Why automation is Australia’s opportunity for a successful recovery
The prospect of increasing automation in the Australian economy is understandably a source of uncertainty and fear for many. The reality remains that automated technologies are only set to become more widespread in the near future, but this reality isn’t nearly as dire as many believe. Automation is expected to provide a significant opportunity for Australia to propel out of the COVID-19 recession and to grow its economy – so long as policy makers take steps to prepare for the changes to come.
The COVID-19 pandemic has been a catalyst for automation across Australian industries. The clearest case of this has been the explosion in online purchases within the retail industry, which in 2020 saw more than a 40 per cent increase. While customers have gravitated towards online retail as a consequence of COVID-19 limitations, the move also captures a more gradual trend toward online shopping simply for convenience. Experts anticipate that this is only the beginning for these changes in the retail sector.
The food services and hospitality industries respectively will also see changes as they have been identified as most at risk of displacing human employment with automation. As such, lower skilled labourers in these industries are anticipated to be the worst affected. For example, almost half of all kitchen hand jobs are predicted to be automated by 2034, but not even 1 per cent of chef jobs are predicted to be replaced. Research has also shown that those in the accounting, finance and procurement fields are at risk, particularly those who typically perform administrative and repetitive jobs. These areas are likely to lose more than a million jobs of this kind in the next decade.
It is anticipated that almost 50 per cent of work activities from across the entire Australian economy could be automated in as little as a decade and income inequality could increase by over 25 per cent. Clearly, without any intervention, automation could have dire ramifications. This is likely to disproportionately hit low-skilled labourers and manual workers, particularly in low-income regions. Men are also expected to be disproportionately displaced.
That said, history shows that automation does not always spell the end of jobs in an industry, but can be an opportunity to create even more. For example, after barcode scanners and point-of-sale systems were largely deployed in the United States in the 1980s, the employment of cashiers did not reduce drastically, it instead increased markedly in the subsequent decades. The maintenance of these automations also necessitated new workers and the reskilling of existing workers.
In the new automated economy, sought after technical skills and jobs will predominantly exist in growing areas such as robotics, blockchain, machine learning, artificial intelligence and big data. The demand for these skills is predicted to increase by over 30 per cent in the next decade. These tech-based industries will make up new blocks of the modern economy. To adjust to these new industries, up to a third of the workforce by 2030 in developed nations is estimated to require reskilling and occupational changes.
Through investment in skills development and reskilling of the Australian labour force, it is anticipated that anywhere from 1.7 million new jobs to more than twice the amount of jobs lost to automation, could be created in these new sectors. With foresight, preparation and sheer will, Australia has the opportunity to take full advantage of the economic opportunity which automation presents.
Workers without tertiary education are anticipated to be disproportionately affected by these changes in the labour markets and will require the most retraining. More than likely, the quality of some of these new jobs may also present an issue. With such a significant portion of the population impacted by the changes, a lack of applicable skills and bargaining power may also leave workers susceptible to exploitation.
To address these issues, policymakers at all levels should consider making investments in infrastructure for training, such as apprenticeships and smaller community educational institutions. This will ensure students are better prepared with the skills and credentials that employers will need. Investments in infrastructure, construction and other middle-wage occupations could also help maintain and create additional and sufficient demand for sections of the workforce that may be overlooked. These actions can also help prevent structural unemployment in the long term and forego an exacerbation in inequality.
Governments should also focus on looking at labour policies that ensure fair levels of pay and employment security for new generations of workers. Governments could also consider investing in policies such as unemployment welfare, and programs to help workers find employment which will allow displaced and disaffected workers to be agile and resilient in the market. Other policy areas such as adjusting the minimum wage and considering creating a universal basic income should also be explored.
Certain corporations are also realising that it is in their self-interest to begin retraining their workforces for the changing world. Australia’s largest supermarket chain, Woolworths, has recognised the increasing demand for such skills and earlier this year chose to invest $50 million in skills training for its employees. As a consequence, its employee base of over 50,000 across its stores, e-commerce operations, offices and supply chain will be upskilled and reskilled in areas such as machine learning, robotics and data analytics. Other companies should also consider investing in similar skills training, to the benefit of their workers and potentially their bottom line as well.
At a more individual level, Australians should aim to acquire knowledge diversity. By striving for this, workers can maintain cross-domain knowledge and diverse skills which allow them a level of flexibility in a range of employment sectors. Soft skills such as judgement, effective communication and empathy are also highly valuable, as these cannot yet be automated. These steps will give Australia the best chance at taking advantage of new economic opportunities in its changing labour market, and ensure workers can share in this prosperity.
Ziyan Tejani is currently a Law and Politics student at Macquarie University and the Operations Officer at the Menzies Research Centre. He is passionate about strengthening our national security and advancing our diplomatic interests abroad