Australia at work: managing adjustment and change
31 October 2018
I would like to start by acknowledging the Traditional Owners of the land we are meeting on today, the Ngunawal and Ngambri people, and pay respect to their elders past and present.
Thank you for that introduction and thank you all for coming today.
I’d like to acknowledge our president Grant King who is here, and thank him for his leadership and support.
I’d also like to thank our member companies, who are here today.
My speech is about the much talked about concept - the future of work.
I want to talk about the transition underway in our society, and how work is changing.
I’ll share some important research that includes some surprising conclusions.
But mostly I want to talk about how we manage these changes in a way that builds a stronger and fairer country.
Before I start I want to take a moment to remind people who is business.
The business community is over 10 million working Australians.
They are the people who run the corner store; the people who work in the supermarkets and for airlines; it’s shareholders, almost six million everyday Australians; it’s regional suppliers; and rural producers.
Business is people.
From Brenda who appeared at our business showcase earlier this year and calls herself “Australia’s oldest checkout chick’’ after fifty years with Coles.
To the young Indigenous woman Naomi, who didn’t finish high school but is now one of Woodside’s proudest employees.
And Ali who has made the most of a second chance with DuluxGroup to re-train after the car industry wound up in Australia.
These are some of the people the Business Council represents.
So, what do we stand for?
We believe every Australian:
- Should have the opportunity to realise their full potential;
- They should have rewarding, meaningful and fulfilling jobs with a sense of purpose that allow them to get ahead;
- They should have jobs with the opportunity for advancement, with higher incomes that give them greater control over their lives.
We believe all Australians should have:
- Access to education and skills development across their working lives;
- And, access to a universal high-quality health system.
We believe Australia should be an energy superpower where:
- People have lower energy bills;
- Where people have reliable and secure power;
- Where we act on climate change;
- And we accept our international obligations as set out in the Paris agreement.
We believe there is nothing more important to human dignity than a society where people are free - free to make choices and free to live their lives how they want.
If people have another way of achieving the ambitions I’ve outlined without strong private enterprises, then I want to hear it.
I know the business community must rebuild trust with Australians.
As part of this, we should take responsibility and show leadership for the transition and adjustment underway in our workplaces.
No Australian should be left behind.
Business needs to understand and plan for the future, never forgetting that people are at the heart of their success.
Individuals also need to do their part by preparing for more change and continuing to learn so they can keep pace with the changing world of work.
In turn, as a nation we need the right settings for small, medium and large companies to thrive, encouraging investment, innovation and enterprise.
All Australians should be optimistic.
Australia is a talented and high-skilled country, with a good track record of adapting to change.
Let’s not be complacent about change, but let’s not be overly anxious.
Now, let’s go to the topic - the future of work.
A phrase that is potentially meaningless and at the very least is bound to create more confusion and unease than clarity.
The simple reality is that everything in our society is about whether someone has a job, a good job, and can lead a life of purpose.
It is about whether the aggregate effect of over 12 million Australians working is a society more capable of looking after its citizens each and every year, particularly those people who are excluded from work.
Let’s not carve off the future of work as a type of program or as a side issue. It is not.
Surely work is at the centre of all economic policy, so why seek to treat it in isolation?
Imagine if 200 years ago we had set up the Department for the Industrial Revolution?
So, let’s stop using this expression because, with the greatest respect, it is a term for consultants and a topic for books.
Fixating on doomsday predictions that robots will take over the world diverts our attention from focusing on the real adjustment taking place in our society now, and how we protect those people and communities most at risk.
Technology in all its forms - whether it is artificial intelligence, robotics or digitisation - is impacting on the way we work, live, and socialise.
But we are yet to really understand the full impact of change, so 12 months ago, the Business Council began a project to explore the forces of adjustment and transition in our workplaces.
With this project, we wanted to understand:
Whether this period of change is different;
Whether the size of the prize is worth chasing;
What jobs will be at risk, and where;
And, whether our structures and institutions are set up to manage the evolution in a fair and just way.
So, let me go to the differences.
One of the defining features of this period is the pace and scale of disruption.
Products and ideas race around the world faster than we have ever seen before.
It took television 13 years to reach 50 million users.
And while it is not comparing apples to apples, Facebook reached 50 million users in one year.
Pokémon Go reached 50 million users in just 19 days.
In its first 90 days after release, the online game Fortnite earned $US100 million.
Roy Morgan estimates that almost one in five Australians aged over 14 used Uber last year – that’s getting close to four million people.
It was just under one million people, two years ago.
The scale of change is also enormous.
McKinsey estimates about 25 per cent of tasks in Australia could be automated by 2030.
Deloitte says nearly nine out of 10 Australians have a smartphone – one of the highest rates in the world.
And, of course, this is all data. Let’s reflect on how technology continues to push boundaries.
At home, technological advances have liberated many people from menial and mundane tasks.
Technological breakthroughs have changed lives.
From the veterans who can now walk because of high-tech artificial limbs, to the children who can hear with a cochlear implant, and the Australians who are alive today thanks to the coronary stent.
Technology is expanding our horizons. A solar-powered plane can now fly around the world without one litre of fuel.
And it will be technology that gives us the best chance to reduce world poverty, to bridge the educational divide, to manage climate risk, and erase distances to bring us closer together.
The opportunities are limitless. The challenge is to ensure they are fairly shared.
The rise of the empowered consumer also makes this era different.
Consumers are driving business models and service delivery, instead of corporations and governments.
It is the ultimate manifestation of people power.
Change also presents us with the potential for a substantial payoff.
The question is whether it is worth adjusting?
McKinsey estimates that embracing digital technologies could add up to $250 billion dollars to the Australian economy by 2025.
And the head of the Department of Prime Minister and Cabinet, Martin Parkinson says: “done right, this technological revolution will drive the next wave of jobs, and growth in productivity and living standards’’.
And, it’s worth repeating - if done right.
If we hit the pause button out of fear, it will only mean that other countries get ahead of us.
And, here’s the red flag.
Australia is already trailing when it comes to investing in technology.
AlphaBeta estimates that just over nine per cent of listed Australian companies are making a sustained investment in automation.
This lags behind the UK and Germany, and is less than half the number in the United States.
We cannot afford to slip further behind – our very future depends on it.
Now let’s go to the data and what we found.
We wanted to know whether more people are losing their jobs and if they’re being displaced by technology.
Our findings covered two areas: job loss, and task change.
The projections of job losses from technological change are highly contested, so the job of policy should be to focus on managing the change we know and the change we understand.
We are concerned that people are using extreme predictions rather than actual trends.
Change is already upon us. These forces are happening today.
But our data tells us some important things. We are creating more jobs in more industries including new and emerging sectors.
Two weeks ago our unemployment rate fell to five per cent – the lowest rate in over six years.
There is little evidence to suggest that technological change is speeding up the rate of job loss in our community.
AlphaBeta estimates that the rate of job loss due to automation is no higher today than in previous peaks over the past 50 years.
Our analysis shows the percentage of workers forced to change jobs has almost halved over the last two decades.
Whilst this is an improvement, it does not diminish the shocking impact on individuals and their families.
We must challenge ourselves to minimise the personal toll.
The key for business is to be transparent about data with their customers, and be transparent about technology and change with their workers.
Business must actively manage that change and not leave it to chance.
The research we are releasing today from AlphaBeta tells us the most significant impact on our working lives will be in the way we perform the tasks that make up our jobs.
Over the past five years, the average level of change in tasks within an occupation has been almost 10 per cent.
Australian workers now spend about half a day a week doing different tasks than someone with the same job just five years ago.
Architects; secretaries; and retail managers have experienced the most change.
We don’t know whether this trend will continue or increase but it is safe to bet that task change will impact every job in the future.
IBM boss Ginni Rometty says: “When it comes to complete job replacement, it will be a very small percentage; when it comes to changing a job and what you do, it’ll be one-hundred per cent.”
The reason task change is so important is because it is the best weapon to protect jobs and create new jobs.
Jobs with a higher rate of task change are less vulnerable.
Jobs with a lower rate of task change are at greater risk.
Our research shows that over the last five years, workers in low-skilled jobs had the lowest rate of task change but the highest rate of retrenchment.
Workers in high skilled jobs were the reverse.
They had the highest rate of task change and the lowest rate of retrenchment.
This is my central message to Australians: to keep people working and to keep jobs in Australia, we need to embrace the change within our jobs and be ready to adapt.
Resisting task change leaves us vulnerable.
Our analysis shows we need to pay particular attention to the following groups of people:
- Low-skilled men aged over 55-years, especially those working in construction and manufacturing;
- Low-skilled people in regional areas;
- Parts of the financial services sector where projections of job losses are much higher;
- And low-paid, low-skilled women who often work in the most undervalued jobs.
I’ve just outlined what the data is telling us, now let me examine what we’re less confident about.
We don’t know whether we will be replacing jobs at the same rate they are being lost.
The only way to do this is to make sure we have a strong economy with new businesses and new jobs being created.
We are also less certain about which tasks will create new forms of value.
Changes in consumer preference will create new jobs and tasks that we can’t even imagine today.
As a society, we are demanding a greater variety and more services than we previously did because people have higher discretionary income and they are time poor.
There are plenty of tasks to do that will create value. The challenge is to reward them properly and to protect people.
I do not want to see a class of people trapped in low-paid, challenging or even exploitative jobs.
We need to carefully consider how we protect people without creating the rigidities that smother job opportunities.
Having said that, I do believe competition and demand will ultimately drive higher value.
In this ever-changing world of work, business has a very clear set of responsibilities as tasks change.
They must design jobs to reflect those changes and they need to train their staff accordingly.
They need to make sure they pass on the gains of innovation and productivity:
To their employees through higher wages;
To their shareholders through better returns;
And to their customers with lower prices and better services.
So, to sum up, what do we know?
We know that tasks are changing, rather than mass job losses.
We know that technology has not altered the rate of people losing their jobs.
We know those who are most vulnerable are the lowest skilled people, who are older, people in the regions, and people who are already disadvantaged.
Crucially, the more resistance there is to task change and adaptation, the more likely it is that jobs will be at risk.
So, when I hear people saying they want to slow down this rate of change, erect barriers to transition, and bring back protectionism, I shake my head.
This is ubiquitous.
It’s consumer driven.
If done well, it will be a force for good.
It could unleash the greatest period of human advancement in history.
If done badly or resisted, it will put more jobs at risk and create greater inequality.
To benefit all Australians, we need to take action now.
Our attention needs to focus firstly on the macro-economic settings to encourage job creation.
Secondly, we need to solve specific problems that stand in the way of managing change.
Let’s go to the macro-economic settings first.
The job of economic policy is to drive economic growth and resilience in the face of change.
The settings need to encourage the creation of new businesses, additional jobs, and the conditions for higher wages.
The job of social policy is to ensure that adjustment is managed in a fair and just way.
Economic and social policies must work in tandem to deliver productivity, participation, and well-managed population growth.
Former Treasury boss Ken Henry described these as the three key levers of good macro-economic settings.
These must be delivered within the context of the rule of law, a rules-based order and a free and open society.
Australia has powered ahead on participation.
On population, we need to:
- Better target the skills we need;
- Find ways to take the pressure off Sydney and Melbourne by making our regions more attractive;
- And, get the right infrastructure at the right times to relieve the pain of congestion in our cities.
We should always remember that well-targeted skilled migration is a job creator, not a job stealer.
Skilled migrants bring ideas, they bring innovation, and they bring the capacity to train and skill their local co-workers.
But it is on productivity where we lag.
I'm not talking about people working harder for less.
What I am talking about is companies expanding, innovating and investing so that people can work more effectively.
So, if we want to drive growth, including the benefits of higher wages and accelerated job creation, we must get serious about productivity and competitiveness.
The best, and most sustainable way, to see wages growth is by lifting productivity.
The link between productivity and wages growth is not broken.
The link between productivity and investment is inextricable. Investment is low and that should be the focus of public policy.
Australia cannot be at the losing end of the global competition to attract the capital to fund the development of new technologies and investments.
So, if we are incapable of lowering the company tax rate for all companies, let’s do something about investment.
Why don’t we look at doing something meaningful on investment or depreciation allowances?
We also have to tackle badly designed regulation, and remove the barriers to starting new businesses and employing more people.
Make no mistake. Anything that weakens Australia’s capacity to create jobs is a recipe for more disadvantage and lower wages.
If you have a weak economy and weak employment growth, you will never get wages up.
Let me go to the things we can do now such as literacy, a passion of mine.
We know from the data that the Australians who are most at risk have the lowest level of skills.
Employers expect a strong foundation in reading, writing, maths and digital skills.
But a recent survey by the Australian Industry Group found 39 per cent of employers said their businesses were highly affected by low levels of literacy and numeracy.
I run a small free literacy program in Sydney with my partner, Tess, who is here today.
What we have found is an alarming number of people turning up who have actually completed school, sometimes even to year twelve.
These were once people who could get away with poor literacy skills.
But now where everything is online and everything assumes a level of literacy and digital capability, they are excluded from society.
As work becomes more complex, these people will become increasingly excluded from the workplace.
We need to fix our literacy problems.
So, today as a priority I want to call for a national inquiry into literacy programs in Australia.
A crucial part of this is to check whether people are being asked to pay for the most basic level of education.
Surely that is what our taxes are for and foundation studies in the public system should be free across Australia.
Now let me turn to entrenched disadvantage.
I’ll start with the obstacles for those who have been out of work for years.
There were almost 730,000 people on Newstart at the end of June this year.
Almost half have been receiving the payment for two years or more.
And, almost 25,000 Australians have been on Newstart for 10 years or more.
As I’ve said before, the Newstart allowance for single people in this situation is inadequate.
We also need to get a better understanding of the barriers that prevent long-term jobseekers from getting - and staying – in the workforce.
The review underway into the jobactive network is an extremely important initiative.
We should aim to increase the incentives for people to work and be in work longer, including paying providers based on successful and sustained job placements.
We need much better coordination between jobactive and business during this time of adjustment.
I also want to see new services that broker and match workers displaced by technology with new employers.
And let’s improve the effectiveness of specialist job services networks for people with mental health issues and chronic disabilities.
The second part of entrenched disadvantage is inter-generational and deep-rooted poverty.
This stems from a complex set of problems including poor education, chronic health conditions, mental illness, addiction, and violence.
We don’t want to see multiple generations trapped in a welfare cycle where they are permanently excluded from the labour market and permanently denied a chance to get ahead.
It frightens me that some children grow up in a household where they have never seen anyone go to work.
As someone who has run the departments of community services, education and housing, I can tell you the families who are trapped in these cycles of despair are not hard to spot.
So, instead of having abstract conversations about measures of inequality, we really should focus on the long-term unemployed and Australians who are chronically disadvantaged.
I am calling again today for a Productivity Commission inquiry into entrenched disadvantage:
How to improve coordination across the levels of government;
And, how best to draw on examples such as New Zealand where people have made serious inroads into these problems.
Now let’s look at the pillars that exist to manage change.
Let me start with the skills and training system.
I want to make lifelong learning a reality, not a slogan.
Our data highlights the critical importance of Australians being able to access quality skills and training throughout their careers to keep pace with workplace and technological change.
This is the basis of our Future-proof report on reforming the post-secondary system, which as you know, I launched here at the National Press Club last year.
Since I spoke twelve months ago, the problems in the sector remain.
VET continues to be a second-class system. TAFE remains undervalued.
Students continue to make poor choices and undertake degrees that do not always get them into the jobs they want.
The system remains clunky and extremely difficult for people in the mid-part of their career to re-skill and re-train.
I commend the Labor Party for announcing an inquiry into the post- secondary system.
And, I continue to advocate for very simple things:
One information system across VET and higher education;
One funding system that removes the perverted incentives for everyone to go to university;
And, a lifelong skills account that will allow people to access a variety of modules and certificates so they can keep pace with task change and stay in the workforce.
And as I said last year not one more dollar, not one more cent, should be removed from VET until state and federal ministers work out what we are going to do with this important sector.
I now want to go to workplace relations.
Let me get some facts on the table:
Most Australians are still employed in full-time positions, but part-time work now makes up around one-third of the workforce.
Despite the spin, the rate of casualisation has been much the same for two decades.
It is hard to estimate the number of people in the gig economy but it is likely to be no higher than four per cent of workers.
We should not let misinformation distract us from the real problems.
One of our best chances of navigating this period of adjustment is a modern workplace relations system.
This must begin with a universal safety net that spells out basic rights and conditions such as the minimum wage, leave and entitlements, and a fair and transparent process for dismissal.
This needs to be complemented by occupational health and safety laws and anti-discrimination laws to protect people at work.
Our system also needs to work at an enterprise, indeed a workplace level.
This should create the environment where workers and managers can sit down together to manage change.
They need to be able to work out how to make their enterprise even more successful so their business – and their wages – can grow.
But, sadly, this is not the system the ACTU wants.
Instead, they want a return to industry-wide bargaining.
Somewhere in Australia irrespective of your town, your circumstances, and your conditions, your agreement will be negotiated by a big union, potentially in another state.
An industry-wide agreement that imposes the same standards on all companies, irrespective of their needs, is unworkable.
And who will this hurt? It will hurt workers in regions, and it will hurt the least skilled.
It will also hurt small business owners trying to get their enterprises to adjust to change, and keep pace with global competition.
And in return for a massively rigid agreement dictated by a big union in another part of the country, workers might be charged for the privilege of participating in the EBA process.
This is because apparently the eighty-six per cent of all working Australians who choose not to be in a trade union are now “free riders’’.
But it is not just at the industry-wide level that the ACTU is pushing for change. They also want to open up enterprise agreements.
This means everything single thing in a business could be subjected to negotiations in what is already a complicated and lengthy process. This would include:
- Opening hours;
- And, hiring.
And, that means nothing would get done.
Anything that makes it harder to adjust or change is the enemy of job creation.
My criticism of the ACTU’s agenda is not intended to diminish the legitimacy or achievements of the trade union movement.
Unions have been fundamental to the wellbeing of our society.
If I think of my uncle, who I loved very much and I used to go fishing with, he came back from the war and didn’t have a job.
He found work on the wharves, and was a very active trade unionist.
And in his time, unions were instrumental in ensuring workers were safe and their rights were protected.
Unions fought for environmental causes and helped build a modern Australia.
But I do question whether the trade union movement today is the same organisation that existed in my uncle’s day.
The organisation that worked with the Hawke government to open up Australia and introduce enterprise bargaining which drove productivity, which in turn drove higher wages.
The organisation that protected Australia as well as Australian workers.
I really do believe we need to move the conversation from conflict and combat to one where we solve the problems that confront many Australians.
My phone is on. Our doors are open.
I encourage the ACTU to sit down and work with us. There are legitimate problems and we need to solve them together.
Because all of us will be judged by whether a young person gets their first job and whether that job is a pathway to a better life.
And finally, I want to talk about our regions and cities because they are crucial to how people work now and into the future.
We need much greater purpose in how we plan our regions and our cities, and how we set up centres of economic activity to create the conditions for investment, private enterprise and job creation.
We must get infrastructure planning right in this country to drive productivity and a better quality of life.
If we are serious about infrastructure, we should:
- Encourage governments to adopt Infrastructure Australia’s long-term infrastructure projects;
- Require state governments to produce complementary 15-year rolling infrastructure priorities and hold them accountable for implementing them;
- Stop chopping and changing, and remove the risk to projects that destroy community trust and act as a deterrent to investment.
In our regions we need a hub and spoke model of infrastructure delivery and the autonomy to adopt the right policies for individual areas.
We need to reserve corridors for innovations such as the very fast train.
We need to make it easier to attract businesses and investment outside our major cities by reducing red tape.
We need to attract workers by removing the disincentives that stop people relocating such as stamp duty.
And we need to encourage migrants out of the cities. We need more carrot than stick. The simple reality is people will stay wherever they have meaningful jobs and a good quality of life.
Our cities underpin our economy.
We must unclog them to ensure people can live and work productively.
We need to combine land use, transport and economic planning.
We need to release more land for housing to keep prices affordable.
We need designated corridors for housing and economic development.
And we must do something about speeding up planning approvals.
We need to be more purposeful in our planning.
We need to create the precincts that kickstart innovation, creativity, collaboration, and job creation.
Now, for us to do any of the things I’ve talked about today, we need to stop having the wrong conversations.
From the blame game of victims and villains to sitting down together and solving problems.
From being branded free riders and wage thieves to achieving a proper system of protecting rights at work.
From an abstract conversation about the measures of inequality to focusing on those Australians who are being left behind.
From a futile attempt to divide big and small business to recognising they need each other and its big business investing that drives small business activity.
Let me conclude, for most people a job is the best road to a dignified and purposeful life.
So, all of us have to recommit ourselves to making sure that people have a job. A good job.
When I was 15, I landed my first job at Permewans on the New South Wales central coast.
I was on the supermarket checkout, I packed shelves and I cleaned.
To this day, I remember the thrill I felt when I received the call to tell me I had that job.
It represented so much more than the pay packet I took home.
It meant I had control over my life.
It opened the door to opportunities.
It gave me options; choices; direction and stability; and it boosted my confidence and self-esteem.
Our society revolves around work.
Let’s remember that one of the most immoral things we can do is to make a set of choices that lock people into unemployment.
As former telephone linesman turned Treasury secretary Ted Evans said: “for the nation as a whole the level of unemployment is a matter of choice’’.
So, we can choose to trample or unleash human endeavour.
We can choose to trample or unleash the forces of imagination and private enterprise.
We can choose to give people the skills they need or leave them behind.
But, the cruellest and most unfair thing we can do is to pretend that Australians don’t need to adapt.
How we manage this period of adjustment and transition is all about the choices we make.
If we are captured by bad conversations or immersed in a blaming culture, we won’t make the right choices.
We have an obligation to create hope, not fear.
And we have an obligation to make sure people feel part of this extraordinary transformation.
We have an obligation to make it real for people’s lives and for the things they want out of life.
As Aboriginal leader Ian Trust does for his people in the East Kimberley.
Ian says his people want four things: good health; good jobs; a good house to live in; and reward for effort.
I think that’s what all Australians want.
So, we should do nothing less than work every single day to deliver that for every single Australian.
Let’s get on with it.