The evolution of the future of work looks a lot like the past, but probably with more Uber and Deliveroo drivers, at least if you believe the Productivity Commission. In fact, it turns out automation might not be the harbinger of the great employment apocalypse after all, despite a plethora of commentary and dystopian angst to the contrary.
Instead, the evidence of the last hundred years suggests that labour markets have been pretty well resilient to ‘shocks’ posed by new technologies including the upheavals caused by the arrivals of the latest global digital giants.
That’s the view of the Deputy Chair of the Productivity Commission Karen Chester, speaking to the Committee for Economic Development of Australia (CEDA) meeting in Perth, yesterday.
Chester drew on the earlier work by the Commission including its Digital Disruption report in 2016 and Shifting the Dial in 2017, as well as the work was done by executives at the Conference Board.
“No matter how transformative the technology,” she said, “No technology has removed people’s capacity to work. And in productivity terms, all have been more transformative than the digital revolution so far (with the emphasis being on the so far).”
She also argued that some measures suggested that technology is not having as large of an effect as expected “…at least not in our current modern times.”
Referring to the famous Productivity Paradox, first flagged in 1987 she argued that the rise of the New Digital Economy encompassing mobile technology, ubiquitous access to the internet and the world of the cloud has created much change in a lot of areas. But to date productivity is not one of those.
The low rate of (multi-factor) productivity growth observed across many countries represents something of a puzzle, she acknowledged. “This is because it suggests that, at least in aggregate, our economies have not become any more efficient in producing things. And we know the policy reasons why productivity may have slowed in Australia, but this is notwithstanding our purported better ability to exploit information technologies.”
Chester argued that one explanation for this is a change in the nature of technological progress and that recent technologies, characterised by some as dramatic, have been minor compared to those in the previous century.
The other explanation is that while ICT prices have rapidly declined, along with a shift from ICT investment to ICT services; “…the new digital economy is still in its “installation phase”. If this is true then don’t expect to see the productivity dividend until the digital economy enters the “deployment phase”.
“This makes sense when you see that in the US the contribution of the most ICT intensive industries to productivity growth has dropped markedly from 46 per cent to 26 per cent in the past decade (2007-16). And for the US and the UK it has even at times registered negative productivity growth in these sectors.”
This trend hints that the dividend only makes its way into the “deployment phase” once users fully grapple with how to absorb technology effectively, she said.
Chester said that arguably if technology is replacing existing jobs without creating new ones, the result ought to be a persistent upward trend in the unemployment rate.
But that trend simply doesn’t exist.
“Whilst routine manual and routine cognitive jobs have fallen as a proportion of jobs from 50 per cent to 37 per cent; non-routine manual and non‑routine cognitive jobs have increased from 42 per cent to 53 per cent. Think child care, aged care, nursing, office managers, designers and engineers using software,” she said.
Furthermore, she noted that the aggregate amount of work available to the Australian population on a per capita basis has not seen a decline since the 1980s when workplace computing became ubiquitous.
“The amount of work available has actually increased by about 14 per cent since the early 1980s.”
Under the hood
Chester said the composition of the workplace, however, is changing.
“Since the 1980s the workforce participation rate for females has increased a lot (by some 15 percentage points to now be just over 60 per cent). Marriage and even children are placing much less of a brake on economic participation of women. Which is both a good thing for the economy and for women.”
Part-time employment is also on the rise now accounting for nearly one-third of total employment (around 35 per cent) in Australia.
However, the pace at which workers are changing between jobs in the Australian is not accelerating.
“Not only is there no evidence that more workers are being forced to work in short duration jobs, but what is apparent is that the opposite has happened. The proportion of workers in very long duration jobs (more than 10 years) has increased from just under 20 per cent in 1982 to around 27 per cent in 2016. Which is perhaps unsurprising when you also take into account the participation rate of older Australians (65+ in age) has risen steeply – having nearly doubled in the past 30 years to now represent 12 per cent of our workforce. Also a good thing with our ageing population.”
The number of workers with multiple jobs is growing, as is the tendency for workers to change occupations (40 per cent) and industries (50 per cent) when they change jobs.
She also suggested the ‘gig’ economy has not translated into any increase in the proportion of the workforce being independent contractors, although she said it was still early days.
Indeed the number of independent contracted actually fell a few percentage points between 2001 and 2014, said Chester.
“We know from history that soothsayers abound when it comes to opining on the future of work. Indeed history is littered with the foretelling of a dystopia of jobless woe … or a utopia of little need to work at all. And the only universal truth seems to be that they were all wrong – both happily and unhappily so,” she said.