Changes in Work Patterns and in Demand for Skills in the Post-COVID Labor Market

Insights from 2020 Israel Democracy Institute Surveys and from the World Economic Forum’s Future of Jobs Report 2020

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The COVID-19 crisis has accelerated processes that were expected to take years. Prior to the pandemic, most international organizations (including the World Economic Forum, the International Labor Organization, the OECD, and more) were anticipating that the revolution in digitalization, automation, and computerization (referred as the “fourth industrial revolution”) would lead to the disappearance of many occupations, particularly low-income occupations, while at the same time, we would be seeing the emergence of new occupations requiring advanced skills.The fourth industrial revolution is characterized by a combination of technologies that blur the boundaries between the physical, digital, and biological realms, and by the growing automation of production processes and traditional industries using smart technologies.

Before the onset of the pandemic, the “Future Labor Market” team in the Israel Democracy Institute had called for the need to take urgent steps to establish vocational training programs in Israel to retrain workers in jobs expected to become obsolete in terms of market needs, and to quickly equip them with the skills needed in a rapidly changing labor market. These steps would help mitigate the expected instability of the labor market, likely to result in an increase in poverty and in greater inequality.

However, what we anticipated would occur within around a decade (by 2030), instead came to pass within just a few months as a result of the pandemic, as millions of workers around the world lost their jobs or were forced to change their working habits, including working from home to a large extent. The primary wounded of the sudden leap in unemployment across the globe were vulnerable and unskilled workers, who faced the risk of sliding into long-term poverty.

In fact, the COVID-19 crisis has given governments worldwide an opportunity to view what the future holds for the economy if they fail to take measures in order to combat income inequality by establishing training programs on a massive scale, in the occupations and skills demanded by the future labor market. This was the conclusion of World Economic Forum (WEF) researchers in a special report published in October 2020, The Future of Jobs Report 2020,The Future of Jobs Report is based on a survey of employers conducted by the WEF every two years, and combines insights from the largest companies in the world together with data from various sources (such as Coursera and LinkedIn). The survey asked senior managers (CEOs, HR managers, and so on) about their human resource planning and the changes they expect over the next five years. Because the last survey was conducted during the second half of 2020, it also included questions on the impact of COVID-19 on the workforce. which raises the question of whether governments will have the wisdom to exploit the opportunity of learning from this crisis, and will implement changes accordingly, to increase employment and reduce the gaps that have been created.

As noted, the Israel Democracy Institute's (IDI) Future Labor Market team, which has been at work for the last four years, has from the beginning of its work (when the pandemic was an inconceivable scenario) set itself the goal of helping Israel’s governing institutions prepare for the expected changes in the labor market. Now, when there seems to be some light at the end of the COVID-19 tunnel, the time has come for Israel to learn the lessons of the crisis and translate them into a set of concrete actions, as recommended by WEF researchers, in order to foster rapid growth in employment and narrow the gaps that have significantly widened during the crisis.

The COVID-19 crisis starkly brought to light the significance gap between Israel's vocational training system, which has been sub-standard for many years, and the situation in those states which had already taken steps to prepare for the challenge expected in the labor market (which were, as noted, predicted before the pandemic arrived), by investing in flexible and dynamic training systems adapted to employers' needs. States such as Germany, Switzerland, Denmark, Finland, and Austria had reinforced the linkage between their training systems and employers, with a focus on training in the workplace and lifelong learning. This afforded a high degree of flexibility and rapid response during the crisis, as these systems were able to offer training and retraining courses to newly unemployed workers.

In Israel, by contrast, there is an acute lack of involvement of employers and social partners in the training system. A report published by IDI in partnership with the Tzurim nonprofit association found that the percentage of trainees who receive practical training while participating in vocational training courses is only 0.5%, compared with 60%–80% in Germany, Denmark, and Switzerland, and 50% in Austria and Britain (Regev, Kedar, and Porat, 2020). The COVID-19 crisis has reopened the public debate in Israel regarding the importance of vocational training, especially in addressing the plight of the hundreds of thousands of workers left without work by the pandemic (including salaried employees who were laid off or furloughed, and self-employed workers who were forced to close their businesses due to the lockdowns and the social distancing restrictions).

An IDI survey conducted in December 2020 to examine the employment status of workers in Israel during the pandemicDesign and analysis of the survey, which examined the situation of both salaried and self-employed workers, was carried out by Prof. Karnit Flug, Daphna Aviram-Nitzan, and Yarden Kedar. Statistical design and analysis was conducted by Gabi Gordon, and questionnaire design and methodological guidance was provided by IDI’s Viterbi Family Center for Public Opinion and Policy Research. found that almost half of those in the labor force (around 47% of self-employed and salaried employees who were working when the pandemic began) would be interested in a 6–9 months vocational training programs, funded by the government, which would enable them to enter a new occupation or upgrade their vocational skills.

Over a period of several months during the pandemic, the willingness to participate in vocational training seems to have declined: In a similar IDI survey conducted in July 2020, more than half (52%) of the respondents stated that they would be interested in participating in such vocational training as described above Aviram-Nitzan and Kedar, 2020). In other words, the public appears to have become somewhat fatigued or discouraged and as a result--interest in vocational training has dropped.

Not surprisingly, the percentage of those interested in vocational training was higher among those currently not working, commonly referred to as “the COVID unemployed” (including salaried employees who were laid off or furloughed, and self-employed workers who were unable to work because of the situation), at 62% in December 2020, compared with 66% in July 2020. It would also seem that men (51%) are more interested than women (44%) in participating in short-term, government-funded vocational training.

In the non-hi-tech private sector, a relatively high percentage of respondents (53%) expressed interest in short-term vocational training of 3–6 months, funded by the government, compared with 43% of respondents in the public sector and in hi-tech.

The December 2020 IDI survey also found that more than half (56%) of those interested in some form of vocational training, are interested in retraining for a new occupation, with slightly lower interest found among respondents who were not working at the time of the survey (52%) than those who were working (57%). Around one-half (51%) of those interested in training, expressed interest in vocational enrichment and upgrading their proficiency in their current occupation, and some 41% are interested in developing their digital skills and/or online marketing and sales skills, while a similar share (39%) are interested in developing their general skills (such as language skills in English/Arabic/Hebrew, skills for working from home, or time management skills).

Figure 1. In which Fields would you be Interested in Participating in Vocational Training ?* (%)

* Training lasting 3–6 months, funded by the government, which would enable you to acquire a new occupation or to improve your vocational skills (multiple responses allowed)

Source: Israel Democracy Institute, 2021

A higher percentage of self-employed workers (66%) than salaried employees (54%), participated in the survey, reported that they would be interested in retraining for a new occupation. Similarly, a higher percentage of respondents who were working at the time of the survey (early December 2020) expressed interest in retraining (55%) than did those who were not working (48%).

Findings on the interest in vocational enrichment and upgrading capabilities in their current occupation, were similar for respondents who were working and for those who were not at the time of the survey, at 52% and 53%, respectively.

A larger percentage of self-employed workers (about 50%) than of salaried employees (40%) indicated that they were interested in developing digital skills.

The survey also found that there is strong demand among workers in the hi-tech sector for vocational enrichment and upgrading capabilities in their current occupation (81%), while in the non-hi-tech private sector and in the public sector there is noticeable interest in retraining for a new occupation, at 60% and 51% of respondents, respectively (see Figure 2).

While the number of respondents expressing interest in training to develop their digital and general skills (such as language skills, time management, or remote working skills) was lower than with regard to the other training options presented (40%), it is still significant. Thus, there is a good chance that if the government were to operate training programs in these areas, these would receive a positive response from the public to participate. It should be noted that there is great importance in government involvement in funding and leading training programs of this kind, which naturally receive less attention and lower priority on the part of employers (who are mostly interested in training that is specific to the employee’s job).

The importance of government incentives for undergoing training in basic skills is highlighted by the low ranking of Israeli workers in the OECD’s PIAAC measurements, relative to workers in other developed countries. The PIAAC measures the basic competencies of workers (verbal and mathematical literacy, and adaptive problem-solving, including the use of technology for solving problems). The low ranking of Israeli workers is a major factor in explaining Israel’s low worker productivity, compared to other OECD countries.

Figure 2. Interest in Training by Types of Training and employment sector (%)

Source: Israel Democracy Institute, 2021

The COVID-19 crisis also accelerated the trend for an increase in online training courses, which have made training possible during a period in which face-to-face learning has not been an option. The WEF report presents data from Coursera (a company for online learning services) for the months April–June 2020 (compared with the same period in 2019), revealing that the number of individuals seeking online learning opportunities at their own initiative had grown four-fold; the provision of online learning to workers by their employers had grown five-fold, and the number of students in online courses as part of government training programs had grown nine-fold. This growth in government provision of online training came against the backdrop of the COVID-19 crisis and rising unemployment, which has led more than 100 countries to provide their citizens with opportunities to gain new skills using the Coursera platform.https://www.coursera.org/government. These initiatives include programs that match up people who have completed training courses with employers who agree to accept them on a training basis.

The steepest increase in demand was for courses in personal development (an increase of 88% among the employed and 67% among those not employed; health (increase of 81% among the employed and 44% among those not employed), and language learning (increase of 55% among the employed and 45% among those not employed). An opposite trends were observed for courses in information technology: While there was a sharp increase (49%) among those not employed, among those already employed there was a 23% drop in demand for these courses (see Figure 3).

Figure 3. Changes in course enrollment on Coursera by course specialism, Q2, 2019–2020 (%)

Source: Authors’ analysis of Coursera data provided in The Future of Jobs Report 2020

Employers Responses to the COVID-19 Crisis

According to the International Monetary Fund (IMF), around 97.3 million people (equivalent to about 15% of the workforce) in 35 developed and developing nations included in its sample were found to be at high risk of layoffs and furlough (Brussevich, Dabla-Norris and Khalid, 2020). The WEF’s Future of Jobs survey (which examined the largest companies worldwide during the second half of 2020) indicates that there is a narrow window of opportunity for acquiring needed skills. Employers believe that over the next five years, among workers currently employed, there will continue to be a large gap between the skills required and the skills they possess, and that the most in-demand skills will be critical thinking, analysis, and problem-solving. New skills that emerge this year are in self-management, active learning, resilience, stress tolerance and flexibility (World Economic Forum, 2020; see Table 1).

The employers in the WEF survey believe that around half (50%) of workers remaining in their jobs in the next five years will need training, as 40% of the core skills required of them are set to change. In addition, employers estimate that around 40% of employees will require training lasting up to six months, and 94% of employers expect their employees to acquire these new skills while on the job (a significant increase from 2018, when the corresponding figure was 65%).

Table 1. Top 15 Skills Required for 2025

1	Analytical thinking and innovation	9	Resilience, stress tolerance and flexibility
2	Active learning and learning strategies	10	Reasoning, problem-solving and ideation
3	Complex problem-solving	11	Emotional intelligence
4	Critical thinking and analysis	12	Troubleshooting and user experience
5	Creativity, originality and initiative	13	Service orientation
6	Leadership and social influence	14	Systems analysis and evaluation
7	Technology use, monitoring and control	15	Persuasion and negotiation
8	Technology design and programming

Source: WEF Future of Jobs Report 2020

According to Central Bureau of Statistics (CBS) survey, a substantial percentage of Israeli companies made changes in their activity in response to the COVID-19 crisis. Employers were asked whether their activity in various areas had changed significantly due to the crisis. About one-quarter (24%) reported that their employees had shifted to working from home with access to company's system; 19% had entered new markets or changed the composition of its clientele; 18% had moved over to working in shifts, and 14% had moved into online sales (CBS, July 2020; see Figure 4).