Workforce and skills

As companies seek greater automation, an increasing concern is echoed: “When will robots take our jobs?”

There is no question that robotics and automation will lead to job losses in some areas of the economy. Reports of the loss of 6,000 jobs at NAB recently due to the application of artificial intelligence is one such example. The bank is, however, also committed to hiring 2,000 people with technology skills to support this [NAB17], making it important to recognise the net change in jobs over time. Policy has an important role to play in ensuring that the economic advantages of robotics are shared equally in our society – a point acknowledged in the Innovation and Science Australia 2030 plan [ISA17].

It is known that most CEOs considering the adoption of these technologies do so with the aim of reducing headcount [PwC17]. Economists refer to this as “substitution”, where new processes cause job shedding and changes to the nature of work. Conversely, the benefits of technological change can also create wealth and jobs, producing an “income” effect. These two major economic forces normally work in opposite directions.

For automation and robotics, short-term job loss and disruption will be most keenly felt by those employed within the Services sector. In the long run, income effects are likely to comfortably outweigh substitution effects and produce economic growth and gains in employment. To buffer the short-term substitution effects and take advantage of the long-term income effects requires careful consideration of the sectors of the economy most likely to benefit or be disrupted by these new technologies and concentrated programs that support and, where necessary, reskill workers who initially lose their jobs.

As Australia enters the age of Industry 4.0, the fourth industrial revolution, lessons need to be learnt from the past. After the first industrial revolution, economic conditions for the working class fell for several decades until economic and social measures were put in place to make a fairer system. Those measures and the fairness they support are an important part of the Australian labour market which has continued to reform with the times. The past 40 years have seen a decline in union membership and more opportunities for businesses to command flexible working conditions from employees. During this period, there has been a rise in part-time and casual work, and some workforce restructuring has been due to technology and a greater take-up of automation and robots. Despite this, the measure of income equality used by the OECD and the Australian Bureau of Statistics, the Gini CoEfficient, has remained largely stable this century.

Future advancements in the application of robotics and automation will continue to give rise to further concern about inequality, with productivity gains harnessed by robot owners at the expense of workers. While many people will benefit from robotic technologies, the risk to social cohesion if those benefits are not evenly shared justifies an urgent focus of social policymakers. Good policy planning is required to protect individuals from bearing the brunt of change which will deliver broader societal benefits.

This debate is not unique to Australia. It has been shaped by a series of international studies which, with increasing sophistication, have sought to map the impact of automation on current employment. The dominant reference has been the Frey/Osborne study of 2013 [FO13] which determined that 47 per cent of North American and British jobs were at risk from technology. A study by the Committee for Economic Development of Australia (CEDA) achieved a similar outcome in 2015.

More recent northern hemisphere work by Frey and Osborne [FO13] looked in greater detail at other societal impacts on employment and concluded the vulnerable category of jobs was closer to 20 per cent over the next decade. Importantly, it nominated another 10 per cent of current jobs that would grow and concluded that the impact on approximately 70 per cent of jobs was impossible to predict.

The World Economic Forum and Boston Consulting Group have started to map which skills might be transferrable from jobs currently thought to be vulnerable. This work indicates that careful career planning involving individuals, corporations and governments can create more valuable alternative roles for those at risk. There are, however, associated issues that influence this outcome, including inflexibility of ageing workers and educational levels that may prevent some workers easily shifting from their current mode to working with technology.

Attempts to address such issues have given rise to discussion around the need for a universal basic income to ease the transition for those potentially pushed from the workforce through technological advancements. This is an ongoing discussion and is subject to trial in some northern European countries. An associated issue is the rise of the so-called ‘gig economy’ of freelance workers competing internationally for digitally based work. While there is concern at its impact on employee conditions, the Australian Productivity Commission notes there is not yet substantial evidence of the rise of a gig economy in Australia [PC17].

Skills required for a robot economy

How do we educate our children for the jobs of the future? How can we help the current workforce adapt? What are the skills needed for a new robot economy? Some of the most common skills required are generalist, creativity, adaptability and resilience. While there is an increased focus on science, technology, engineering, and mathematics (STEM) education at all levels in Australia, will this be enough to prepare people for jobs that have not yet been created? Like all new technologies, integrated skills encompassing the social sciences, law, economics, the arts, and design are necessary to ensure acceptance by society.

How do you rapidly reskill people for a dynamic job market? What will the guaranteed jobs of the future look like aside from robotics engineers and robot handlers? Does Australia have mechanisms in place to cope with the structural adjustment and the speed of workforce change that is likely to take place, where micro-credentials (validated learning of specific skills in a concentrated timeframe) will become increasingly important.

There are concerns that Australia is not yet well-positioned to meet these skills challenges. Australia 2030: Prosperity through innovation (the Innovation and Science Australia 2030 plan) [ISA17] recommends a review of the nation’s vocational education and training systems and, subsequently, the development of “a strategy to make the sector increasingly responsive to new priorities presented by innovation, automation and new technologies” (see Recommendation 4).