While the future of work is human, Australia faces a major skills crisis

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While the future of work is human, Australia faces a major skills crisis

The right response can deliver a $36 billion economic bonus

12 June 2019: With skills increasingly becoming the job currency of the future, a new Deloitte report finds that the future of work has a very human face. Yet Australia is challenged by a worsening skills shortage that requires an urgent response from business leaders and policy makers.

The path to prosperity: Why the future of work is human, the latest report in the firm’s Building the Lucky Country series:

  • Dispels some commonly held myths around the future of work
  • Uncovers some big shifts in the skills that will be needed by the jobs of the future
  • Reveals that many key skills are already in shortage – and the national skills deficit is set to grow to 29 million by 2030
  • Recommends that businesses embrace, and invest in, on-the-job learning and skills enhancement
  • Finds that getting Australia’s approach to the future of work right could deliver a $36 billion national prosperity dividend.

According to Deloitte Australia Chief Executive Officer Richard Deutsch: “In spite of recent, as well as current, global uncertainty, Australia has a record run of continuous economic growth. But our future economic standing isn’t guaranteed, and we certainly shouldn’t take it for granted.

“There is clearly some anxiety about the future of work. Will robots send unemployment soaring? Will the advance of automation mean we lurch from one insecure job to another? Will new technologies keep our wage growth fixed to the floor? We say there’s no need to be scared, and that businesses need to be brave, not afraid. These myths aren’t just wrong, they’re potentially damaging if we allow them to take hold and lead to our making the wrong choices.

“People, and their unique interpersonal and creative skills, will be central to the future of work, and how we structure this future, and prepare our workers, will say a lot about us as a society. Our decisions now will be a key driver of our economic success. After all, for every problem there’s a job, and the world isn’t running out of problems.”

Deloitte Access Economics partner, and lead report author, David Rumbens said: “We don’t face a dystopian future of rising unemployment, aimless career paths and empty offices. Yes, technology is driving change in the way we work, and the work we do, but it’s ultimately not a substitute for people.

“Technology is much more about augmentation than automation, and many more jobs will change in nature because of automation, rather than disappear altogether. We can use technology to our advantage to create more meaningful and productive jobs involving more meaningful and well-paid work. And making better choices to facilitate this, could boost national income in terms of GDP by $36 billion a year.”

Myths busted

The report dispels three myths that tend to dominate discussions around the future of work.

Myth 1: Robots will take the jobs. Technology-driven change is accelerating around the world, yet unemployment is close to record lows, including in Australia (where it’s around the lowest since 2011). New technologies will have the capacity to automate many tasks, but also create as many jobs as they kill, and employment is growing in roles that are hardest to automate.

Myth 2: People will have lots of jobs over their careers. Despite horror headlines, work is becoming more secure, not less, and Australians are staying in their jobs longer than ever. And nor is the gig economy taking over. Casual jobs are a smaller share of all jobs than 20 years ago, and that share hasn’t moved in over a decade. The rate of self-employment has also been falling for almost 50 years and is at a record low.

Myth 3: People will work anywhere but the office. The office isn’t going away any time soon, and city CBDs will remain a focal point for workers. More people are working flexibly, but on a given day only one in every 25 workers work remotely, even though almost one in five Australian employers offers the ability for staff to work from home. Being physically close to other creative people is becoming more important, not less, and working together helps us collaborate and socialise, and provides infrastructure and support.

The big skills shift ahead: from hands…to heads…to hearts

“That today’s jobs are increasingly likely to require cognitive skills of the head rather than the manual skills of the hands won’t be a surprise,” Rumbens said. “But there’s another factor at play. Employment has been growing fastest among less routine jobs, because these are the ones that are hardest to automate.”

More than 80% of the jobs created between now and 2030 will be for knowledge workers, and two-thirds of jobs will be strongly reliant on soft skills.

“Yet something new is also happening,” Rumbens said. “Jobs increasingly need us to use our hearts – the
interpersonal and creative roles, with uniquely human skills like creativity, customer service, care for others,
and collaboration that are hardest of all to mechanise.

“Demand here is set to soar for decades, and this is actually a liberating trend. Much of the boring,
repetitive work will be taken care of by technology, leaving the more challenging and interesting work for
humans.”

Critical skills and the multi-million gap

As work shifts to skills of the heart, Rumbens said the research reveals that Australia already faces skills shortages across a range of key areas critical to the future of work.

“These new trends are happening so fast they’re catching workers, businesses and governments by surprise,” Rumbens said.

At the start of this decade, the typical worker lacked 1.2 of the critical skills needed by employers seeking to fill a given position. Today, the average worker is missing nearly two of the 18 critical skills advertised for a job, equating to 23 million skills shortages across the economy.

“This skills gap is significant, and it’s still growing. If we continue as we are, our national skills shortage will grow to 29 million by 2030, and far-and-away the bulk of those ‘missing skills’ will be those of the heart,” he said.

Media contact:

Simon Rushton
Corporate Affairs & Communications
M: +61 450 5309 748
T: +61 2 9322 5562
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Magnitude of skills shortages, or over-supply by skill - 2019

The report looks at 35 skills, and finds that today:

  • Of the three that require work of the hands, none are in shortage
  • Of the 23 under work of the head, 16 (70%) are in shortage
  • Of the nine classified as required for work of the heart, 8 (89%) are in shortage.

“Skills of the head and, increasingly, the heart are going to be in strong demand in the future, but we face significant under-supply now, and we forecast that this will only get worse,” Rumbens said.

For example, employers would prefer 3 million more people with digital literacy than what’s available. But this shortage is dwarfed by customer service skills, the most demanded skill in the Australian economy and where the shortage in these skills is already severe, representing around 5.5 million workers.

“The extent of skills shortages, and how long until this peaks, will vary by industry but be felt throughout the economy,” Rumbens said.

“They will be most prolific where people are key to driving how businesses create value, and five industries –government services, construction, health, professional services and education – are set to face more than two million skills shortages at their peak.”

Magnitude and imminence of skills shortages by industry

For example, in all industries except agriculture, all of the top five skills sought by employers are expected to see demand exceeding supply by at least 100%. Mining and manufacturing are forecast to see demand outstripping supply by at least 150% in four out of the five skills most demanded, while one out of five skills in most demand in both retail and education face this extent of shortage.

The business response?

Rumbens said that getting ahead of the game will require concerted action.

“With skill requirements changing faster and becoming more job-specific, the future of work will require much more, and much better, on-the-job learning than Australia has today,” he said.

“Business leaders will have to make active choices, and just buying skills won’t be enough, they will have to adopt an investment frame of mind, and train them.

“With investment in on-the-job training cheaper, more relevant and more focussed than classroom learning, the future of work will be a combination of learning and work integrated into one. And refreshing the skills of current, experienced workers will be just as critical as producing students and graduates with the skills they need.

“By making workers smarter and better suited to the jobs of the future, and improving the match between what businesses need and what workers have, we will make our workplaces happier and more productive.”

The report includes a series of checkpoints business leaders and policy makers, can use to inform, and drive
action. These include:

  • Identify the human value – Identify which jobs can be automated, outsourced to technology such as AI, and which are uniquely human. Use technology to improve efficiency, and increase the bounds of what’s possible.
  • Forecast future skills needs – Understand the skills, knowledge, abilities and personal characteristics of your employees.
  • Re-train, re-skill, and re-deploy – People represent competitive advantage. Consider alternatives to redundancy such as re-training, re-skilling or re-deploying as options to support existing workers reach for new opportunities.
  • Involve people – The people who do the work are often the best placed to identify the skills they require to succeed. Find ways to involve employees in the design and implementation of learning programs.
  • Talk about technology honestly – Engage in an honest dialogue about the impacts of technology to support staff and generate new ideas for managing change.
  • Manage the robots – Introduce digital governance roles to evaluate the ethics of AI and machine learning, alongside existing frameworks.
  • Use mentoring and apprenticeships – Micro-credentialing holds the key to unlocking the value of emerging job skills, while apprenticeship models are re-emerging as an effective way for business to develop a future-ready workforce.
  • Recruit and develop social and creative skills – Recognise and reward social skills such as empathy, judgement, and collaboration when recruiting and developing workers.

The payoff…for Australians, and Australia

Deloitte Australia Chief Strategy & Technology Officer Robert Hillard said people will remain the fundamental drivers of Australia’s economy, central to the future of work, and vital to business success.

“Maintaining our prosperity as a nation needs to include fostering creativity, innovation and productivity in the workplace, and this new research presents a view that the future of work in Australia will very much be human,” he said.

“We have an opportunity to make better choices about our work, our workers and our workplaces, and if we navigate this change effectively, the results will offer more interesting work for all of us, and create a more engaged and productive workforce. This will deliver better outcomes for businesses and government, significantly boost the economy, and help pave the path to prosperity for all Australians.”

Deloitte’s Building the Lucky Country series

Previous Building the Lucky Country reports have examined key challenges – but more importantly, potential opportunities – including:

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