Media & Speeches

AFR Business Summit – Future of Work Panel

Jennifer Westacott - Introductory Remarks

7 March 2018

Thanks Joanne.

There’s a lot of views about the future of work, so I would like to set out a perspective from the Australian business community based on a major project we have underway.

Many points complement the PwC findings in Jon’s presentation.

Although no one can predict changes with certainty.

    • I think the outlook is more positive than negative.
    • Every job will change, but that doesn’t mean every job will disappear.

We think the future of work will be shaped by five major forces of change.

One. Artificial intelligence and robotics.

I am not convinced that machines will rule the world.

A couple of weeks ago Ginni Rometti, the global Chair and CEO of IBM talked about the need to replace the term artificial intelligence with augmented intelligence.

    • That is, machines and people working together.
    • Because this will be overwhelmingly be the case.

AI and robotics can automate tasks that are routine or risky.

    • …And the remainder will be the domain of workers who can harness and augment technology.
    • These jobs will require more human interaction, a higher level of digital capability and a higher level of skill.

Two. Digitisation.

    • Almost every job will have a digital component
    • From surveying, to human resources, to transport and distribution, to nursing.
    • Not everyone will be a computer scientist but they will need to be capable of lifelong learning to continually adapt to changes in technology.
    • Microsoft and IBM have developed this notion of the digital apprentice.

Three. Increasingly empowered consumers and empowered employees.

    • Empowered consumers are driving massive change to business models.
    • But these consumers are the same people who are also employees and they will demand the same level of empowerment in the workplace.
    • They will expect greater choice in when, where and how they work.
    • Some of them will turn away from full time employment with one employer.
    • and instead will assemble a work portfolio of projects, tasks and interests.

Four. An ageing population.

    • Workers are going to be older.
    • Greater flexibility in the workforce will mean businesses keep engaging with their staff, long after the current point of retirement.

Five. Continuing changes in global economic patterns.

    • By 2030, the disposable income of the Asia-Pacific’s middle class will exceed the disposable income of the rest of the world.
    • That middle class is going to have significant purchasing power in setting trends and consumer preferences.
    • For Australia to remain competitive, our workforce will need to be more global in its orientation and experience….
    • and with more diverse backgrounds and perspectives.

With all this change, what are the risks we should consider now?

    • We have to make sure we don’t see some regions hollowed out by the utter loss of jobs.
    • We have to watch that wages keep pace with economic activity. 
    • We have to be wary of being caught out by big, sudden adjustments in the labour market.

These risks need a response from individuals and businesses, and they need a system – directed by government – that supports them in exercising their responsibilities.

Individuals have a responsibility to consider their own career path, and proactively upskill and re-skill as needed.

    • They need to consider if their careers are at risk.
      Inform themselves.
    • Work actively to reskill. – engage with their employer

Businesses should own the transition of their workforces.

    • They need to understand and plan for their future workforce, through skills audits, capability assessments and workforce planning.
    • They need to be more savvy about likely skills gaps and how they work to solve that problem.
    • They need to be transparent about the impact of technology on their workforce and the impact of data on their customers.
    • They need to provide training and development of their staff.
    • They need to get better at partnering with educational institutions for the skills they need.
    • And we need to systematise support for workers who need assistance to transition… and coordinate across the business community and between big and small businesses.

I hear from Business Council members that they take this responsibility seriously.

But they need a system that works for them.

They need governments to put in place the processes and systems that enable individuals to thrive and businesses to help.

Those systems have a number of elements.

Firstly, we need the macroeconomic settings that will promote investment, business activity and job creation.

In particular, that means competitive tax and regulatory systems that drive investment.

Second, we need a personal tax and welfare system that rewards effort and participation.

We could envisage in the future of work an older worker who is drawing down from super, working 1 to 2 days a week and possibly receiving a part-pension.

The tax and welfare system is not set up for this type of scenario and needs to be better calibrated to encourage labour market participation.

Third, we need a better system of helping people into employment, or supporting their employment transition.

We do not have a system that is responsive when a number of workforce transitions are underway at the same time.

We rally around with big-spending packages when high-profile companies or sectors go through transition … but my concern is for someone working at a mid-sized company in a regional area …

      • How do we inform them and prepare them for change …
      •  And how do you get that into a predictable system.

Four, we need an education and skills system better suited for the future world of work.

It needs to do these things:

      • The system needs to work for people with a range of different learning styles – especially for kids at school.
      • It needs to offer a range of pathways to work … and that’s one of the reasons I am such a fan of IBM’s PTECH schools.
      • The system needs to provide clear market information so learners are empowered to make choices and make sure their first post-school qualification is right for them.
      • It needs to address the cultural bias where vocational education and training is viewed as second-class compared to university.
      • It needs to be modular and encourage lifelong upskilling and re-skilling. Training needs to be dynamic, short and give people a credential.
      • And it needs a funding model that achieves all those objectives where the distorted incentives are removed.
      • That is why we have proposed distributing funding through a Lifelong Skills Account for every Australian.
      • An employer and employee could sit together and decide a buy a module rather than a whole degree.
      • It could come from a VET provider rather than higher education.
      • It would be credentialed.
      • It puts the learner in charge.
      • and it forces every provider to compete for your funding and modernise their offerings for a very dynamic world.
      • We cannot maintain a system with funding and incentives that distort choices and drive everybody into university.
      • Our education and skills system needs transformational change.

And, on workplace relations we can’t seem to have a meaningful conversation about this.

In a world of rapid business model change, it is not good enough to have a system that requires companies to renegotiate complex and difficult enterprise agreements every time they need to adjust to global conditions.

We need to drive productivity in a way that is more about collaboration and bringing workers and managers together.

Finally, we have to change the conversation with the community.