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TechTalk ep4: Keep calm and upskill

Paramita: Hello and welcome to PwC Luxembourg TechTalk. On today’s episode, we speak with Christian Scharff, our People and organisation leader, on a very important Human Resources topic: upskilling.

P: Hello, thank you so much for coming here and to give us this interview, Christian.

C: With pleasure!

P: So today we’re going to talk about a very important topic that we have been hearing about a lot everywhere in the media, in business, upskilling. The word has many nuances and so many implications… what is upskilling? Why are we talking about upskilling now?

C: I think there are there is a conjunction of elements, which are kind of materialising at the same time. At the same time, we have this amazing acceleration of technologies getting in companies and this is kind of disrupting business models. This is disrupting the way we are producing, the way we are consuming. But of course behind all of those words there are people because there are people in manufacturing, there are people serving you in stores, there are people having stores, being a teller in banks or whatever. And we realise that as consumer we are now using an app. We are doing stuff. But behind the app there is someone I mean there are some people doing stuff.

And so this is changing a whole ecosystem. And by definition if it is changing the whole ecosystem, it has an impact on people. So at the end of the chain there is a huge impact on people's jobs. And what we realise is that contrary to what a lot of people are seeing there will not be most likely in the short and medium term less jobs but the jobs will be different. And there is a word out there which says the jobs will be augmented. You know the jobs would be different. And we need to know different things to do the job… new technologies. We need to manipulate new tools. And so we need somewhere to upskill people to that next level. That's why it's there. That's the first reason why there is some thing out there about upskilling technology. There is another one which is the fact that we are at work longer. I mean you know that retirement age was 55, 60, 65. Now some countries are talking about 70. And obviously if you are staying that long at work and if technologies are evolving so quickly there is an additional problem because we also need us somewhere when we get a little bit older, more senior let's put it that way, to be up to the new ways of working, the new technologies or whatever. So that's another issue which is kind of materialising as we speak.

P: Can I ask you a very naive question Is it possible to up skill people?

C: Actually yes. That's the good news. That's a fantastic good news. I think a lot of people are kind of a little bit pessimistic or sceptical about this but there are a lot of examples which are showing that it's absolutely possible. I’ll just give you some statistics about the IT world in the U.S. There were more people put at work last year in the U.S. in the I.T. sector through boot camps than through vocational training. And we are talking about the U.S. market which is huge and usually boot camps, it’s kind of two to three months.

P: Is there a difference between when we say, that's OK a person needs to be upskilled and a person needs to be reskilled, is there a difference between the two? Or are we talking about the same concept?

C: Well reskilling is kind of doing the same maybe in a better way. Upskilling is I think getting up the ladder. It gives a very positive tone to the thing. You are reaching somewhere on a different level, floor in terms of competencies to do maybe the same job because it could be the same job but that needs new competencies. So it's really kind of moving up the ladder. To be to be very clear just to give you kind of a threshold we’re not talking about upskilling for someone doing five days training. I mean this is just common training. We are starting to talk about upskilling - at least this is our definition - as from for instance at least 20 days of training. So it's really kind of something hefty, something which is having an influence on your profile. So you can say, you can claim tomorrow to be able to do something different or to be able to do a totally new function.

P: OK. What we are seeing nowadays is that regarding upskilling that there is - correct me if I'm wrong – there’s this kind of a sense of urgency. Did we speak about upskilling before? Were there any warning signs that we needed to, you know, employees needed to be given certain trainings?

C: I think it's quite recent. I mean the word appeared maybe 10 years ago as such. And we really see a boom about talking about upskilling for the last 24 months with a peak we see really materialising  this year. As you know we had this year this CEO survey which came out and surprisingly it came out as one of the main topics of the survey which is the lack of availability of competencies of people to run business. So 80% of those CEOs today are really concerned about the lack of availability of competencies in their company.

P: They suddenly realised this?

C: Well no it was there but it was 60% - 50%. It went up in the last two-three years really sharply. I mean it went from 50% to 80%, which is an amazing increase. You know in our survey it usually moves by a few percent and here it has been moving by a few tens of a percent which is kind of almost unknown.

So it really shows that there are a lot of difficulties these days to find people and certainly to find people which are matching the competencies we need because one can say this is not true because there are so many unemployed people. Well yes there are a lot of people in markets but they don't have the rights skills we are we looking for now… for many reasons. Maybe the reason first is not the right level of education and training and precisely that's what we see. In the market today where you've got some classical positions coming to be available in the construction area in the U.S…

P: I was going to ask you this question again that when we speak about upskilling are we talking about a small percentage of jobs or all kinds of jobs?

C: I mean it's really from the very first level jobs to the top level jobs. You had Christine Lagarde - that everybody knows of course - two weeks ago in Dubai and she was saying AI will augment everybody's job.

P: Everybody like from a pizza delivery guy to…

C: Absolutely and to be clear, today he needs to work with a digital interface to pick up the orders and to find his ways and he's got a G.P.S. on his mobile getting him to the next client. He needs to collect money using applications. So obviously he needs to use technology. For people in the construction area you know all these techniques, which are currently used to build homes because we now talk about green energy, we talk about AA building... I mean each requires all new techniques you know to build homes. So basically those guys they need to be up skilled as well. If we are talking about the industry, whereas yesterday you had engineers on the drawing board taking specifications for your product, that is now done through digital interfaces where the client itself is kind of putting his drawings using the interface and there is behind another engineer on the factory side who is just checking the specs and making sure it works out. So from really I would say basic jobs even in a in a warehouse where before you had some people kind of moving pallets from right to left. Today you've got these AGVs (Automated Guided Vehicles) picking up the orders in the dark, by the way, it is not even lighted anymore. But you need people to manage your fleet of AGVs. So it's changing everywhere much faster than people expected by the way. This is the problem.

P: The boom in technology…

C: Yeah and you know they say that the that the power of chips is kind of doubling every four years or something like that. Well everybody thought it would not last. And by the way it is lasting. It is still there meaning that the power we have now from all those engines is immense. And we're now going to come to computing which is again giving another leapfrogging into it and that's going to even, you know 5G combined with that, IOT (Internet of Things) combined with that, so you're going to have more autonomous. And we’re almost there. I mean we all saw those tests left and right in the world. So, it means it's maturing… delivering via drones. I was yesterday discussing with someone from the construction area who was explaining to me that in some buildings now we don’t put ladders anymore to reach some remote place on a building and to put some stuff on the floor. Now they just take a drone which is kind of flying there and putting the product on this specific place. Wow. I mean already today… it's not future. I mean people tend to think that is the future. No, I mean we are in the future. It's the present. It's already happening.

P: Talking about delivery, when you spoke about drones… Amazon did some kind of an experiment with drone delivery…

C: Indeed. And you've got now flying autonomous taxis that they're going to test in Dubai. I mean they are all kind of things which look like science fiction but actually it’s today. So it's amazing to see the speed of the evolution of all the things but at the same time what we tend to forget is that when we are pushing the button and when we are ordering something on the retail store online, well we don't go to a store anymore. So basically there is another chain of work which is at work. We get some people to put that in a box to ship it to your home and maybe you're going to have tomorrow you know a lock on your door which can be automated as well. There is no key anymore so it's key less with someone putting a code, opening your door and pushing your delivery in. Which means we're going to change millions of locks in the years to come to electronic locks which can be unlocked by an app etc. But all those locks will have to be maintained. They will have to be made secure. So this is another business and you need the former people who used to install locks to go to technology, to electronics, to software, to security. And we need to upskill those guys. So yes even in those business when you just look at the key you have in your pocket you realise even the guys taking care of these they need to be upskilled someday.

P: There's so many questions were flooding... You already answered one of those that I can understand the pizza delivery guy who was supposedly replaced by a drone. What does he do... But you just said that probably that drone needs maintenance. So those people they need upskilling but like you said the technology is moving fast and in unprecedented ways. Do you think the upskilling that we're going to do – and we are going to come to the how - But do you think it's going to be enough?

C: Well actually to be very clear what we do today is clearly not at the level of what we should be doing. If you look at the lack of resources in the market as we speak there is a lack of resource. There is already some countries which have been announcing that their growth will be less next year or this year because of lack of resource. Netherlands and Belgium both announced that their growth will be less because they have too many vacant jobs. Can you imagine? They have too many vacant jobs. The vacancy rate in OECD is about 2.2%. This means for 100 jobs existing on the market, you’ve got 2.2% being available. In Belgium it’s 3.5. So basically if there is nobody to produce there is no tax paid to the government. So there is no income for the country to pay for the roads and the teachers. But there is neither production in the stores or in the factories. So there is no production of wealth. So basically we are just stuck. We need to find people and we need to educate people and that's kind of conflicting because at the same time we got unemployment. In all those countries we still have 6, 7, 8 percent unemployment rate, which is a problem. And I think we have a major problem… These unemployment rates are not rising. But, if we don't upskill people it will because basically we have those factories which are kind of going for the next generation of robots. We have maybe tomorrow those pizza guys that will not be there anymore but then we need people to be able to repair drones. So we need to upskill some other people to do the job. And if we don't upskill people who currently are at work, the challenge today is not anymore only to take care of people who are unemployed - which used to be the challenge of governments in the past - today's challenge is to make sure that millions of people who are working remain at work. We are talking on about 4.5 billion people globally, 4.5 billion people out of 7.7. Those guys like you and me they are working and their jobs one day or the other will change. Hopefully not all at the same time but if you are considering only a very little percentage of those guys that need to be unskilled, we are talking about maybe something like 50 million people to be upskilled every year in the world, to be very modest. So this requires an effort that nobody has done so far.

P: So the big question how… what do we do to upskill these people?

C: Well you know the thing is if you look at history and I was HR director in the beginning of my career… we all do kind of the same thing, either we try to look at the medium - long term and we try to foresee the future. And actually it was possible in the past because technology evolution was rather slow. When you had a new factory or a new IT platform it was for a decade at least so you could have some vision about the future because it was rather stable. It doesn't work like that anymore as we stated. Or we work on a very short term basis because we look at two or three months down the road when there is a new device coming in production or when we acquire some new technologies. But of course to upskill people it’s way too late because you just have a quarter in front of you. So either we are trying to look down the road but three years for instance the distance is too big because we just can't foresee anymore what's going to happen and I have a lot of testimonies of people in companies telling me I can't predict anymore because on the human side we just don't know which is fair enough or we are reacting way too late. So the first thing to do now is to look at the right horizon in terms of time and that horizon is about nine to 15 months. Why is it so. Because nine to 15 months, it gives two advantages. The first one is on the company side. Normally you know what's going to happen in your company or department nine to 15 months down the road. The investment that are currently being done, the purchase order for this new IT platform is kind of almost done or even already in progress or in the setup is being done so you can foresee nine to 15 months on the company side. You can also foresee what's going to be the consequence on people, most of the time… not always but most of the time. On the employee side, it has also a big advantage. Well if I'm telling you in three months time your job is gone, there is little time to react. You know it's way too late. If I'm telling you a three to five years time your job will be gone which is kind of you know normally all warehouse will be according to their size automated in three to five years so ours should be as well. So basically in three to five years you should think about a new job because… it’s like something is coming. Motivation is not there because three years is way too long down the road you know. So again as an individual if I'm telling you well you know we are currently building this new automated warehouse. So in 12 months your job will be gone but we have another one for you that we'd like you to I mean to go for and we’re going to help you to go for that new job. That's another story because we can really kind of look at the future, you can really kind of… you could be motivated to have access to this new job and you have this company coming to you in well asking your support to make it happen. So basically there is enough time to reskill. There is kind of six - nine months to do something in terms of training…

P: And you have the visibility over that period…

C: As a person, you have the visibility. So on both sides both on the company side on the individual side, there is something to do because the horizon is long enough and short enough so there is as we call it a “burning platform” but a good one.

P: Yeah. You and one of our other partners you wrote a brilliant book on the ways of upskilling[1]. There was a notion in there… it was something about insurance having...

C: Oh yeah! That's an idea of course if you're looking down the road what could be the future of work and the need that people have to be upskilled on a permanent way. You can figure out that it will happen to anybody. Everybody will have an issue in his/her career and most likely several times. So the idea was also to kind of ask insurers to create a new product which would be a product that would just like you have a health insurance, you would have a skills insurance. And so basically it's an insurance product. And then when your job is disrupted by new technology your insurer somewhere will pay some trainings for you because basically you have an incident. The incident is that your job is gone. It's not gone because you're not good enough. It's just gone because new technology is kind of disrupting it. And so under some conditions that insurer would of course pay you some money for that incident in order for you to be back on track. Exactly like in the case of health insurance because when you have a health problem and you go to the doctor, you go to the trainer, you get medicine, you go to training and you're back on track and you can again do your thing, you can again go back to work. That was the idea.

P: And you think it's feasible? Let's be honest it's logical. It is like you compared it. It is an insurance on your future. It's like health insurance…

C: I think it could be feasible. We discussed this with a few insurers already. On the principle they find it a good idea. The question is, is there a market? Well I can tell you there is a market.

Well it will take time for companies most likely to evolve in that direction and for individuals to go for that kind of an insurance policy as with every new thing… but most likely there will be something there in the future.

P: So this is something that is still in the horizon. But what is being done concretely right now around the world and in Luxembourg.

C: Well let's start from the top level. You have the first few number of countries which have decided to go for national competency plans. So countries like Norway, like India, like Portugal, like Ireland… they’ve really kind of put their act together. They understood there is an issue. If you look for instance at the government of Norway, if you look at “Skills Norway” - I invite you to do that - you will find the document signed by all the ministries of the government which are really kind of working in a collaborative way in order to make sure that Norway has the right skills for the future. Which means they are looking at what skills will be in demand. They are kind of working with the education world to make sure the right education is available. They are kind of in contact with industries to make sure that they really understand what's going to happen. I mean the entire ecosystem is working together… you know they are building the right trainings... And when you put your act together you can do something fast, you know. And this is a competitiveness issue, a critical one. So this is an example.

In India, they did something different. They created a kind of a company, a JV (Joint Venture)… 51 for government, 49 for companies. It is kind of a half-and-half between companies and governments. And that company is always looking at trends in the industry understanding what's currently happening but at the same time on the government side they are also influencing the training curriculum, they are pushing so that the youth is going to take the right curriculum.

It's a major problem. If you look at mathematics, sciences, in all exact sciences, we don't have enough people going for those fields in universities as we speak. In Europe, it's a catastrophe. We have more people going for psychology than for mathematics. In India, it's the opposite. Yeah. Exactly and that's what makes India very strong these days. We need engineers. Of course, we need psychologists. And don't get me wrong but in the proportion we are wrong. And so we are not pushing our youth in the right direction. So that's what some countries are trying now to do is to really to push the youth but also to create the curriculum which are really matching the needs.

This is at country level. Now you have some initiatives as well I mean I suppose you want to talk about the Luxembourgish initiative which is called Luxembourg Digital Skills Bridge. Well this is an experimentation that the government has been running here for the last 15 months. And by which, companies are proposed to enter the scheme called Luxembourg Digital Skills Bridge where the government is supporting the reskilling, the upskilling of employees and the workers when their job have potentially been put at stake due to technology. That's why it's called Digital Skills Bridge. So if I rephrase your job is put at stake because there is a new technology coming. You can go to that scheme ask for support to get to the next stage.

P: So it's for the companies to choose…

C: It’s for the companies to choose. Yeah. I'll give you an example. I'm kind of putting together a new production line and I'm changing all my robots. I could claim to go for that scheme to upskill all the people working on the former line to go to the new one. I'm putting a new digital interface… I'm an insurer for instance and I'm meeting a new customer interface. All my middle office is kind of gone because of what this tool is doing on behalf of what the people were doing before. But you still need people now to be facing and answering the calls from the clients. So basically the middle office becomes kind of a front office. Then you need to upskill those people because they will be now in contact with clients, they need to be able to talk with clients, they need to do more about the legal framework because clients will ask questions… they need to know more about the product, they need of course to know the software. So there is a mix of soft and hard skills to acquire. So those guys will go for upskilling.

P: And what's the cost?

C: Well of course there is a cost attached to that. So the company and the government are kind of sharing the cost half and half in this case. Again we are not talking about low key training. We are talking about at least 20 days and sometimes much more. So we are talking about thousands and thousands of euros because there is of course the employment cost, the training cost and all the setup which is put around to make it happen.

P: What are we looking at now then?

C: I think you're looking at very different things. You're going to have - there is already some very big initiatives of companies standalone going for massive upskilling of the population.

P: We're talking about Luxembourg or in general?

C: I'm talking about generally speaking and what we see is that for instance on digital skills you've got companies taking big initiatives to upskill thousands of their employees and massively I would say… there is no purpose as such because their job individually will change. There is just a consensus that everybody needs to go up one or two notches in their knowledge about digital. Is everybody aware about what is IOT? Does everybody know the very basic on coding? I mean can you talk about RPA (Robotic Process Automation)? Can you talk about A.I.? So this is something for instance in a technology company everybody should know about.

P: That's what I was going to say… a technology company, yes but don't you think it's… I'm coming back to the pizza delivery guy… isn't it too much asking him…?

C: Again, you need to put that at the level and the problem, the issues of each and every company.  Maybe for that that company there will be some issues about a very basic issue about... if I'm talking about again digital… what is phishing to do to kind of teach them the basics of security. They will be using digital interface. So they need to be knowledgeable about someone who's going to trap me. I'm getting you know some message I should not open. How it works… Also to get you to be able to use all those devices. This might be easy because we all tend to think that everybody is kind of a digital native. But it’s not the case. Far from being so. You can really kind of when you dig a little bit more people they all have a mobile in their pocket and they have Facebook and that’s it you know. People can be very surprised about what they can do with their mobiles. So they have a fantastic tool in their pockets. They can use 5% of the possibilities of those devices. So it's also kind of teaching them how to do that. So from the basic level to the upper level, for some people it will be about learning some very sophisticated language for data analytics are like “python” and for others it’s going to be the very basic of protecting yourself from phishing and making sure you don't open the wrong mail. And you can use the platform and a few device we need you to be to be using. So you need really to be sensitive on what you are trying to push to people. It needs to be useful but it also needs to be reachable otherwise of course it doesn't make any sense.

P: Basically so we needn't be hopeless then in that short term if we try and upskill ourselves to a certain level we will be able to you think match…?

C: I mean there are so many opportunities to upskill yourself. You know if I mean if the population would use 5% of the time they spend either on the mobile or in front of the TV screen to upskill themselves... I mean we will reach sky. I mean it's just a matter of being conscious that I need to do it and have the right material available. Is the right material available? Yes most likely. Is it findable? Not always. It's sometimes very hard to find it if you're not a little bit in the field but is there material out there to upskill yourself? There’s tons of materials… specially in the digital area but also in other areas. But instead of maybe speaking on Facebook with your friends if you would spend every day half an hour looking at something new and acquiring new competencies, for sure it’s possible.

P: I think we as employees, of course we have the responsibility, but the employers need to play a big role at all levels, big companies, small companies…

C: Big or small companies, employer associations, governments, everybody at his/her level needs to play a role. I mean an employee needs to be willing to do it. He/she needs to dedicate time… not always paid time on working hours. I mean we also have the responsibility for ourselves to remain employable, I think. And we need to be curious. It’s very important to be curious and to really use that curiosity to dig into new fields. That’s the first thing.

At the employer level, I think it’s also important to be transparent about the changes that are going to occur and not to warn people at the last minute. So it gives people time to also acquire potential new competencies and also to be prepared. It’s a matter of change. So basically when the warehouse is shifting or a customer interface is shifting to a new one… it’s change. And we need to acknowledge that the world is changing, new technologies are coming in… But nobody likes change. That’s amazing you know because everybody is talking about it but nobody likes it certainly when it’s happening to yourself.

But if the company is kind of preparing the ground, is communicating about it and you know it’s coming… it’s going to be in two years’ time, in one year’s time or in six months… when it’s there, there’s no surprise anymore and you kind of accompany people through the journey. And it’s very important.

So that’s at the company level. And of course to have the possibility for people to find a training, to ask for advice, there’s a new setup, maybe a new role in HR in companies is needed in that sense.

You’ve got the associations for instance the building association… those guys are currently thinking about what’s going to impact tomorrow’s work in the building sector. It’s fascinating when you hear them talking. But how do we then prepare the thousands of workers which are currently placing bricks one on top of the other to do that in a very different way… I think at association level and at sector level – because it’s very specific – there need to be some thoughts, works to be performed.

Then you’ve got the State. And at the State level, there are so many actors which are important. You’ve got certainly the Ministry of Economy because at the end of the day it is an economic issue. It needs to support maybe by giving the right incentives to companies in order to do so… maybe some tax cuts when you’re doing some investments not only in factories but also in human capital. I mean I’m investing in my human capital, why shouldn’t I get more tax cuts. Maybe it could be possible to incentivise companies to take that route. So it’s between the Ministry of Economy and the Ministry of Finance in this case.

There’s of course Education. We briefly touched that… maybe they should not only have the right content but also the right formats. I’m talking about formats because whereas in the past we had the three year curriculum… maybe now we need some curriculum in six months or three months full time.

But today these are not available at universities. You hardly find something like this. If you look for example at the Polytechnic School in Singapore, they have now a six-month track to upskill engineers. So you’re 45, you were trained some 20-25 years ago, it’s a century ago, to be honest.

All the techniques that you learnt are gone, are obsolete… So there’s this six month track available to kind of put you back in the market. This is excellent, you know. This should exist for almost every business. University could play a major role in there. Today we don’t see that… at least not around here.

P: And not just the duration… new kinds of training…

C: And also you know, new ways. The classical way we taught at the university in an amphitheatre, I mean… You know there were more people put at work last year in the US in the I.T. sector via boot camps than via vocational training.

So in three months, you can create some people who are able to code or build a website… it’s doable. But if you want to reach that then it’s going to be full-time training, it’s going to be test every day, it’s going to be tough. It’s going to be tough… but three months down the road you’re somewhere.

It’s another way of teaching. There is the content, there is the duration, there is the method… so there is a revolution in education that needs to happen. And that sector is currently boiling, that’s for sure.

So that’s at the Ministry of Education level.

There’s of course Labour. That’s for sure a very important ministry. Today Labour is taking care most of the time of unemployed people… certainly employed people – who are in millions - should be part of their responsibilities as well. And then you need to see where permanent education takes place… lifelong learning. Is that at Education or at Labour? That’s always a good question. But maybe regrouping those under Labour could be an idea.

P: Well, great conversation, Christian.

C: Really my pleasure. As you can hear, I’m really passionate about the topic. It’s really something fascinating. You see it everywhere around the planet. It’s fascinating because… we are travelling a lot… I mean form New Zealand to the US, from Singapore to Bhutan, which is kind of a remote place, when I have conversations with people, it’s really consistent. They all have issues… of course each at their own levels, aligned with their economic footprints but they all have, absolutely everywhere the same problem at the same time. So, as I told you in the beginning, it’s a gigantic issue. Hopefully, there are solutions. But it really needs us as a community, as political deciders, as economic deciders, to join our hands. Not to forget of course that we also have a very big responsibility as individuals.    

P: Well on that very optimistic note, of course there is hope and there is will, I’m sure that we will be able to … not probably be a 100% match to the technological revolution that’s happening… but somehow match its progress.

So thanks you very much.

C: Real pleasure.

P: So that was Christian’s take on upskilling or reskilling. Hope you enjoyed the episode. If you have any questions or would like to comment on the episode please use the #PwCTechTalk. And I’ll see you next time.

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