Despite decades of growth, Australia is facing economic challenges. To be ready, the country should reassess notions about work, workers and workplaces, say Deloitte Access Economics’ David Rumbens, Jessica Mizrahi and Cathryn Lee.
“If you've been in a sector for 20 years and that job's no longer there, we need to have a pathway so that people don't end up taking early retirement in their mid-40s or early 50s.”
— David Rumbens, partner, Deloitte Access Economics’ Macroeconomics group
Tanya: I’m Tanya Ott and today on the Press Room we’re going to look into the Future of Work, down under.
But first, we’re heading to my family room because something happens here that gives us a way to think about the nature of work and how technology is changing it.
Almost every day, my husband takes a live spin class with an instructor and hundreds—sometimes thousands—of people he’s never met.
He lives for his time in the saddle, high-fiving other riders spread around the world and working up a sweat to a great soundtrack.
My guests today are interested in how technology will shape the future of work in Australia. Their research suggests that sports and fitness will be one of the five fastest growing occupations in Australia in the next decade … and not just because everyone wants to look great on the beach. Technology is changing the way people interact with the fitness industry—from online spin classes to high-tech biometric scanning.
My guests are David Rumbens, who leads the macroeconomics group for Deloitte Access Economics in Australia. Jessica Mizrahi does big-picture policy work and thought leadership with David at Deloitte. She used to be regulator at the Australian Competition and Consumer Commission. And Cathryn Lee worked for the Australian Treasury’s economic forecasting team before joining David and Jessica at Deloitte, where she helps produce regular economic forecasts on the Australian economy.
Australia’s had a really good run for the last three decades. There’s been continuous economic growth, even when there was global volatility in the economy. David says historically they’ve been lucky, but they can’t rely solely on that luck continuing.
David: There was a famous novel about Australia called The Lucky Country. Australia's economy has experienced a lot of luck over time. We rode on the sheep's back and then we had had a mining boom. There's a lot of irony in that, because really to support the economy over time, it's not about luck. It's about hard work. And it's about making the right choices. So, what we've sought to do in [the series we wrote] “Building the Lucky Country” is focus on the big issues for Australia's economic prosperity going forwards. At the moment, we thought there's actually no bigger [issue] than the future of work—how we organise our people, how we invest in our people and get the best out of them and make our workplaces the most rewarding. It’s really one of the key economic issues at the moment. That's why we wanted to focus on something that's important for Australia's prosperity, but also can be related to both an individual level and business level as well.
Tanya: Cathryn and Jessica, as you were looking at this and you wanted to focus on this, what was the approach that you took to really look into the future of work for Australia?
Jessica: One of the things that we've really struggled with—one of the reasons that we picked up this project—was that people are very afraid of the future of work. There's a lot of negative stories in the news and a lot of fear-mongering. I suspect that is consistent internationally as well. Part of what we wanted to do when we first started was to look at some of the common conceptions or, in this case, misconceptions or myths around the future of work, and see whether there was actually evidence or any proof to support those myths. The other thing that we wanted to do is to look forwards and to help people to understand—people and businesses both—what they needed to work on today to succeed in the future: Some of the trends we've seen in employment over time and looking forwards to what are the skills that people need.
Tanya: I talked to a lot of people who are really worried about, for instance, robots taking their jobs. Or they worry about constantly having to reskill and change jobs over and over and over again in order to stay employed. You call them myths? Why are they myths?
Cathryn: Yes. So we, being economists, we looked at these myths and decided to delve into the data that sits behind some of these things. We tried to disprove them or prove them if they were true. You're right, the first myth that we looked at was that robots are going to take our job. We found that, yes, technological change is changing the way we work. But unemployment is actually very low in many developed economies around the world. In the US, the unemployment rate is the lowest it's been in half a century.1 In Australia we have unemployment close to the levels that they were in 2012.2 While technology is changing how we work, we're not seeing it displace many workers. We think it's actually improving and changing the way that we work.
One of the other myths that we looked at that you mentioned was that we're all going to have many jobs over our careers. What the data actually says is that Australian workers are staying in their jobs for longer than ever. Forty-five percent of workers here have been with their current employer for over five years.3
Jessica: When we first researched this the powers that be made us check that number four times. But that's the truth in this statistic.
Tanya: That's interesting. One of the other myths that you guys dig into is kind of funny: For some people, working from your home office in your pajamas on your computer is Nirvana, but for a lot of other people that are used to going to an office or factories or a retail shop, some of those traditional employment spaces, they don't necessarily want to be disconnected from an onsite work experience. And they worry that that's what the future is going to be like—everyone's in their own little pods, doing their own little thing, and not having that camaraderie with coworkers.
Cathryn: We don't think traditional office space will disappear. Most of us are working a little bit more flexibly. That might be an afternoon at home, for example. But we have the Australian census, which is a survey that's done every few years by our statistics agency, and we found that only one in every 25 workers was working from home on a given day. That's despite one in every five employers offering the flexibility. This is because being physically close to people actually matters. It allows us to do things like collaborate. It allows us to socialise and it also provides the physical infrastructure that makes working efficient and effective, as well.
Tanya: You have a framework that you used to think about the future of work. You talk about hands, heads, and hearts. I want to start with hands because that's how a lot of people are used to working. When I think hands, I think of my husband's grandfather, who built roads in the southwest of the United States for decades and then, when most people retire, he actually went on to riding an ATV through wilderness areas looking to document invasive species for the state. So that's a very “hands” kind of job. It's definitely work, but there's already a shift underway. What are we seeing?
Cathryn: We wanted to see how work had changed over history to have a look at some of the trends that were occurring. And we have found that today's jobs are increasingly likely to use your head, rather than your hands. They're more likely to be thinking roles than manual roles similar to what you described. We're seeing that technology can often replace or mechanise some of the manual tasks in a way that it can't do the jobs that require you to think.
The jobs that are really the hardest to automate will be the jobs of the heart. And these are roles that require interpersonal and creative skills. So we found that 86 percent of jobs created between now and 2030 will be knowledge worker jobs. One quarter of the workforce will be professionals—and again this is the Australian workforce—and two-thirds of those jobs will be soft skill intensive by 2030.
Jessica: We're talking about anything which requires you to be human
Tanya: Like being a radio host!
Jessica: Like being a radio host—exactly right! I would like to say “like being an economist,” but some people would probably argue with me on that.
Tanya: I have a daughter who is studying economics. I think she has a heart. It's OK.
Jessica: That's good, at least you've come to the light. Look—that it's really important to recognise that people, more than ever before, are craving and wanting deeply human experiences. And too often, as economists and as people, we get stuck in this idea of defining ourselves in very specific, very niche technical capacities. Like: I'm an economist or I'm a data scientist or even I'm a doctor, I'm a firefighter. We define ourselves a lot by the task it is we do or even what we've been trained to do, but actually roles and occupations change really very quickly. The truth is that to be good at any given job or any given task, it's not just enough to be a technical specialist anymore. In fact, we had a look at over 9 million job ads in our research—so that's a lot.
Tanya: That's a lot!
Jessica: One of the things which surprised us at first glance is that to be good at a job, to make the job ad requirements, you didn't need one or two skills. You needed 18 skills, on average.
Tanya: And how many people would fill 18 skills of any job?
Jessica: Not that many, as it turns out. We actually found that already today Australians are missing two out of the 18 critical skills that they need. And I do think that this is where the human skills or the heart skills come up because, actually, we're a very well-qualified workforce. We like to think of ourselves as certainly quite clever people, and yet the skills that you need to be successful in your role are not just about your technical skill. A lot of them are about your human skills. Customer service, your ability to understand your customer's needs and to give them a good experience. Your ability to do critical thinking or to solve problems or to be creative, to teach, to lead. There are so many skills that sit in this category and I'm sure everyone will have an experience of having worked with someone or dealt with someone who might be a technical expert, but simply does not have the soft skills at the level that they need to really be able to bring that technical expertise to life. If you can't explain your findings as a data scientist to your business leadership, then half of your findings are not really valuable because you haven't been able to articulate them. If you have a great product as a retailer, unless you can give your customer really good service and really understand them and listen to them, it's going to be quite hard for you to grow. So, that was one of the most interesting things that we found through this research, really how important these heart skills are across the board in every single role.
Tanya: I train young journalists and also some people who are hoping to come into the business a little bit later, and the ones that are coming to it as a second or third career are often very nervous [because] they don't think they can learn the equipment and all that. And what I continually say is it's not about the equipment. But what I really need is the critical thinking skills that you just mentioned, and I also need your ability to be able to connect with people and listen deeply.
But those soft skills are sometimes harder to teach or harder to coach, so where do companies start with that idea of, “How are we going to really develop these heart jobs and the people to fill the heart jobs?”
David: It's a great question and really one of the takeouts of the report is that with the skills that we’re missing, it is a role for businesses to help to harness it. It's not something that we can just say, oh, that's the education system that should be delivering that. And one of the best ways is actually encouraging people to be teachers and mentors as part of their job. When you come to work, your role is not only to do specific functions you're asked to do, but it's actually to help teach and mentor others around you. And that doesn't mean that's because you're their supervisor. You might be their colleague. You may have a lower rank to them within the organisation, but there are lots of skills that we can learn off of each other, be they customer service, design, active listening, digital skills. There are plenty of examples where we can learn from each other. And if employees have the mindset of, “We're not only going to perform our work, but we're going to help our colleagues through teaching and mentoring them,” you end up with a much more effective organisation where skills are developed and transferred.
Tanya: What are the systems that companies could put in place to develop that kind of culture where that happens?
David: When we're looking at the future of work, skills are important for the individual, but what is going to provide your job security going forwards is having skills that are relevant in today's workplace. Yes, formal qualifications are important, but just as important is how you can utilise those qualifications in the workplace. There's a real interest for the individual or the employee to continue to learn new skills, but there's also real interest for the company to have that. You want to have the most effective workforce. If you have a workforce that has great technical qualifications but can't apply that to customers or to solve new problems, then it's not going to be very effective. Harnessing those types of skills is really in companies' interests.
A lot of it comes down to culture. A culture of actually sharing information. When there are challenges like new technology, it's talking about that honestly. It's saying to the workforce, “This technology actually may displace some roles, but don't be fearful of that because as it displaces some functions ,there'll be other, probably more interesting and more creative functions for workers to do so let's embrace the technology.” Let's think of how we can make our job more efficient and take away some of the boring, repetitive stuff that technology is actually better at doing, and then that leaves more capacity to do the customer-focussed, creative, interpersonal roles.
Tanya: You have some interesting case studies. Are there one or two that you'd really like to highlight that tell us something meaningful about what's happening in the future of work right now?
David: One which is pretty interesting is what's been happening in Australia around the automotive sector. Australia did use to have a car-manufacturing industry where we would do final assembly on cars. In the last few years, that has disappeared because of competitive pressures. That has been a real challenge for that sector and for government more broadly. You've got a lot of workers who have spent many years in the auto-manufacturing industry and all of a sudden those jobs aren't there anymore. How do we go about making transitions for those workers and meaningful careers going forwards? And we found that there has been some considerable success in people moving to new careers, particularly when they've been able to define their abilities in terms of the skills that they've brought to their work. When people thought of themselves as car-industry workers and there was no longer a car industry, it was very hard to find alternative employment. But when people thought of themselves as having skills in engineering, skills in design, problem-solving, customer service, as well as a layer of technical skills, it turned out that there were a range of other roles that they could go on to. Some of those were in manufacturing, but some of those were in transport and warehousing, logistics, even health care. A lot of our success story has been that a lot of former factory workers have been able to be redeployed just by utilising their skill set in a different manner.
Tanya: How difficult has it been for them to affect that mind-shift, to stop thinking of themselves as a car-industry person first and think of themselves as a customer service or an engineer or a design or something else first?
David: Look, it’s not easy, particularly for those who'd been in the sector for a long time and were older workers. Not everyone has transferred. Some people have taken early retirement and that might not be a great result for those individuals and it's certainly not a great result for the economy as a whole. You're losing a valuable resource, a valuable person or human capital in economics parlance. As a country, we do need to do better to look after all people, including older workers. One of the main elements of the research is that we can't just focus on people who are new to the workforce and have attained the latest technical skills. We need to make use of our whole workforce, including older workers. People will be living longer. As a society and economy, it makes sense for people to also work longer, but in order to do that, we do need to adapt in terms of skill sets and have pathways for people to transition.
If you've been in a sector for 20 years and that job's no longer there, we need to have a pathway so that people don't end up taking early retirement in their mid-40s or early 50s. They can transition to another job and have a great further working life for another 10 or 20 years.
Tanya: One of the things we haven't touched on yet is diversity. And you have some predictions about what would happen if you increased gender diversity in Australian businesses and what that would do for the economy. And I would imagine that the kind of flexibility, not only in time and location of work but also just in the way that we think about work, might drive some of that diversity, whether it's gender or other types of diversity.
Jessica: Yes, that's entirely right. That it is a growing conversation, but also a very important conversation, which we need to be having more of. Having more flexible workplaces really helps support people who have different needs and different priorities in their lives. And that it's gone, to be honest, from being a kind of nice thing that the companies do for social reasons or to make themselves feel better or feel like good corporate citizens. It's not just a nice thing. Quite simply, it's a business imperative. Businesses that are more diverse and more inclusive have better outcomes across a whole range of different metrics. That comes from customer engagement all the way through to team engagement. Even sometimes in their sales.
Tanya: We've spent a lot of time talking about Australia, which makes total sense since the three of you are based in Australia and this research is on Australia. But this is somewhat generalisable though to other countries around the world, to other populations. Do you have a sense of
what that's going to look like outside of Australia?
David: Absolutely. It's a global trend. Essentially what we're looking at here is structural change in the workplace, and often that change is brought about by technology. We're seeing across the US and Europe and other industrialised countries that technology is changing the way we work. It's not leading to mass unemployment. In fact, the opposite. We're seeing very low unemployment rates, but it is changing the kind of skills that we need to be effective in the workplace.
Jessica: The main takeout for me from the report is that people are quite scared about the future of work. But, if we play our cards right, there is nothing to really be scared about. Some people may be displaced but ultimately business leaders should not be afraid that they should be thinking about how they shape a future of work which best meets their needs in their workplace and of their people. My key takeout is that the future work will be what we make it. There are some really exciting opportunities ahead if we just manage to grab them and make the most of them.
Tanya: That was Jessica Mizrahi, David Rumbens, and Cathryn Lee—all with Deloitte Access Economics in Australia. Their series of reports—Building the Lucky Country—argues that by making better choices about work, workers, and workplaces, Australia’s already thriving economy could see a Aus$36 billion annual boost. You can find the series at deloitte.com/insights. You can keep up with the podcast on Twitter at @deloitteinsight and I’m @tanyaott1.
Thanks for listening … we’ll catch you again in two weeks.
This podcast is provided by Deloitte and is intended to provide general information only. This podcast is not intended to constitute advice or services of any kind. For additional information about Deloitte, go to Deloitte.com/about.
At Deloitte, we believe that it’s not enough for Australia to ride our luck. We also have to make it. The Building the Lucky Country series has been developed to prompt debate and conversations across business, industry associations, government and the media on issues facing the Australian economy.