State of Australia’s Skills 2021: now and into the future
A shortage of work or a shortage of workers?
The conclusion that is often drawn from descriptions and characterisations about the future of work – albeit not always stated – is that the economy may end up with too little work, and hence the risk of higher levels of unemployment. The fear is that automation, AI and robots are taking jobs.
In contrast to the thinking of some future of work theorists, economic agencies are usually more inclined to worry not about a shortage of work, but a shortage of workers into the future. This reflects a number of factors, but most significant is the changing demographic profile of the population. As an example, the 2015 Intergenerational Report noted:
There will be fewer people of traditional working age compared with the very young and the elderly. This trend is already visible, with the number of people aged between 15 and 64 for every person aged 65 and over having fallen from 7.3 people in 1974-75 to an estimated 4.5 people today. By 2054-55, this is projected to nearly halve again to 2.7 people.
That declining share of working age people compared with the entire population has significant implications for future economic growth. And it is these implications for economic growth that stem from demographic change which see a further divergence between some of the more alarmist views about the future of work and automation versus the analysis of economic agencies considering the long run outlook for the Australian economy.
These divergences reflect the need – as expressed in the succession of intergenerational reports over almost two decades – to increase participation in the labour market. It’s also reflected in a more positive view around technology, with the 2015 Intergenerational Report making the following reflection:
Technology is changing the way we interact with each other and how we live our lives. It is changing the face of business, markets, governments and social engagement.
In the 1970s, the Internet, mobile phones and social media did not exist as we know them today. Now they are integral parts of our lives and IT-related industries employ nearly as many people in Australia as the mining industry.
Technological advances, such as advanced robotics, 3D printing and self-navigating vehicles have the potential to unlock quality of life improvements.
That is, technology is seen as a positive force to boost productivity and hence both economic growth and living standards over the long run.
These sentiments aren’t unique to the series of Intergenerational Reports from the Treasury. In a 2015 speech the then Governor of the Reserve Bank, Glenn Stevens argued that:
There are no prizes for guessing that the share of services in most economies will continue to increase. Health and aged care are obvious areas for expansion – another effect of demographics. It may be that jobs will be ‘robotised’. But on the other hand, in the long run we may need that to some extent. Demographic factors suggest strongly that, all other things equal, the problem isn’t going to be a shortage of jobs, but instead a shortage of workers.
Understanding the big forces at work
Stevens also observed that:
While small forecast changes get a lot of attention, the far more important question is whether we have recognised and understood the big forces at work. Even if we cannot predict the outcomes with great accuracy, an understanding of these forces ought to help us get policy responses roughly right. And that, in the real world, is probably about as much as we dare hope.
Throughout this report a key focus has been on drawing out the big forces: a shift to higher skill jobs and an ongoing shift toward services; the resilience of non-routine and cognitive jobs in the face of automation and AI; the opportunities and new jobs being created by technology; and an acknowledgment that many of those forces likely to shape the future have also shaped our recent past.
It is through understanding these big forces, the implications for jobs and skills, and understanding the transferability between and across jobs and skills that we can best mitigate the risks inherent in using any set of forecasts – or an overreliance on any set of forecasts.
Encouragingly, the Australian labour market has, on the whole, managed the impacts of these big forces well over the past few decades. The labour market has also emerged from the COVID-19 pandemic in robust fashion. Overall, Australia now has a relatively low unemployment rate and a more highly skilled population than was the case decades earlier. The higher skill base of the population occurred at the same time as jobs across the economy became more highly skilled. Although past performance is no guarantee of future success, the ability of the Australian labour market to respond and reshape itself over the past few decades, as highlighted in Chapter 2, provides some grounds for optimism about our ability to do so into the future.