The problem with discussing the future of work is that the future is here now. In most places in the western world, workers know it. And quite rightly, they think it’s not great.
In Australia, wages are growing at close to the lowest rate since the wage price index published by the ABS began in 1997. Given the level of inflation, in many sectors take home pay has stood still or worse. This would seem to make no sense, since unemployment is low and everyone is telling Australians that things have never been better economically. In focus groups people see the economy doing well, “but not for me”. Saving rates are down, reflecting the impact of higher services costs on stagnant wages.
Australians are not pressing for higher wages because they fear for their jobs. They get that every company is pushing for productivity gains and using technology to do more with fewer people. They read about NAB cutting 6000 jobs and blaming automation. Every bank is doing the same. And in the less-skilled parts of the economy jobs are going too.
“They’re always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex or race discrimination case,” former CKE boss Andrew Puzder said of machines. CKE businesses include more than 3300 fast food places in 42 US states and 28 countries, including Australia.
In June last year McDonald’s shares hit a historic high when analyst Andrew Charles from the US investment bank Cowen predicted that sales would increase as the company introduced new digital ordering kiosks that will replace cashiers in 2500 Maccas stores.
As RBA governor Philip Lowe said in a speech last month: “The returns to those who can develop and best use information technology have increased strongly. These returns, though, are often highly concentrated in a few firms, and in only certain segments of the labour market. At the same time, the firms that are not able to innovate and take advantage of new technologies as quickly are slipping behind and they feel under pressure. As a way of remaining competitive, many of these firms are responding by having a very strong focus on cost control. In many cases this translates into a focus on controlling labour costs.” But it’s not just workers. For the first time, the Westpac Melbourne Institute Leading Index, which measures the pace of future economic activity, has dropped below trend. Despite the myth of a huge investment in innovation, Australian companies are investing less. Right now, whatever growth there is in the Australian economy is coming from infrastructure projects in Melbourne and Western Sydney.
Hardly reassuring about the future of employment.
So Australians are already feeling the impact of a combination of technology and long-term corporate bloat.
In industries such as construction there have been no real advances in productivity for nearly a century. Good for building workers, not too good for the rest of the economy.
For most people, their identity and sense of purpose is intertwined with their work. Many social benefits are delivered in the workplace. A key benefit was once company training but a focus on short-term productivity has cut that.
Governments, consultants and commentators all agree that investment in human capital through training, education and research is critical to enable people to deal with changes in work. But Australians don’t have much confidence in their bosses to provide that.
Forty-five per cent of respondents to a recent IKEA Australia study did not feel that their current workplace was setting them up for a relevant career in the future. More than 20 per cent of women believe their future career path is completely out of their hands. What they don’t realise is just how much of the future is here. Outsourcing, part-time jobs, an ageing population, flexible working, and being digital and connected are part of life now.
The bottom line is they are right to worry. As MIT economics professor David Autor says: “A subset of people with low skill levels may not be able to earn a reasonable standard of living based on their labour. We see that already.”