky facility. She wanted to talk to the employees directly and hear how the program had changed their lives.

This was Ms. Trump’s second trip to Kentucky within six months. Her focus for both trips centered around workforce development and inclusive growth. Donald Trump is asking companies to sign the Pledge to America’s Workers, which is a call to action to the private sector to join the federal government in thinking about workforce development and skills training. Ms. Trump, who also co-chairs the American Workforce Policy Advisory Board, supports the philosophy of a holistic approach to skills development that inspires lifelong learning, and she believes that it will require a continuing partnership between businesses and the government.

During her visit, Ms. Trump wasted no time in asking Jim Lentz, CEO of Toyota Motor North America, to boost Toyota’s pledge to develop 100,000 training, reskilling and education opportunities. Lentz countered her quickly by asking, “How about 200,000 opportunities?”

Zahidi notes that the need to start reskilling workers is becoming urgent. On behalf of the World Economic Forum, she recommends that boards consider a combination of three investment options. First, companies will need to work with each other to lower costs. Second, boards will need to advocate for governments and taxpayers to take on the cost of reskilling as an important investment in society. Finally, as Toyota so aptly demonstrated, businesses and governments will need to partner together in this challenging and worthwhile effort.