Targeted investments in high-potential technologies and talent development are essential to unlock sustainable productivity gains in the manufacturing sector.However, innovation-intensive sectors face risks in the scenarios defined by talent shortages, fragmentation and winner-takes-all dynamics. With only 45% of the workforce engaged in upskilling,56 manufacturers may face significant challenges in building a qualified talent pool. According to the World Economic Forum’s Future of Jobs Survey 2024, skills gaps and difficulties in attracting talent are identified as the top barriers to transformation in the next five years (see Figure 6). Industries further from the innovation frontier, while less affected by technological breakthroughs, can achieve substantial gains through human-centric improvements and the adoption of technologies throughout their value chains. Predictive maintenance, for example, can increase equipment effectiveness and reduce unexpected breakdowns by 60%.57 With assembly line costs comprising 16% of manufacturing sector revenues, such advancements offer significant cost savings and productivity gains,58 even in the absence of broad-based technological acceleration. Regional dynamics are affecting the pace of adoption across the sector. Advanced economies with high labour costs and demographic pressures are rapidly automating. This is exemplified by a leading Japanese manufacturer achieving a 35% cost reduction through robotics.59 Manufacturers in many developing economies may face risks if automation leads to reshoring or shortens global supply chains. Technological acceleration can also create opportunities for faster industrialization and technological leapfrogging for many developing economies, albeit infrastructure, investment and talent gaps can create substantial obstacles to productivity growth. Targeted investments in high-potential technologies and talent development are essential to unlock sustainable productivity gains in the sector. This includes involving workers in digitization and automation processes, supporting job transitions and promoting a culture that embraces change. However, more than one-third of manufacturing employers highlight resistance to change and outdated or inflexible regulatory frameworks as significant barriers to transformation (see Figure 6). Energy and materials The energy and materials sector is shaped by the competing dynamics of more capital- intensive segments, such as oil and gas, and more innovation-driven green energy. Both sub- industries are poised to benefit from advances in technology and talent development. Wider benefits can also be unlocked through digitalization of value chains, automated fault detection systems, improved grid management, predictive maintenance in resource extraction and improved access to highly specialized talent. Nearly half of industry executives expect AI investments to improve organizational effectiveness,60 while more than one-third plan to use AI to improve operational resilience and efficiency.61 In high-productivity scenarios, there is likely to be an acceleration of green innovation and a scaling up of green energy technologies, such as wind, solar and hydrogen. This would contribute significantly to a broader increase in electricity demand across the economy, with AI alone projected to increase data centres’ power consumption by 160% globally by 2030.62 This may contribute to the continued growth of renewables in the long term, but in the short to medium term, the energy mix is likely to require both renewable and non-renewable sources. The supply of critical materials, if constrained by geopolitical tensions, poses a significant challenge.63 Global Economic Futures: Productivity in 2030 21

Global Economic Futures Productivity in 2030 2025