What major changes are likely to affect the labour market?
Labour markets are complex and there are many different ways in which new developments can have an impact. Some of these developments we know about or can anticipate today, while others are yet to appear.
For example, we know that the population is ageing and Australians are working longer before retirement. Around one in five Australians is expected to be 65 years or older by 2035, up from one in every six in 2015. Between 2007 and 2017, the proportion of those 65 years or older who were employed rose to 13% (up by 4 percentage points). These and other demographic changes mean that the goods and services needed in the Australian economy will also change and a more diverse labour force will be required to deliver them.
Another key trend which has been frequently discussed is the increasing use of technology and automation. People often ask how this will affect them and their job, and whether they will be replaced by a robot.
Is automation affecting existing jobs?
The jobs which are easiest to automate are those which are routine, following explicit rules which could easily be specified in computer code for execution by machines.
The proportion of people employed in such jobs is decreasing. For example, factories and assembly lines have become increasingly automated, reducing the need for Factory and Process Workers in the Manufacturing industry.
Importantly, automation has not led to a widespread absence of jobs. Indeed, despite the rapid pace of technological change over the past quarter of a century, the proportion of Australia’s population in employment has increased.
Are the skill levels required for jobs changing?
Over the past two decades, there has been a significant shift away from medium-skill jobs towards higher-skill jobs.
One explanation for this is that the increasing use of technology has led to the automation of routine tasks which, whether mental or physical, were previously the domain of medium-skill workers. Meanwhile, technology may complement the type of non-routine knowledge-based work undertaken by higher-skill workers, improving their productivity and hence the demand for such workers.
There has also been a decline in lower-skill jobs, although this has not been as pronounced. Such workers may be undertaking tasks that, to date, have not been automated because, for example, they involve non-routine physical work in unpredictable environments or they have a significant component of human interaction.
What does the research say about the future impact of technological change?
Some research has suggested that many jobs are at risk of automation, generating significant concern about the future of jobs. More recent research, however, suggests it is not likely that entire occupations will be automated. Specific tasks within each occupation may be susceptible to automation, and the task (and skill) requirements of jobs may therefore change. One recent study found that, on average across 21 OECD countries, around 9% of jobs face a high risk of automation. It is important to realise that
- not all such jobs will be automated, because it may be costly or difficult to do so
- workers can adapt by upgrading their skills
- new opportunities will arise from the use of technology.
What new opportunities might be created by technological change?
While technology is decreasing the demand for some occupations, it is also creating opportunities through the need for workers to develop, use or supervise the operation of new technologies. For example, new jobs such as 3D Printing Designers and Big Data Analysts have emerged.
Technological change may also increase workers’ ability to participate in the labour market. For instance, assistive technologies may expand the range of opportunities available to a person with disability, or allow some jobs to be done remotely rather than requiring someone to be physically present.
What does this mean for workers and job seekers?
The labour market of the future is one in which workers will need a range of complex skills. Having the ability to gain new skills and apply existing skills to new contexts will be critical to success in the changing labour market. A recent survey by the World Economic Forum found employers thought that, by 2022, more than half of all current employees would require significant reskilling or upskilling.
With continuing improvements in technology affecting the labour market and society more broadly, workers will need both technological skills and the ability to apply other skills, such as problem-solving, in a technology-rich context. Developing skills such as creativity, complex judgement, social interaction, emotional intelligence and other interpersonal skills will leave job seekers well placed in the decades ahead. Jobs involving these skills are likely to grow, and are less likely to be overtaken by advances in automation and artificial intelligence.
Sources: The Treasury, Intergenerational Report 2015; ABS, Retirement and Retirement Intentions; ABS, Labour Force; OECD, Economic Surveys: Australia, 2018; OECD, The Risk of Automation for Jobs in OECD Countries, 2016; World Economic Forum, The Future of Jobs Report, 2018