Today, factory towns like Gaoming and Dongguan – both in southern China's Guangdong province – positively pulse with the energy of migrant workers who moved there from their rural homes. The iPhone as we know it could not exist without their willingness to rise in the middle of the night so manufacturing plants could meet production goals. These workers are part of China's "floating population" that comprises about one-sixth of the country's total. But their jobs may largely disappear in the coming decades, made obsolete by automation. Indeed, by 2030, new technologies could eliminate one in five Chinese manufacturing jobs.

China and the world face an epochal transition. In little more than a decade, accelerating advances in digitization, automation and artificial intelligence are expected to displace 400 million to 800 million jobs worldwide, even as they create new ones. "We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another," writes Klaus Schwab, founder and executive chairman of the World Economic Forum. In the process, unprecedented numbers of mid-career workers will need to quickly learn new skills in order to remain in the workforce.

China, which very much needs the productivity gains these technologies can bring, must urgently explore how to successfully manage the transition to this "post-industrial revolution". AI-driven technologies not only do things hitherto considered the domain of human talent but do them better – whether it's tracking insurance fraud or beating the world's best Go player. Right now, less than 5 percent of jobs are fully automatable, but 60 percent of all occupations have significant components (at least 30 percent) that could be.

Many countries are grappling with the challenge of assisting vast numbers of workers in upgrading their skills and redeploying them productively to meet the changing needs of employers. In magnitude, the challenge is akin to coping with the large-scale shift from agricultural work to manufacturing that occurred in the early 20th century in North America and Europe, and more recently in China. But in terms of who must find new jobs, we are moving into uncharted territory. Those earlier transformations took place over decades, allowing older workers to retire and introducing new entrants gradually to growing industries. The current change is much faster and more far-reaching.

The situation in developing economies varies from that of advanced countries, where the demand for high-skill, high-wage occupations will likely accelerate, even as middle-wage job growth declines. In China and other emerging economies, by contrast, middle-wage occupations such as service and construction jobs will likely see the most net job growth, since their current path of automation is less steep. A bigger and richer middle class, in turn, should generate stronger relative job creation than in advanced economies. As China's middle class grows, its members will boost demand for careers in retail, child care, education and energy efficiency. An aging population will also add jobs in health and related fields. There is more than enough potential in these and other sectors to make up for automation-related employment losses.

Despite the potential for continued middle-wage job growth, the broader labor disruption will affect China to a greater extent than many other countries due to its level of economic development and large population. While China has made substantial progress in expanding secondary and college education, particularly in the past 15 years, its training systems are currently not well equipped to deal with the growing need to deliver "lifelong learning". As technological changes drive rapid shifts in the required skills, the country will need to heed late premier Zhou Enlai’s words, "Live to old age, learn to old age."

Part of the problem is that the quality of education has not advanced as fast as the quantity. Many new graduates have found it difficult to turn their degrees into satisfying work, and a Chinese government report on higher education found that "many employers are generally unsatisfied with their new hires' practical skills and professional ethics". Additionally, an increasing share of the tasks workers will perform in the future will require skills that get short shrift in the current education system, such as mental agility, emotional intelligence, abstract reasoning and collaborative problem-solving. Resulting skills shortages could cost China $250 billion a year in lost opportunities by 2020, or 2.3 percent of GDP.

China has begun creating a social safety net that can catch those who lose their jobs. But what the future workforce really needs isn't a net but a springboard. And here China is faltering (as are most other countries). It is working adults who will be most affected by automation, and yet it is they who get the least attention.

To prepare the labor force to capitalize on future opportunities, leaders of the education system need to ensure their institutions adapt to the evolving demands of the market. That means recognizing the urgency of the issue, evaluating it empirically and establishing a committee under the aegis of the State Council with a mandate to develop a comprehensive national skills strategy. SkillsFuture Singapore offers a potential model. Overseen by the Future Economy Council and funded through a tax on employers, the agency's overarching goal is to make lifelong learning accessible, routine and useful to employers. The government can take the lead and establish a direction, but business must play a role – and a bigger one than it does now.

Second, the government should work with industry and private-sector training and education providers to create trusted, competency-based programs. Employers are much more important than educational institutions in improving the skills of workers over the age of 25. Coding "boot camps" are one model for offering targeted training to working people. Over two to four months, they turn programming novices into skilled graduates whom employers are happy to hire. Public-private partnerships with employers could help establish similar programs in other fast-growing fields.

While technology is ushering in these disruptive changes, it can also provide part of the solution. For example, online education provider Udacity offers "nanodegrees" that certify those who complete a six- to 12-month course in subjects such as robotics, data science and web development. The government should support workers (especially women and the elderly) in accessing digital education options, and encourage them to become lifelong learners – maybe even pay them to do so. It should also accelerate the construction of a robust, national digital infrastructure.

If the world is in the early stages of a post-industrial revolution, the history of past industrial revolutions is largely encouraging. In the long term, they resulted in higher productivity, more jobs, more wealth and improved human well-being. The challenge always lies in helping some sectors and individuals to bear the costs of the transition. China has proved its dynamism and resiliency. With renewed focus and foresight, it can successfully navigate this transformation, too.

This article is based on a paper produced for the China Development Forum.

The author is global managing partner at McKinsey & Co. The views do not necessarily reflect those of China Watch.

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