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Opportunities in Change: Responding to the Future of Work
IAG commissioned the McKell Institute to develop a research report about the future of work. The report, Opportunities in Change: Responding to the Future of Work, explores the current state of the Australian labour market, the evolution of traditional employment and how government and industry can respond to the changing nature of work.
The nature of work around the world is changing, and Australia is not immune. With the increase in automation in Australia and globally, some fear the worst – that in the future, human workers themselves will be replaced. However, while automation has displaced many jobs, it has also created new industries, made many jobs safer, increased efficiency, and enhanced economic prosperity.
The worst-case scenarios about the future of work may not have yet materialised and may never do so, but the changing nature of work presents a real challenge to governments and organisations. Avoiding the worst-case scenario demands creative responses from policymakers and industry leaders to ensure that the workforce of tomorrow is equipped for an uncertain future. This report explores this long term challenge, and puts forward ideas aimed at navigating a path forward.
Part ONE begins by exploring what the ‘future of work’ really means. The emergence of new technologies has dramatically impacted the way we live, work and produce, and has been referred to as the Fourth Industrial Revolution, or Industry 4.0. Estimating how many jobs are to be impacted by these forces of disruption is challenging. At a minimum, 9 per cent of jobs in the Australian labour market today are at risk of being fully automated in the foreseeable future, with more than half of all jobs likely to be subject to varying degrees of automation. The scale and pace of change is truly unprecedented.
But it’s not just technology impacting the future of work. The nature of employment is also changing. Today, over one million Australians are employed as independent contractors. More than 100,000 of those full time in the ‘gig economy’. Even more shift between jobs, with labour mobility at an all-time high, and more than 40 per cent of millennials report having engaged in some form of freelance work. If the future of work builds on these trends, the Australian labour market of tomorrow will be more flexible, more mobile, and more technologically-attuned than in the past. However, it may also be subject to higher rates of job insecurity, and reduced access to basic entitlements like superannuation and paid leave, if reforms are not delivered.
Part TWO outlines the current state of Australia’s labour market, identifying the underlying trends – such as a high underutilisation rate and modest wage and productivity growth. Unemployment is typically low and participation high. These stats, though, conceal some concerning trends, such as the modest decrease in the male participation rate, and the large number of Australians who are underemployed. These phenomena have pushed jobseekers towards new types of work – like freelancing or platform work - that don’t offer the type of job security many Australians currently receive.
Part THREE explores the challenges facing Australia’s non-permanent workforce. While traditional forms of employment remain dominant in Australia, an increasing number of workers find themselves in non-permanent work. Independent contractors and gig workers regularly miss out on superannuation and workers’ compensation. This leaves these individuals uninsured and exposed to the financial consequences of workplace accidents and illnesses. Part Three then looks at how the existing system of workers’ compensation can be improved to cover more Australians who are finding the nature of their employment disrupted.
Part FOUR paints a picture of Australian perspectives on the labour market and their own job prospects through an analysis of extensive survey data produced by the Australian National University (the ANUPoll survey). Some of the findings are positive: most Australians don’t feel insecure in their job. But neither do many Australians believe their job is likely to disappear anytime soon, at least not because of automation. This suggests a degree of complacency, or at least a lack of awareness, among the Australian workforce about the disruptive forces shaping future work. This may lead to the workforce being less inclined to engage in life-long learning, leaving today’s workers ill-prepared for unforeseeable disruptions to their industry.
Part FIVE tables international responses to the changing nature of work. While every economy is unique, there are lessons to be learned from how other economies are dealing with disruption. We can also learn from the policy advice offered by major multilateral bodies such as the Organisation for Economic Co-Operation and Development (OECD) and World Economic Forum (WEF). Some countries are leading the way in trying to identify pathways forward. Germany, in particular, has been successful in facilitating widespread consultation, bringing labour, business and government together to identify policy priorities. These priorities enable innovation and growth while securing workers interests. National strategies in New Zealand and Thailand, and ideas floated in the United Kingdom and the United States provide useful insights for Australian policymakers.
Part SIX puts forward recommendations to government and industry. This section argues for enhanced access to life-long learning, investment in early childhood education, equipping Australians with the appropriate key skills of adaptability and creativity, facilitating portability of entitlements, modernising the way we categorise work and harmonising workers’ compensation. It is also recommended that the government develop a White Paper with the intention of constructing a long-term strategy for the Future of Work, with collaboration and input from a broad range of stakeholders.