Career Evolution Models for the Digital and Green Transformations

Covid transformed our lives. One of the most striking changes is the heightened sense of urgency to digitalize society. As remote working, paperless administration, and cashless payments became the norm, lagging government digitalization has laid bare Japan’s comparatively torpid response for support of those in need. Digital transformation has become a major trend, with reforms of companies, industries, and society—the goal, a digital society.

The other major trend spurred by the pandemic is the green transformation, or society-wide reforms to achieve decarbonization. In Japan, former Prime Minister Yoshihide Suga declared in October 2020 that Japan would become carbon neutral by 2050. The United Nations Climate Change Conference (COP26) in the fall of 2021 further raised global awareness of carbon neutrality as a pressing issue. The green transformation will have a significant impact on our lives as a basic principle of post-pandemic society.

The digital and green transformations will likely drive change of how industries around the world are composed over the next few decades. But Japan could fall behind for two main reasons: low human resource mobility and a lack of human-capital investment to get personnel the skills they need to lead the transformations.

We forecasted the impacts of the green transformation on employment using an energy supply and demand model developed in house based on an extended input-output table from Waseda University et al. (right side of Figure 1). We made the assumption that both the supply and demand sides would make changes on the way to achieving carbon neutrality by 2050. The results demonstrate a striking contrast with the digital transformation.

First, we see a net increase in employment across a wide range of occupational categories, although numbers are comparatively modest in the hundreds of thousands. This increase will feature on both sides of the supply and demand for energy. With large-scale industrial electrification and the spread of renewable energy, the supply side will see new jobs in the manufacture of power generation equipment and construction of facilities such as offshore wind farms. With a greater shift toward energy saving practices, the demand side too will see a boost of employment for related equipment.

The forecast excludes the impact of digital transformation among businesses under the green transformation umbrella. Employment as a whole will see a reduction in sales, service, and general administrative jobs due to the extinction of positions and a shift toward smaller teams in light of greater automation.

Second, increase and decrease in employment varies considerably between industries and occupations. For example, electric power-related sectors are projected to see an overall increase amid progress in electrification and energy-saving, but the need for jobs related to thermal power generation, such as power plant operators, is set for sharp decrease. Employment will decrease overall for the automobile industry because of the progressive shift to electric vehicles, which reduces demand for internal combustion engines and parts. The steel industry too will see decreases due to pressure to reduce blast furnace capacity. However, demand will likely increase in growth areas that support carbon neutrality, such as motors, fuel cells, and green steel, produced using hydrogen technology.

The green transformation will be typified a growing demand for workers in expanding industries needed to achieve decarbonization and a fall in demand for workers in traditional, fossil fuel-based industries. This is a change in the lineup of occupations.

Workers will have to acquire the appropriate skills through recurrent education for job-types on the rise, and at times the workforce as a whole will go through large scale employment shifts, including leaving existing jobs. We have proposed continued learning in small-steps—the Incremental Career Evolution Model for short—for learning and action in line with the uptake and spread of digital technologies. The model constitutes a form of human capital investment with very little burden: it focuses on daily efforts and requires only modest amounts of time and money. Specific methods at play include microlearning*, e-learning, and Massive Open Online Courses (MOOC)^†.

However, incremental reskilling alone cannot fully match the pace of transforming industries and job markets. Career evolution must also make use of movement between roles. A multilayered approach to human resource investment makes possible personnel portfolios in line with the digital and green transformations. We have conceptualized two additional models for career evolution alongside the incremental model (Figure 2).

First, the focus model is designed for adapting to the green transformation. It addresses the need for greater employment mobility, for workers to shift to growth areas. This model is beyond the influence of a single company or even industry as the green transformation will require tens or even hundreds of thousands of workers to relocate across multiple industries and occupations. Workers will have to spend six months to a few years in professional training for new skills, which means they will also have to temporarily take time away from their current job, giving rise to a social cost as well. Collaboration between the government, employers, and employees will be essential to guarantee labor mobility; support must also be readily available for workers to cultivate their skills during their current employment.

Second, the explorative model will be critical to nurture the core personnel who will drive change needed to achieve transformation and accompanying changes to business models. However, it will not have a large impact in terms of worker volume. This model requires long-term advanced education such as studies at an overseas institution or graduate school program for professionals. It might also feature strategic secondment to another organization to gain knowledge beyond one’s field of specialization and systematically acquire a skill set far removed from one’s previous fields of expertise. Keys to success are providing co-creation opportunities through collaboration between industry, government, and academia, and for companies to fully commit management resources to the program.

These three career evolution models will be essential forms of human capital investment in anticipation of the inevitable change of industry composition. Society as a whole must build a framework for human capital investment that combines these three patterns.

We propose the FLAP Cycle, composed of Find, Learn, Act, and Perform elements, as a framework for career evolution amid the digital and green transformations. However, especially for the focus and explorative models, it is crucial that the FLAP Cycle be applied across the labor market, with both corporate-specific and a society-wide renditions in unison.

The cycle begins with Find. The June 2021 revision to Japan’s Corporate Governance Code* requires companies to disclose their HR strategies, a main driver of overall management strategies, in wording commonly understood by external stakeholders. We recommend that companies install talent management systems as they make it easier to visualize existing human resources. Companies should also then make clear, to stakeholders within and outside the company, what additional human resources they require.

Next, the Learn step calls for companies to use co-creation opportunities to share tacit knowledge. The kind of innovation that transforms industries is the product of unencumbered dialogue between large companies, SMEs, and startups. We created our career evolution models to help workers acquire the all-purpose skills needed to traverse industries and companies.

The Act step must first be preceded by a major change in the Japanese government’s employment policies: the focus must be reset from maintaining employment to encouraging movement of human resources in the direction of growth areas—a proactive approach. Both the public and private sectors must take action to assure workers they’re heading in the right direction when shifting to new growth areas. The government needs to coordinate both its skill-development and safety-net policies. Companies need to build a framework that links skill development with pay structures.

The final step, Perform, is for individuals to fulfill their true potential and find success. The previous three steps, and measures outlined therein, will only take hold if workers can come to accept and embrace them. Management must fully commit to these actions, share on the principles behind them, and effectively put them into practice for individuals to excel. Time is running out.