The Future of Work Part 1

The future world of work & careers: dynamics, skills & partnerships

Dr John Doyle February 14th, 2022 · 8 minute read

Dynamics, Trends & Forecasts 

The two principal drivers of change to the world of work and careers are the pace and scale of technological developments, particularly in automation and artificial intelligence (AI), and the ongoing impact of globalisation. Other significant factors include labour market flexibility and its corollary, job precariousness.

General forecasts of massive technology-driven disruption to the world of work—such as the Bank of England’s reported warning of 15 million jobs losses in the UK and 80 million in the US—serve a purpose, but can obscure the fact that the impact of AI and automation will vary significantly across sectors and regions. They can needlessly intensify fears about ‘robots replacing workers’.

The roles most open to automation are those comprising a greater degree of ‘routine’ procedural, rule-based tasks (both cognitive and manual). Roles with more non-routine functions will also be affected, but to a lesser extent. These changes are already well underway, with the highest jobs growth in Australia in ‘high touch [and] high skill’ roles.

Professional services roles have increased by over 50 percent in real terms since the early 1990s.

The impact of automation and AI is ‘shortening the shelf-life’ of people’s work skill sets. The most valuable skills into the future will be those ‘uniquely human characteristics [that] complement, rather than compete with automation’. The Foundation for Young Australians (FYA) states that young people should focus less on ‘choosing the “right” job’ and more on ‘acquir[ing] the “right” skills’. In this context, the Gonski Report highlights the need for today’s young people to develop skills ‘such as problem-solving, interactive and social skills, and critical and creative thinking.’

By 2030, the average Australian working week will involve significantly more time on ‘enterprise skills’ such as problem solving; critical thinking and judgement; and verbal communication and interpersonal skills such as listening, empathy and persuasion, according to the FYA. They will also use more ‘advanced technology skills’ and foundational skills in maths and science. Global management consultants McKinsey and Company forecast increasing demand in four broad work activities: technology skills; social skills; emotional skills; and higher cognitive skills.

Today’s young people will work in an increasingly globalised environment. Technology is intensifying the globalisation of labour by enabling employers and employees to ‘more easily connect and transact across geographies.’ Whether in Australia or overseas, young people will need the global skills and mindset to work with colleagues in dispersed locations and with diverse cultural backgrounds.

Technology-enabled ‘cooperation and collaboration’ across multiple platforms will play a key role in the growth of flexible work. These changes entail both opportunities and risks for today’s young people—and recruitment and retention challenges for traditional employers.

Data shows that young Australians take on average 2.6 years to transition from full-time education to full-time work. Educators, policy makers and families can support/accelerate this transition by fostering career management skills; developing and embedding ‘enterprise skills’; enabling work integrated learning; and focusing on mental wellbeing.

Research Findings

There is an extensive contemporary literature on how the world of work and careers is transforming, with general agreement about the underlying drivers of change, the broad outline of where it is heading, and the
kinds of responses required to mitigate risks and take advantage of opportunities.

The two principal drivers of change are the pace and scale of technological developments, particularly in automation and Artificial Intelligence (AI), and the ongoing impact of globalisation. It is accepted that
the world of work will undergo major changes over the next 10-15 years, as the adoption of automation and AI technologies accelerates and expands into ever more complex activities.1 Other significant factors
include labour market flexibility and its corollary, job precariousness, and the effect of increased human longevity on working lives.

But, as researchers from the University of Sydney recently noted, ‘it is by no means clear just what combination of trends emerging in the current situation will actually prevail … The critical challenge
is to prepare for uncertainty’. Australian education consultant Vic Zbar similarly refers to the need for schools to deal with ‘known unknowns’. This section firstly considers the anticipated impact of AI and
automation on occupations, including forecast changes in demand for particular skills and capabilities. It then discusses the impact of globalisation, including its interrelationship with technological change, before
identifying the ‘work clusters’ expected to enjoy the strongest growth in coming years. The section concludes by focusing on key factors associated with the transition from full-time education to full-time work.

Technological change

AI has been described as ‘a range of technologies concerned with (but not limited to) pattern recognition, learning, inference, modelling and decision making across a variety of domains’; or more simply as ‘[e] versmarter machines performing ever-more-human tasks’.5 The key point is that AI does not refer to a single technology not refer to a single technology; it is a collective term encompassing ‘a range of technologies applied to specific tasks’.

There is no shortage of reports predicting the extent of change to be wrought by AI and automation on the world of work. The Bank of England, for example, has reportedly warned of 15 million job losses in the UK and 80 million in the US due to automation. The Foundation for Young Australians (FYA) estimates that 40 percent of current Australian jobs are at high risk of automation between 2025-30.8 And analysis by global management consultants McKinsey and Company indicates that up to 46 percent of current work activities in Australia could be automated by 2030, affecting up to 6.5 million fulltime equivalent positions and requiring up to 5 million workers to change professions. That is, 50 to 80 percent of Australians ‘may need to retain and transition to completely new occupations depending on the pace of automation’ in the coming decade.

Macro forecasts like these serve a purpose, but they also obscure the fact that the impact of AI and automation will vary across sectors and regions. For example, it is estimated that automation-related disruption
in Australia could range from 16 percent of jobs in the education sector to 33 percent in transport; and vary from 21 percent in city centres dominated by professional services to over 30 percent in mining
regions.

Such blanket forecasts have also been criticised for fostering fear. As McKinsey notes, when many Australians ‘hear about automation technologies like artificial intelligence or robotics, they understandably
see a threat rather than an opportunity. It is hard to be enthusiastic about the next wave of disruption when the last wave left you feeling vulnerable.’ A recent World Bank report on the changing nature of work argues that fears over ‘robots replacing workers’ are ‘exaggerated’. ‘Uniquely human characteristics’

Roles comprising a greater degree of ‘routine’ procedural, rule-based tasks—both cognitive (such as administrative assistants, sales agents and brokers) and manual (such as construction workers and mechanics)—
are most open to automation. Roles with more nonroutine cognitive functions (such as in management, healthcare, engineering and creative sectors) will also be affected, but to a lesser extent. A recent World
Economic Forum (WEF) report predicts losses in ‘routine white collar office functions’ and an increasing number of roles in business and financial operations, management, computer and mathematical sciences,
architecture and engineering, sales, and education. Such changes are already occurring. The highest jobs growth in Australia since the early 1990s has been in ‘high touch [and] high skill’ roles, according to the
FYA. Professional services roles have increased by over 50 percent in real terms, and community and personal services roles by nearly 90 percent. As seen in the graph below, the proportion of ‘non-routine’
occupations in Australia has been rising for over 30 years.

Non-routine occupations are an increasing proportion of Australia’s workforce

It can similarly be observed below that since at least 1960, the US labour market has consistently demanded more ‘higher-order’ non-routine interpersonal and analytical skills. The labour market increasingly demands higher-order skills

A survey by the WEF of more than 350 senior human resources, talent and strategy executives across nine industry sectors in 15 countries found a strong consensus that the impact of automation and machine learning (or AI) is ‘shortening the shelf-life’ of employees’ existing skills sets. As such, the WEF forecasts that the world of work will see ‘the development of very different skill sets just a few years from now’ as employees increasingly focus on new tasks.

In this context, there is broad agreement that the most valuable future skills for work and career will be what economic consultancy AlphaBeta describes as ‘uniquely human characteristics’ (alternatively defined as ‘tacit’ capabilities or knowledge) that ‘complement, rather than compete with, automation’. It categorises these ‘uniquely human’ skills as:
• Knowledge—‘the body of information that can be directly applied to the performance of a task, such as medicine, maths, language, architecture, and accounting’;

• Abilities—‘an observable physical or mental competence, such as strength, design, listening, driving, time management or programming’; and

• Characteristics—how people execute tasks including ‘creativity, integrity, leadership, persistence, empathy, and attention to detail.’

This is also a consistent theme in the Gonski Report, which calls for Australia’s school system to prepare young people ‘for a complex and rapidly changing world’ in which they will ‘need skills that are not easily
replicated by machines, such as problem-solving, interactive and social skills, and critical and creative thinking.’ It notes that the need for young people to leave school with well developed ‘general capabilities [was]
raised repeatedly in stakeholder consultations and public submissions as critical in preparing students for a future of intuitive, non-routine work.’

Flowing from this, the much-observed trend towards increasingly varied and dynamic careers is expected to gather pace. The WEF cites ‘one popular estimate [that] 65% of children entering primary school [in 2016] will ultimately end up working in completely new job types that don’t yet exist.’19 The FYA estimates that the career of a young Australian leaving school today may comprise up to seventeen jobs across five industries.

But having analysed the work-related skills of over 400 Australian occupations, the FYA also finds that they are ‘more closely related than we thought’ and advocates a focus on skills and capabilities rather than specific jobs.

It argues that the response by young people (and their families and educators) to the impact of automation should therefore not be ‘choosing the “right” job’ but rather ‘acquir[ing] the “right” skills that allow them to
succeed in an automated and globalised workplace.’ McKinsey similarly argues that ‘[w]hile some jobs [in Australia] will be lost, and others created, all jobs will change [as] automation technologies take over
more routine, predictable and physical activities’. This will change the mix of work skills that people require. Demand will increase for people in ‘unpredictable and interactive’ roles.22 OECD research reaches comparable findings. So what are the ‘right’ skills? The literature suggests a mix of social skills (broadly defined); advanced cognitive skills; and technology-related skills. This issue is addressed only briefly here; it is explored in detail in Part 2 of the report. According to the WEF, by 2020, ‘over a third of the desired core skill sets of most occupations will be compromised of skills that are not yet considered crucial to the job today’. It finds that social skills—such as persuasion, emotional intelligence and teaching others—will be in higher demand across industries than narrow technical skills, such as programming or
equipment operation and control. In essence, technical skills will need to be supplemented with strong social and collaboration skills.

According to McKinsey, by 2030 in North America and the advanced European economies, there will be a greater need for social and emotional skills, such as leadership and managing stakeholders; advanced cognitive skills, such as applying specialised expertise; and technological skills; and work will become more cross-functional and team-based. The World Bank similarly identifies rising demand for ‘advanced cognitive skills, sociobehavioral skills, and skill combinations associated with greater adaptability’.

Quantitative analysis by AlphaBeta and the FYA indicates that by 2030, the average Australian working week will entail significantly more time spent on problem solving; critical thinking and judgement; science and mathematics related skills; and verbal communication and interpersonal skills. The FYA argues that Australians will need to be more ‘entrepreneurial’, as direct management and organisational coordination declines.

Comparable analysis by McKinsey finds that demand will increase in four types of broadly categorised work activities:

• technology skills (such as working with machines);

• social skills (such as interacting with stakeholders);

• emotional skills (such as managing, teaching and developing people); and

• higher cognitive skills (such as applying specialised expertise).

McKinsey’s forecast ‘evolution’ for ‘macro skills’ in Australia from 2016 to 2030 is shown below.29 These trends are broadly consistent with forecasts for the US and Western Europe.

Macro skills evolution

Globalisation

Overlaying the discussion above is that today’s young people will work in an increasingly globalised environment. This trend has clearly been underway for some time. Hundreds of thousands of Australian
manufacturing jobs have long moved offshore. A key point is that technology is intensifying the globalisation of labour by enabling employers and employees to ‘more easily connect and transact across geographies.’
New technology platforms are blurring the line between Australian and foreign jobs. Some professional and services roles—including in legal, information technology, design, architecture and business services—
in Australia can be done from offshore, and some offshore roles can be done from Australia. The FYA estimates that up to 11 percent of global services roles in these areas could feasibly be done in this way.
Various studies note the interrelatedness of technology, globalisation and labour market fragmentation. A University of Sydney report commissioned by the NSW Department of Education describes the ‘amplifier’
capacity of AI to intensify labour market fragmentation and globalisation.32 The WEF similarly notes that ‘previously disjointed fields such as artificial intelligence and machine learning, robotics, nanotechnology, 3D printing and genetics and biotechnology are all building on and amplifying one another … Concurrent to this technological revolution are a set of broader socioeconomic, geopolitical and demographic  developments with nearly equivalent impact to the technological factors.’

Moreover, globalisation-related themes were raised unprompted in the interviews conducted in preparing this report. In the context of discussing an increased focus on diversity and inclusion in contemporary
workplaces, the Head of Organisational Capability at Bendigo and Adelaide Bank, Carmel Speer, noted the importance of young people being able to work in virtual teams and with colleagues from diverse cultural
backgrounds and based overseas.34 Peter Lucarelli, a senior partner in law firm Baker McKenzie, identified global experience and skills, including language skills (Mandarin in particular), as key attributes sought by the firm when recruiting graduate lawyers.

Technology-enabled ‘cooperation and collaboration’ across multiple platforms is also playing a key role in the growth of flexible work. These changes entail opportunities and risks for Australian young people.
On the upside, the barriers to pursuing entrepreneurial activities is lower. Technology and globalisation are making starting up new venues simpler and cheaper; enables greater flexibility in how and where people
work; and opens up access to wider markets. Indeed, this dynamic was identified as a challenge for ‘traditional’ employers.36 Carmel Speer of Bendigo and Adelaide Bank notes the growing challenge of attracting and
retaining young people who could otherwise engage in the ‘alternative workforce,’ whereby they effectively run ‘their own practice’ as professional freelancers and contractors.

But the flipside of labour market flexibility is increasing employment insecurity and precariousness. Over half of new jobs in advanced economies since the early 1990s have been temporary, part-time or self-employed. Some 30 percent of Australia’s workforce (as at 2015) is already engaged in ‘flexible’ work, comprising multiple parttime and casual roles and independent contracting. It is expected that this trend will only increase into the future.

Growth areas

The FYA and McKinsey have each sought to identify Australian employment areas with the greatest growth potential. In The New Work Order, the FYA presents findings from a review of over 1,000 occupations in Australia. It groups these occupations into seven ‘clusters’ on the basis of similarities in ‘skills, day-to-day tasks and work environments’. It also identifies the three clusters with the ‘strongest future growth’ potential. The clusters (and example occupations) are outlined below, with the ‘strongest future growth’ clusters highlighted in bold:

  • Informers (professionals providing information, education or business services)—for example:
    • solicitors; financial brokers; policy analysts; economists; market research analysts; journalists; school teachers; human resource advisers; and technical writers.
  • Technologists (requiring skilled understanding and manipulation of digital technology)—for example:
    • software engineers; web designers; web developers; programmers; and ICT business analysts.
  • Carers (improving mental/physical health or wellbeing of others, including medical, care and personal support services)—for example:
    • surgeons; psychiatrists; GPs; pharmacists; physiotherapists; veterinarians; occupational therapists; special education teachers; social workers; and nurses.
  • Designers (involving skills and knowledge of science, mathematics and design to construct or engineer products or buildings)—for example:
    • architects, electrical engineers and geologists.
  • Generators (requiring a high level of interpersonal interaction)—for example:
    • retail, sales, hospitality and entertainment.
  • Artisans (requiring a high level of manual tasks)—for example:
    • construction, production, maintenance or technical customer service; and
  • Coordinators (involving repetitive administrative and behind-the-scenes process or service tasks)—for example:
    • receptionists and bookkeepers.

McKinsey’s Australian ‘hot professions’ for the period 2016-30 are shown below:

Hot professions

Transitioning from education to work

By analysing data from the Longitudinal Survey of Australian Youth (YSAY), which tracked 14,000 Australians over ten years, from the ages of 15 to 25, the FYA identifies what it considers to be the key
requirements to accelerate young people’s transition from full-time education (school and post-school) to fulltime work; and ways for educators (and others) to ensure that young people are prepared and equipped with the skills and capabilities for this transition.

Young Australians take, on average, 2.6 years to transition from full-time education to full-time work. YSAY data indicates that the following four factors can accelerate this transition:

  • Possessing ‘enterprise skills’ (such as problem solving, communication and teamwork) accelerates the transition by up to 17 months;
  • Having relevant paid employment experience (combining study with work in a relevant ‘work cluster’) accelerates the transition by up to 12 months;
  • Working in work ‘clusters’ with ‘a strong future focus’ can accelerate the transition by up to 5 months; and
  • Having an optimistic mindset and general mental wellbeing has a materially positive impact on ‘the opportunities that a young person perceives are available to them’.

According to the FYA and related to the above points, educators, policy makers and families can support young people in transitioning from education to the future world of work by:

  • fostering career management skills. Young people’s mindsets need to shift from focusing on a single career pathway to developing ‘a portfolio of skills, knowledge and attitudes that will expand and deepen
    over time and become highly portable across many jobs and sectors.’ This encompasses:

    • curriculum development ‘to integrate and assess careers education through multiple subjects, rather than as a separate discipline, including exploring the right links to general capabilities’;
    • careers learning activities and work exposure opportunities ‘through experience, immersion … in and outside of the classroom’;
    • ensuring that young people can ‘identify the skills they are developing’; and
    • parent engagement strategies.
  • developing and embedding ‘enterprise skills’ by:
    • encouraging young people to choose pathways that will equip them with portable enterprise skills;
    • ensuring senior secondary school years incorporate a focus on building ‘a broader set of skills and capabilities including enterprise skills’ in addition to ‘knowledge-based domains’;
    • measuring and assessing enterprise skills alongside knowledge-based domains; and
    • articulating in tertiary course guides the enterprise skills that students will be equipped with on completion.
  • enabling work integrated learning, including ‘higher apprenticeships’ that combine paid employment with training in ‘future focused’ industries; and
  • focusing on mental wellbeing, which is a material factor in education-to-work transition.

Resources

The Future of Work Part 2

The future world of work & careers: dynamics, skills & partnerships

Dr John Doyle February 14th, 2022 · 8 minute read

The Future of Work Part 3

The future world of work & careers: dynamics, skills & partnerships

Dr John Doyle February 14th, 2022 · 8 minute read

The Future of Work: Appendix A

The future world of work & careers: dynamics, skills & partnerships

Dr John Doyle February 14th, 2022 · 8 minute read

The Future of Work: Appendix B

The future world of work & careers: dynamics, skills & partnerships

Dr John Doyle February 14th, 2022 · 8 minute read

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