Some 40 million workers across advanced economies are unemployed. With many nations still facing weak demand—and the risk of renewed recession—hiring has been restrained. Yet there are also long-range forces at play that will make it more difficult for advanced economies to return to pre-recession levels of employment in the years to come. As a result, McKinsey sees that the current disequilibrium in many national labour markets will not be solved solely with measures that worked well in decades past.

To help develop appropriate new responses, McKinsey examines five trends that are influencing employment levels and shaping how work is done and jobs are created:

1. Technology and the changing nature of work

Over the past three decades, technology has altered how production and routine transaction work is done, substituting machines for assembly-line workers and ATMs for bank tellers, for example. The next frontier is interaction work, the fastest-growing employment category. This includes employees performing low-skill jobs that must be done face-to-face (for example, day-care work), as well as the managers and professionals who are the costliest resources. One way to redesign high-skill interaction work is disaggregation, or reassigning routine tasks to lower-skill employees. Additionally, with broadband connections, cloud computing, and other technology, many interaction jobs can be conducted “anytime, anywhere” — from the road, from a facility in a lower-cost city, or from an employee’s home.

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