McKinsey: 140,000 Croatian Workers Will Need to Change Occupations

Lauren Simmonds

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As Poslovni Dnevnik writes, approximately 340,000 jobs will disappear due to automation and trends fueled by the COVID-19 pandemic, but rest assured, these will be replaced by almost the same number of new jobs in new occupations and growing industries and due to a general increase in productivity. While net labour demand will remain virtually unchanged, there will be significant changes in the structure of occupations on offer. Therefore, by the end of the decade, almost 140,000 Croatian workers will need to change their occupations in order to remain employed.

This is one of the conclusions of the analysis published by McKinsey & Company Adriatic in cooperation with McKinsey Global Institute entitled The Future of Work in Croatia – Transformation of the Croatian Workforce in the Age of Automation and Digitalisation, which examines the impact of automation, artificial intelligence and digital technologies on various sectors, occupations and jobs, and the combined impact of all this on the combination of skills that the Croatian workforce will need to have by 2030.

Realising the full economic potential of automation and digitalisation, but also maintaining the existing level of employment will require the cooperation of all stakeholders to find ways to enable Croatian workers to transform and acquire the skills that will be required in the future.

“This isn’t just going to happen by itself – all private organisations, public institutions and educational institutions will have to work together during the transition period to realise this potential,” said Tomislav Brezinscak, CEO of McKinsey & Company Adriatic.

By 2030, six percent of the total number of working hours in Croatia will move from jobs that require physical skills to solve work tasks to jobs that require cognitive, social, emotional and technological skills. Specific skills, such as those needed to manage devices and equipment and to easily enter and process data, are likely to experience the largest drop in demand in the share of employees by 2030. This is to be expected, as activities that require physical strength and skill as well as data collection and processing skills are something that can be very easily automated now.

The analyses described in this report take into account the composition of the workforce throughout the country, combined with the expected rate of the adoption of automation, based on available technologies and the economic feasibility of their implementation. When looking at the potential speed of automation from the perspective of trends fueled by the coronavirus pandemic, Croatia will achieve an automation adoption rate of around 22 percent by 2030.

In other words, the activities that currently account for about 22 percent of the total number of working hours of employees in Croatia will be automated by the end of the decade. The adoption of automation will vary from sector to sector – manufacturing, wholesale, business functions that serve to support the administration, and public administration – will be the areas with the highest rate of automation adoption.

Croatia needs to improve its productivity in order to achieve sustainable economic growth and income growth in all segments of the population. This is especially important because the population of Croatia is only getting older. Automation is also an opportunity to realise Croatian national interests. Companies, if supported by the appropriate policies and investment in skills development, can develop new services and products, increase their productivity and create new and better paid jobs. By embracing the changes that will take place in the world of work over the current decade, Croatia can avoid structural unemployment and create new national wealth in a way that promotes social inclusion.

Accelerated digitisation may be the most important new driver of growth, and Croatia’s digital economy, which encompasses all digital activities in all economic sectors, now accounts for approximately five percent of GDP, equivalent to 2.4 billion euros. By 2025, the digital economy in Croatia can reach 11 percent of GDP, which means that it will contribute to the value of the overall economy with 8.3 billion euros.

Although automation and digitalisation provide an opportunity to create a more productive and competitive Croatian workforce, they also bring several challenges – especially in terms of losing existing jobs and developing future skills. Like stakeholders in other EU countries, all stakeholders in Croatia must balance the pace of automation and the acquisition of new skills if they want the country to benefit from automation and the introduction of new technologies.

If automation and digitisation happen too quickly, it may happen that the new jobs that will be created will remain unfilled by Croatian workers, and that, potentially, could lead to worsening income inequality. On the other hand, if automation and digitalisation happen too slowly, it could harm Croatia’s competitiveness and prevent economic growth.

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