Future Frontiers analytical report: the future of work in Australia
About the report
Going beyond the headlines of robots stealing our jobs, Professor Peter Gahan, Dr Joshua Healy and Daniel Nicholson from the University of Melbourne's Centre for Workplace Leadership explore the impact of technology on the global and Australian labour force.
Published: August 2017.
- Despite a technological paradigm shift, more jobs are currently being transformed than destroyed
- Predictions of widespread job destruction could be overstated, and many studies don't take job creation or transformation into account.
- Routine tasks - regardless of the level of cognition involved - are being performed by machines leaving non-routine tasks to be performed by humans (for now).
- Changes to the distribution of jobs have been less pronounced in Australia than elsewhere
- Australia has not experienced the same 'hollowing out' of middle-income jobs that has been observed in other OECD countries such as the US.
- Despite ongoing change within jobs towards more non-routine tasks, there has not been the same scale of increased income inequality seen in many developed countries.
- The Australian labour force participation rate has been more resilient, potentially because of higher levels of education.
- Uniquely human skills will be of the greatest value in the future labour market
- Competence in performing non-routine jobs may best prepare workers for the global labour market.
- Equitable access to education will also ensure that workers develop the competencies of greatest value to the future labour market - those that are hardest to automate currently - including uniquely human skills such as communication and teamwork.
Download the report
Executive summary [PDF 233KB]
Listen to the podcast
Features Dr Joshua Healy and Professor Peter Gahan from the Centre for Workplace Leadership, the University of Melbourne.
Credits: recording and podcast production by Jennifer Macey (Audiocraft).
Charlie's Future Episode 2: The Future of Work in Australia
[School bell ringing, sounds of children playing in a playground; introductory sound bites]
From the New South Wales Department of Education – this is Charlie’s Future.
They've built robots that can open doors, and can jump over things. It's an incredible mixture of the mechanical side of the design of a robot, and then this sort of onboard technology that gives them a form of non-human intelligence. This is real. This is happening, and things are changing fast.
Welcome to Charlie’s Future, a podcast series that explores the role of education in preparing young people to thrive in an age of Artificial Intelligence. This podcast is part of the ‘Education for a Changing World initiative’ by the New South Wales Department of Education.
Join us as we meet some of the leading thinkers on this issue. We’ll explore the future of work, the future of education, and the future skills needed to navigate this brave new world.
On the edge of Melbourne’s CBD sits the University of Melbourne’s new Business school, home to the Centre for Workplace Leadership. It’s in this shiny new building where researchers wrestle daily with the question - what will work look like in the future?
What sort of jobs will be available in an age of automation, artificial intelligence and quantum computing? Where will the jobs of the future come from and how can future workers best prepare?
The NSW Department of Education recently commissioned a report from two of Australia’s leading labour researchers: Peter Gahan, Professor of Management and Dr Joshua Healy, Senior Research Fellow both at the Centre. The report is titled ‘The Future of Work in Australia’: So how are our jobs changing today and what might they look like in the future?
Well, I think it looks pretty varied. It’s very difficult to think about a singular trajectory that we’ll all go down. I suppose in terms of really trying to divine the future we’ve got the past to give us some guidance and we know that what's happened over the last decade or so, there's been a fragmentation of what that work experience looked like.
So, we've seen the development or generation of a lot of jobs that are relatively low or medium skill in nature, still rely on person to person interaction, often manual skills, and so on, without necessarily interacting a lot with technology. So, there are plenty of those jobs that are still being created. We see things like the demand for very customised services become important.
But for others, it will look like almost a science fiction type of perspective, where we're doing all sorts of crazy things with job titles that we can't imagine today. And the weighting of technology, the weighting of technical skills will be far greater than it has been in the past.
In sort of big picture terms, I guess, the distinction here is between thinking about things that are more routine and non-routine. That's a very simple, kind of binary, distinction, but if you can think about things that can be pretty well organized, then those are the kind of routine types of tasks that machines are good at and will get better at doing.
There's a set of other non-routine things, which are much more about unpredictable, unstructured tasks. You know, you might imagine an aged care facility, where there's a lot of stuff going on that is sort of unpredictable and unexpected. You think of a school environment, or a construction site, where we need a human kind of environmental situational awareness and ability to notice that something's amiss, and deal with that, or we're talking about a more abstract ideas-based economy.
That's the knowledge economy, so to speak, that we're continuing to create, where value is not about a physical object, but about an idea, and understanding a convincing argument, where we’re going to continue to need well-educated, creative, initiative-taking, skilled communicating people to do these things. These aren't going to be machine tasks.
I think the real question is well, how do we understand what those changes and that mix of change is likely to be, and how do we manage both the positive and the negative, so that we can in effect, share the cost as much as the benefits that come with technological change.
Once the history of our age is written, this is a radical change in terms of what's happening, but it's kind of happening over decades. The reason why I kind of like this, I suppose, is because it's incremental. I think that that's the right way to be thinking about this, is not as a radical transformation.
The more alarming headlines suggest that a great many jobs will be lost to automation – one oft-quoted statistic is that 40 percent of current jobs could be threatened.
But Dr Josh Healy disputes that the job losses in the future will necessarily be as high as some predict.
We think that's probably at the upper end. It's a prediction, right, and predictions are notoriously hard to make. But it's not always understood that what the authors of those studies were doing was making predictions about the likelihood that certain jobs and tasks would be able to be automated. What we have to understand is that there's kind of a potential, and then there's a reality. There's often a very big gap between them.
If you look back throughout history, it’s not unusual for jobs to come and go. History shows us that new technologies also lead to new jobs.
The question many are asking is whether smart machines will create more jobs than they will destroy – and how different will they be from today’s jobs?
Some of the evidence, I think, shows that we’re seeing qualitatively different jobs being created, compared to those that have been destroyed.
It isn’t always just technology that’s doing that by the way, globally interconnected trade, people with more spending power. When you create these high tech, skilled innovation jobs, for each one of those you create five other jobs because those people spend their money, they want to do stuff. So there's a knock on effect through the economy. That's part of the way that technology has this job creation function that's often neglected.
And so, a real concern will be on the quality of jobs. First of all, I suppose in these platform type companies, the number of employees that they have are relatively small, compared to more traditional sectors. So, if you think about Airbnb; it's a four billion dollar a year revenue generator. It's probably got a few hundred employees as its core workforce. Maybe a few more than that, but compare that to a manufacturing operation that was generating four billion dollars’ worth of revenue, they would require tens of thousands of workers to generate that value.
So, we're seeing fewer core quality jobs come through and maybe more lower quality jobs that are attached to it as a consequence. So the real question is around the quality of jobs, rather than just an exclusive focus on this concern about whether in net terms we're seeing a destruction of jobs and the prospect that there'll be a workless future.
Not only are the number and nature of jobs changing, there is a view that this change is happening more rapidly.
Well, there's no doubt that that pace of technological change has been increasing.
The thing that's challenging right now is that this process of technological change is happening fast – the rate of progress, the rate of which new innovations are being created and put to use does seem to be picking up.
If we think about the application of platform type technologies, I reckon a decade ago, we might have seen that as a fairly niche type of application of the internet. But now, we're seeing it across the board in many different sectors, and often incorporated into older ways of delivering. So, think about in real estate services.
So, we've got a platform company out of the U.K. called Purple Bricks. It was nowhere. It was not part of the scene a decade ago. But now, in the U.K. at least, it's a major provider of real estate services. So, there are just areas where a decade ago or five years ago, even, we wouldn't have thought about the platform-type economy really having a major part to play.
So the challenge in a way to us is getting greater to keep on top of it. We talk in our report about this idea of convergence, that what's sort of happening that makes it feel like everything's galloping ahead really fast is that things are joining up. Advances in robotics are joining up with advances in machine learning, and artificial intelligence, and they're finding ways of then having robots with these sensors on them that have a form of vision.
If you think about the driverless vehicles, this is possible because the vehicles are mounted with all these sensors that understand in computer ways their environment, that they can navigate within certain parameters, they've built robots that can kind of open doors, and can jump over things. It's an incredible mixture of the mechanical side of the design of a robot, and then this sort of onboard technology that gives them a form of non-human intelligence. All of that happening, I think, contributes to the sense that, yeah, this is real. This is happening, and things are changing fast.
While technology, automation and AI won’t mean the end of work, it will certainly change the nature of work; the way we work, the tasks that make up our day-to-day jobs.
In some jobs there will be important tasks that will be profoundly affected by technology and they’ll be taken away or they’ll be transformed in some very significant way. But that job will continue to exist. In other jobs, there'll be a bundle of their tasks that, in fact, will be more deeply affected across the board by technology. And some of those jobs will be diminished. They will be de-skilled, or perhaps transformed in more significant ways. Maybe some technologies and new markets emerge where particular jobs just disappear. So, we need to understand how that bundle of tasks that make up a job might be affected by that sort of technology. So, the surgeon, an accountant, a lawyer, are really good examples of where we're seeing technology transform very discreet tasks that are part of those jobs. Not every task that's being undertaken.
I think we need to be conveying here that it's not necessarily that all of these jobs have gone, but a portion of the task requirements of those jobs has gone. You know, you might think about, in a law firm, some of what we've seen happening is some of that basic data entry, document search, information retrieval and you know, this would have once been done by people physically retrieving things, and putting things together, and laying out the case. A lot of that can sort of now be automated but we haven't done away with lawyers.
Predicting what effect technological changes will have on jobs however is notoriously hard. Despite dire predictions at the time, the introduction of automatic teller machines (ATMs), for example, did not mean the end of frontline bank staff.
So we were getting ATMs, and then there were never going to be anymore bank tellers, or bank employees. That's actually not what happened at all. There are still plenty of them, but what they're doing is different kinds of work.
Now these are basically sales jobs, the tellers are still there just doing different things. That's the same kind of process, I guess, that we're likely to see kind of playing out in other contexts too. More people doing the things that humans continue to be good at doing, and letting the robots, and the algorithms, and the fancy computers do the things that they're better at.
Disturbingly, in some countries, advances in technology like big data and quantum computing have resulted in what’s called a “hollowing-out” of the middle.
At both ends of the workforce spectrum, the higher paid, professional jobs and the lower paid, less skilled jobs appear to be safe in the future.
It’s the middle-skill jobs, including clerical, data entry type of work that seem to be most threatened by technology.
We talk a lot about this idea of hollowing out of the middle, or the idea of polarisation. You've seen, definitely growth in the skilled ideas processing jobs. There's no doubt about that. That's the high end, and then at the low end, well, we know that we still need plenty of people to do, sort of, I'm using the example of care-type roles. If you think about sort of ranking all of the jobs in our labour market by sort of their skill content, then the jobs that are sort of smack bang in the middle of that have been declining in the relative share that they take. They haven't vanished altogether, but as a proportion of the total, there fewer now than they were decades ago. Those have tended to be the more routine jobs, you know an accounting clerk, or a factory production line worker.
And I'm suggesting the Australian evidence tells us that some of that polarisation has a geographic dimension as well. It's in large cities where the growth is concentrated. And in more regional areas where we're seeing, in fact, a greater proportion of jobs, at least, more susceptible to destruction.
I think we know less, for example, as to whether it has a dimension that might be related to the age of workers, that's related to the gender or ethnicity or other characteristics of workers and where they're located. And we need, probably, to understand that more closely to be able to manage the consequences. So, the question is, how do we make sure that some of the gains that we get from technology are allocated to trying to address some of those downsides to technological change.
Much of the research about predicted job losses that we read about in newspapers is based on overseas research, in particular from the United States of America. The NSW Department of Education asked Professor Gahan and Dr Healy to look at what the Australian data tells a different story – should we expect to mirror the US’ predicted economic and labour market trends or will Australia respond differently to a changing technological landscape?
This is kind of where it really gets interesting, or it does for me, because there's variation in how much difference societies allow this process to play out.
The same debates are happening in the US there’s no doubt about it. So, for instance, the big wave of job destruction happened after the financial crisis in 2007. Now, that hit America and Europe much, much harder than it hit Australia. So, it hasn't had the same immediate impact that we saw in the United States. So, for the U.S., looking at the interaction between technology and the state of economy at that particular time has been an important part of their debate.
That's what we're seeing a focus of, particularly in the European context, is what do we need to put in place that enables individuals to make those sort of transitions more quickly? And that comes out of the experience, if you like, of the last great recession in Europe, where you saw a lot of people lose their jobs and never really find work again. So they sort of had long-term, a large long-term unemployment problem as a consequence.
So, for example, there's a significant debate around this idea of the basic income and the idea that we should have, maybe universal basic income with all of this change that's happening, so people can navigate their way through these more frequent labour market transitions that they might have, and they don't get stuck in one of them, like an unemployment state, and not make it back into the labour market. It seems almost far-fetched in some respects as a policy response, but it's gaining real traction in Europe in particular. I think we’re going to see those sorts of debates emerge here in the Australian context as we see the effects of technology begin to have a greater impact on the labour market.
In Australia, to sort of, I guess, illustrate this point about choices, and the government's role, and policy settings. The importance of all these things is that we haven't seen the same fanning out in terms of earnings inequality. So if you think of the gap between somebody in the middle of the earnings structure and somebody at the bottom, in the U.S. that gap has gotten significantly wider over the past 30 years. In Australia, almost no change.
Well, I think it's because, that we've got a set of structures in place that mean that we're able to sort of compress the outcomes a bit. So, what happens is that we provide a reasonably high minimum wage - high in global terms. We have other settings that are redistributive, so our taxation system and our social welfare system both work to kind of move money from those that are doing well to those that are in greater need, and those kinds of policy settings mean that when you look at our income distribution, it's not as polarised as it might be if none of those things existed. We should resist this idea that technology is just this irresistible force, is it certainly powerful and capable of doing some damage and capable of bringing about real change. But it’s always a managed change and there are decisions to be made about how much to manage it.
Finally, what words of advice do our labour researchers have for little Charlie who is just starting school and will likely enter the workforce in 2030?
My advice for Charlie - I would as a new student, I would still think about choosing something that you’re really interested in and sticking with it. I think you need to study something that’s got a real core, a method, foundation of theory and history of thought behind it, a real discipline. I would go to classes and get to know as many of my fellow students and their backgrounds and interests as I possibly could and try to diversify and learn those things that aren’t on the curriculum that are going to benefit you long term.
Well, I think my advice would be similar to the advice that you heard from Josh. I would probably also emphasise, however, the importance of what your profile of skills look like. And I think we often call it a T-shape profile of skills. So, where you've got one area of very deep skills, and Josh mentioned the importance of a discipline in that skill profile. So, an area of specialisation. But then, a broader set of skills, which are often around critical thinking, problem solving, working with others, and so on, that also allow you to, if you like to sort of work across different sort of environments, negotiate changes as they happen over the life or course of your working life.
That was Professor Peter Gahan and Dr Josh Healy from the Centre for Workplace Leadership at the University of Melbourne ending this episode of Charlie’s Future – a podcast series by the New South Wales Department of Education.
Go online to read the full report – ‘The Future of Work in Australia: Anticipating how new technologies will reshape labour markets, occupations and skill requirements’ just do a search for ‘Future Frontiers’ on the department’s website. There you’ll also find links to all the reports commissioned exclusively for the Education for a Changing World initiative.
And do join this conversation. If you have comments get in touch with us through our Facebook group: Future Frontiers: Education for a Changing World. Our Twitter handle is: @education2040, Hashtag #futurefrontiers, or email us at firstname.lastname@example.org.
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Thanks so much for joining us. This is Charlie’s Future.
Watch the Charlie's Future animation that explores what the world will look like for children starting school today, and what skills they will need to flourish.