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Australia's Future Workforce? National South Australia and the Level 13, 440 Collins Street Northern Territory Melbourne VIC 3000 Level 7 GPO Box 2117 144 North Terrace Melbourne VIC 3001 Adelaide SA 5000 Telephone 03 9662 3544 PO Box 8248, Station Arcade Email [email protected] Adelaide SA 5000 Telephone 08 8211 7222 Email [email protected] New South Wales and the ACT Level 14 Victoria and Tasmania The John Hunter Building Level 13, 440 Collins Street 9 Hunter Street Melbourne VIC 3000 Sydney NSW 2000 GPO Box 2117 GPO Box 2100 Melbourne VIC 3001 Sydney NSW 2001 Telephone 03 9662 3544 Telephone 02 9299 7022 Email [email protected] AUSTR Email [email protected] A Australia’s future workforce? Western Australia LI Queensland Level 5 A ’s future workforce? Level 17, 300 Adelaide Street 105 St Georges Terrace Brisbane QLD 4000 Perth WA 6000 June 2015 GPO Box 2900 PO Box 5631, St Georges Tce Brisbane QLD 4001 Perth WA 6831 Telephone 07 3229 9955 Telephone 08 9228 2155 Email [email protected] Email [email protected] Australia’s future workforce? June 2015 About this publication Australia’s future workforce? © CEDA 2015 ISBN: 0 85801 300 2 The views expressed in this document are those of the authors, and should not be attributed to CEDA. CEDA’s objective in publishing this collection is to encourage constructive debate and discussion on matters of national economic importance. Persons who rely upon the material published do so at their own risk. Designed by Robyn Zwar Graphic Design Photography: Pages 67, 73, 75, 77: Rio Tinto image library Section 4.0 and Cover (bottom right): CEDA image library All other images: iStock image library About CEDA CEDA – the Committee for Economic Development of Australia – is a national, independent, member-based organisation providing thought leadership and policy perspectives on the economic and social issues affecting Australia. We achieve this through a rigorous and evidence-based research agenda, and forums and events that deliver lively debate and critical perspectives. CEDA’s membership includes 700 of Australia’s leading businesses and organisations, and leaders from a wide cross-section of industries and academia. It allows us to reach major decision makers across the private and public sectors. CEDA is an independent not-for-profit organisation, founded in 1960 by leading Australian economist Sir Douglas Copland. Our funding comes from membership fees, events and sponsorship. CEDA – the Committee for Economic Development of Australia Level 13, 440 Collins Street Melbourne 3000 Australia Telephone: +61 3 9662 3544 Fax: +61 3 9663 7271 Email: [email protected] Web: ceda.com.au Contents Foreword 6 Executive summary 7 Introduction 16 Section 1: Global trends Chapter 1.1 32 Reshaping work for the future Professor Lynda Gratton Chapter 1.2 38 The impact of emerging technologies in the workforce of the future Professor Hugh Bradlow Chapter 1.3 48 How next-gen computing is changing the way we work Belinda Tee and Jessica Xu Chapter 1.4 56 The impact of computerisation and automation on future employment Hugh Durrant-Whyte, Lachlan McCalman, Simon O’Callaghan, Alistair Reid and Daniel Steinberg Chapter 1.5 65 Case study: Automation and Australia’s future workforce Michael Gollschewski Chapter 1.6 78 Digital disruption – what, why and how Sarv Girn Chapter 1.7 85 Megatrends and Australia’s future: Older and wiser? Dr Fiona McKenzie AUSTRALIA’S FUTURE WORKFORCE? 3 Section 2: Australian stocktake Chapter 2.1 98 Australia’s shifting economy Tim Bradley Chapter 2.2 109 Technological and structural change in Australia’s labour market Professor Phil Lewis Chapter 2.3 131 Information technology and the Australian labour market Professor Jeff Borland and Dr Michael Coelli Chapter 2.4 142 Stability of education earnings gaps in Australia Dr Michael Coelli Section 3: The future worker Chapter 3.1 156 Developing the capacity to adapt to industry transformation Sue Beitz Chapter 3.2 167 Closing the gender gap in labour supply Professor Patricia Apps AUSTRALIA’S FUTURE WORKFORCE? 4 Chapter 3.3 179 Your future employer – yourself Ken Phillips Chapter 3.4 192 Where the jobs are Phil Ruthven AM Section 4: Policy response Chapter 4.1 204 The strategic imperative: Australia’s place in the global labour market Professor Steven Callander Chapter 4.2 213 Future skills, industry policy and a new social contract Professor Roy Green, Professor Ian Marsh and Professor Christos Pitelis Chapter 4.3 225 A brave new world of higher education Professor Jane den Hollander Chapter 4.4 234 Future skills in information technology Hugh Durrant-Whyte Chapter 4.5 240 Northern lights Dr Andrew Scott Acknowledgements 249 AUSTRALIA’S FUTURE WORKFORCE? AUSTRALIA’S FUTURE WORKFORCE? 4 5 Foreword Professor the Hon. Stephen Martin Chief Executive, CEDA Australia is on the cusp of a new but very different industrial revolu- tion. Technology is going to dramatically reshape our workforce in coming years and the nation’s ability to rapidly adapt to technologi- cal change, and even more importantly, innovate, will be paramount for job creation and our future economic success. That is why CEDA has chosen to examine the issue of Australia’s future workforce as its major research project for 2015. This pub- lication reviews the significant technology and related issues our workforce will face and considers what needs to be done to ensure we develop industries, skills and jobs for a future that is still largely unknown. Technological change over the last two decades has been extremely fast and that is likely to continue. This will mean that a significant portion of Australian jobs that exist today will no longer exist in 20 years’ time. In fact, modelling in this report has found that almost five million Australian jobs – around 40 per cent of the workforce – face the high probability of being replaced by computers in the next 10 to 15 years. While we have seen automation replace some jobs in areas such as agriculture, mining and manufacturing, other areas where we are likely to see change are, for example, the health sector, which to date has remained largely untouched by technological change. Our labour market will be fundamentally reshaped by the scope and breadth of technological change, and if we do not embrace economic reform and focus on incentivising innovation, we will simply be left behind in an increasingly competitive global marketplace. Creating a culture of innovation must be driven by the private sector, educational institutions and government. However, government must lead the way with clear and detailed education, innovation and technology policies that are funded adequately. Currently the commitment needed to link education and innovation policy with funding is significantly lacking compared with other countries. It is likely some tough decisions about the Australian labour market will need to be made in the next decade; we’ve already had a taste of this with the decline of the car manufacturing industry. However, if we develop the right policies now, we have the potential to reduce the impact of these challenges and ensure our economy remains robust. This publication draws together contributions from more than 25 authors and I would like to thank each one for their considered contribution to this project. I would also like to thank the CEDA advisory group, who has overseen this project. This publication is big, but the workforce challenges we face are big, and if we do not start preparing now for the changes coming, the impact on our economy and our standard of living could be significant. AUSTRALIA’S FUTURE WORKFORCE? 6 Executive summary For most of human history, not much happened from an eco- nomic perspective. The level of financial wealth and material wellbeing of society was broadly static, with economic progress so incremental that it was virtually unnoticeable. The wealth that a person was born into was the same as what they would pass on to their descendants. That all changed with the industrial revolution when, for the first time in human history, economic progress began to occur rapidly. Since 1750, it has taken only 50 years for living standards to double. Prior to this, improve- ment would have taken 6000 years. AUSTRALIA’S FUTURE WORKFORCE? AUSTRALIA’S FUTURE WORKFORCE? 6 7 EXECUTIVE SUMMARY Economic progress has not been smooth nor has it been clean. Technological change has frequently created losers, but when job losses have been caused by productivity- enhancing technologies, they have tended to create demand via higher incomes and lower prices, which have generated new jobs economy wide. The next stage of the industrial revolution promises to continue this trend but in new challenging ways. The extension of computerisation into almost all aspects of human activity threatens to radically reshape the workforce of tomorrow. However, in the more globalised economy, it remains to be seen whether it will generate a net increase in employment and wealth within Australia or if the labour market benefits will be dispersed. While increasing computational power has been reshaping the labour market for over 60 years, the capacity of machines to replicate aspects of human thought is set to most radically reshape the future of work. These advances mean that activities pre- viously considered forever outside the scope of programming are increasingly being undertaken by computers. For instance, driving through traffic was thought to be a task that humans would always have an absolute advantage over computers; now Google has patented a driverless car. Computers will reshape the labour market in two key ways. They will: 1. Directly substitute for labour, with a high probability that as much as 40 per cent of the jobs in Australia could be replaced by computers within a decade or two; and 2.
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