The Evolving World of Work

Every now and then, after a little nagging, my wife prevails on me to clean up the cupboards in my office. I am a little sentimental and that causes me to be somewhat of a hoarder of the various mementos and awards I have collected over my career. In cleaning out recently, I came across two little mementos that the workforce had given me when I left my role as manager of Stanwell Power Station to take up the position of CEO of Stanwell Corporation.

The first such memento was a nicely turned stainless steel receptacle on a little cedar plinth. On the plinth was a label which read:

1TED01AA2002 (which was a pseudo plant identification number) and under that:

Bucket – noun, vessel for EBA money

This was a rather humorous allusion to the fact that during EBA negotiations I used to tell the union delegates that the problem with EBA’s was they thought I had a bucket of EBA money and they saw their job as ensuring they got all the money in the bucket!  Whereas I saw my job was to ensure I gained sufficient productivity gains from the EBA to pay for whatever additional compensation we consequently agreed on. (I’m afraid they don’t do EBA negotiations like that anymore!)

We might have had our differences, but I was a great admirer of these “salt of the earth” people.

But the other memento I turned up is more pertinent to the theme of this essay. It was a little cedar coffin inside of which was inscribed “R. I. P. Trades”.

What was this about, you might ask? Well in the 1980’s and 1990’s I had done a lot of work researching the future of work. One of the trends I had noticed was, that on a per capita basis, the proportion of the workforce that were tradespeople had been reducing since the 1960’s

My experience, working in power stations, reflected that trend.

Now it wasn’t hard to work out why this was occurring – it was largely due to technology advances and improvements in materials science.

My first experience working in power stations was in the late 1960’s. Tradespeople (and their ubiquitous trades’ assistants) dominated the workforce. In the workforce in a power station there were fitters, machinists, electricians, plumbers, painters and even blacksmiths. In those days when parts needed to be replaced whether because of wear, corrosion or mechanical failure, new parts were often manufactured by these skilled tradesmen.

Twenty years later, the incidence of failure of mechanical components was considerably reduced because materials were more durable and corrosion vastly reduced. What’s more machinery was being designed to enable easy replacement of components so that parts that failed were routinely disposed of and readily replaced. Plumbing, which in the old days required considerable skills like lead wiping, became more about gluing plastic pipes together. When we selected electricians one of the more sought after skills was to be good at fault finding. With the growing prevalence of computers in control systems often the computer would indicate where the fault was. As a consequence of all these things, and others like them, fewer and fewer trade staff were required.

I had given many papers at national conferences highlighting this change in the demographics of the workforce. My own tradespeople took this to mean that I was prophesying that there was no future at all for trade staff – hence the parting gift of the coffin! I was merely pointing out the trend, which continues today, is that trades people are a diminishing proportion of the workforce.  We continue to employ trades people, albeit in diminishing numbers, and I would be loath to predict that this avenue of employment would completely die out.

But certainly things have changed from the days of my youth when I remember my father advising my younger brother to take up an apprenticeship because if he had a trade qualification he would never be out of a job.

Of course there is nothing new in such a transition in the way of work.

We need only look back to the Industrial Revolution to see a major disruption in employment. During the Industrial Revolution there was a mass exodus of those working on the land to take up employment in the mills and factories that evolved in the wake of the discovery and harnessing of steam power. Although there were many undesirable side effects, this was an easier transition than those created by later technological developments. This was largely because the new jobs being created in the factories required no more skills (in fact some have argued even less skills) than those working on the land possessed. It was therefore relatively easy for a farmhand to slot into a role as a labourer in a factory.

Unfortunately, since then most of the impacts of technology on employment have been far more disruptive. Over the years we have seen more and more unskilled work displaced by technology. Inevitably other jobs are created in the wake of these technological interventions. However, it is generally the case that the new jobs require skills that the displaced workers do not have.

Generally, it is argued that the introduction of new technology into the workplace results in greater productivity and that is still generally true. But recent material I have seen questions the introduction of technology to improve productivity in all cases. Historically there is no doubt that automation, robotics and artificial intelligence improved productivity and reduced the costs of production. It seems that sometimes increased use of technology occurs merely because it reduces the messy problem of employers having to deal with employees!

The Asian Development Bank on the other hand argues that the benefits that developing countries receive from technology in stimulating the economy generally provide more opportunities for lesser skilled employees. But this is unlikely to be the case in more developed countries.

Historically it was easy to predict where technology would displace human beings from the workplace. Robots assembling equipment on production lines, automatic teller machines displacing tellers in banks, data loggers recording information that previously required operating staff to manually record readings from instruments, driverless trains, and many other applications were obvious steps decades ago. But advances in artificial intelligence (AI), computer science and other more esoteric technologies makes it far more difficult to predict technology’s impact on the world of work today.

Once upon a time, I would have advised employees that if they were to maximise their job opportunities, their employability so to speak, gaining more skills was important. And indeed complex skill sets would have virtually assured your future employability, but while it is still a worthwhile strategy, AI is rapidly displacing workers in even the most complex areas of knowledge.

And of course we are all touched by the ubiquitous social technologies. In a recent article The Times pointed out that:

…. last year 1.5 billion smartphones were sold, enough for every fifth person on earth. Mobile technology and services contributed $US3.6 trillion to world output, 4.5% of global GDP.

…..production of smartphone components in South Korea contributed a third of GDP growth last year.

The advance of these technologies, apart from creating concerns about privacy and the harvesting of personal data from participating individuals, has also been hugely disruptive on the employment front. The ready free access to data (some of it admittedly of dubious quality) has dramatically changed journalism and press and news services. Social media platforms are also attracting an inordinate amount of advertising at the expense of the more traditional newspaper and TV platforms. On top of this, on-line shopping is having a huge impact on retail. Whilst this is keeping a brake on inflation it is doing so at the expense of traditional retail jobs.

Overall the rise of social media is opening up our exposure to the international economy. As I intimated above, this brings the benefit of lower prices but at the cost of large structural changes in our economy. Historically as we have seen, such change provides opportunities for some but inevitable pain for others.

But the world of work is not only being impacted by the inevitable march of technological development it is also being affected in Australia by our aging demographic. Many job opportunities are in effect, “dying out”.

For example according to demographer Bernard Salt’s analysis of the last census, the average age of livestock farmers is over 55 years of age. (The average age of those employed as bus and coach drivers, caretakers, mixed crop and livestock farmers, and caravan park and camping ground managers are all well over 50 years of age.)

So you see although most of the commentary on the changing nature of work has been around automation and computer technology and has largely looked at the impact on factories and offices, there are broader effects in other work environments.

For those living off the land for example, survival has meant mechanisation and the aggregation of properties to gain economies of scale. Whereas once farmers and pastoralists divided up their properties among their heirs, this now is often not a viable option. When it does occur it often leaves someone who has inherited a part of a property unable to make a living from it. Consequently unless the family working the reduced property has another income source, they will often be compelled to sell because the property is too small to avail itself of the required economies of scale.

And of course acquiring sufficient property to make a viable business is then often beyond the capability of families such that pastoral and agricultural businesses are becoming more and more the province of big business and the notion of the traditional family farm is becoming anachronistic.

So the opportunity for young people to make a living off the land is dwindling. But, as Salt points out, other opportunities are open to them. However they are not the roles many would believe lead to satisfying careers. For example those under 30 years of age dominate the ranks of:

  • Fast-food cooks,
  • Waiters,
  • Checkout operators and office cashiers, and
  • Bar attendants and baristas.

Often these roles are taken by students, working part-time whilst completing tertiary studies or young people from overseas with working visas.

But just as the nature of employment is changing so is the workplace. For more than forty years managers have been trying to benefit from allowing more employee involvement in decision making and harnessing the benefits of people working together in teams. Technology has enabled more flexible working arrangement and working remotely. This has provided some employees with the opportunity of better balancing the work and family components of their lives. Many workplaces have far more generous leave entitlements than they did decades ago which facilitate the management of their personal affairs. [The Fair Work Commission has recently granted 10 days unpaid domestic violence leave for many workers. The Labour Party has vowed to legislate to change this to paid leave if elected. Irrespective of whether such leave is justified, the likelihood that it will be rorted (in the way sick leave often is) will add additional costs to business.]

As a result of the above structural changes to the nature of work and other factors, union membership has greatly declined. Currently less than 10% of the private sector workforce are union members. Unions are struggling to organise a workforce that is not now dominated by the employment of large traditional blue and white collar workforces. They find it difficult to influence casual workers, workers employed by small business and young employees who assert their independence. But their interests are still pervasive in many workplaces and their chief strategy seems to be to try and take industry back to the 1960’s. In their zest to manufacture virtual compulsory unionism, championing protectionism and to expose industry to coercion through strikes, they risk impacting on the gains in standards of living we have achieved which were largely started by the microeconomic reforms of the Hawke/Keating governments. But whilst I suspect they might manipulate Labor governments to restore some of their former power, with increasing international competition between economies, the more complex nature of work and the resolute independence of young workers,  the genie is already out of the bottle.

So what are we to make of all this?

To begin with the forward march of technology is inevitable and there is little we can do to stop it. However the trajectory of technology development seems to be more difficult to predict than once it was.  But overall it has been largely positive and has contributed significantly to our rising standards of living.

Globally, the proportion of people living in extreme poverty has almost halved. This has been largely due to technological improvements and an opening up of markets which has enabled third world countries to sell more of their produce.

Many will argue that this has led to greater exploitation of poor people. But in reality it has led to more exposure of such exploitation. And it can’t be denied that the poor in those countries have benefited in general by rising standards of living.

In Australia the introduction of new technologies and the subsequent changes to working arrangements has largely been to our benefit. As we saw above the disruptive nature of technology changes produces winners and losers. In the last couple of decades the biggest losers have been unskilled male workers whose avenues for employment have substantially reduced. But overall, with the Australian unemployment rate at around 5.5%, we are faring reasonable well in historical terms.

And whilst employees gain some insurance against future displacement by technology by enhancing their skills, it is harder to predict than ever what the new jobs might look like.

I hope those of my old trade staff who are still working will remain happily employed as tradespeople. But they might want to think carefully about what advice they might give their children with respect to employment opportunities.


9 Replies to “The Evolving World of Work”

    1. Well, Chris, as I implied in the article where to next is getting harder and harder to predict. AI is advancing so quickly that skills I once thought were irreplaceable by machines are now being seriously threatened. But I am optimistic because technology increases productivity and hence our standard of living. It’s implementation can prove quite disruptive for many. But overall our unemployment levels are currently lower than they have been for some time. So it seems to me that the economy is adaptive enough to ensure that those replaced by technology have other places to go. I read in the Australian this weekend an analysis by the demographer Bernard Salt who shows that in recent times there has been resurgent demand for people with few skills. I find that heartening.

  1. I like your reflection on our future workforce, I wonder about replacing people with robots in the workforce, just because we can, should we?

    1. This is a difficult question, Madeleine.In most occasions replacing people with robots raises productivity and hence our standard of living. in greenfield sites it is essential to garner what competitive advantage you can and the use of automation and robotics is one of the tools to achieve this. In brownfield sites the introduction of these technologies will displace existing employees.But the employer will often face the dilemma that if he/she doesn’t embrace the new technology, which will undoubtedly render some employees redundant, the enterprise might become uncompetitive so that all the jobs are under threat.

      So the introduction of such technology needs to considered on the basis of the greater good. Sometimes it is worth jettisoning some jobs in order to ensure the viability of many more.

  2. Ted. Totally agree and I have given some very similar presentation myself – which only reinforces what you are saying. It seems to me the future growth in employment will have to be the service industries. That said, how meaningful such jobs will be I think is somewhat debatable. I’d love to hear your thoughts on my views.

    1. Well, Mark, it is easy to forget the ongoing importance of some traditional industries well into the future. No doubt our extractive industries and pastoral and agricultural industries will continue to thrive. However, as we have seen, productivity gains through technology will make them less labour intensive and accordingly employ proportionally less people. There is little likelihood of a resurgence in manufacturing because of high Australian wages, except in niche areas where we might have a technological advantage.Manufacturing has become the industry that raises developing countries out of poverty. You just need to look at the industrial history of Japan and South Korea as examples of that phenomenon.

      So as you say, the most likely area for future growth is in the service industries. This is aided by an aging population with reasonable wealth that is seeking more quality of life as they age. But we have also seen a growth in engineering, mining and financial services that as well as providing for our own needs are making a mark internationally.

      Surprisingly, despite the fact from my point of view we are not particularly good at it, education is booming with many of our top universities gaining substantial revenue from international students.

      I suppose it is a natural transition for an economy. Once our basic physical needs are met health, education, and financial services begin to come more important. And on top of that our efforts to improve our lifestyles with travel, restaurant experiences, entertainment and other pleasant distractions become more dominant.

      But I disagree with your assumption that these “service” jobs are necessarily less satisfying than traditional employment.I am sure that many who work in such jobs believe they are “making a difference” and gaining job satisfaction from so doing.

  3. Interesting topic Ted. I have pondered where technology will take society for many years and I have always come to the same conclusion. In the extreme there is nothing that a person can do that a machine can not also do and probably better and at lower cost. We are only just seeing the beginning of AI and modular automation (cars, planes, lawn mowers, vacuum cleaners,etc.).

    The last area where people will dominate will be the service industries because this is the hardest area to automate. We will likely still prefer to talk to a person behind the bar than a robot for many years to come. A hair dresser once told me that her clients don’t come in for a hair cut they come in to be pampered and feel good. So the service industry is evolving into a social service and not a menial one. Services like lawn mowing will disappear well before the social services and those most successful in these industries will be the people with the best social skills. Very valuable skills and very hard to teach. There will still be education, Government services and the creative industries (research, etc.) but overall there is going to be a lot less work to do.

    So where does that leave society generally? There will be 2 major issues result I believe. Wealth sharing and creation of meaning for the population. Wealth is not the issue, it is sharing the wealth that will be the challenge. At present we share the wealth around by getting paid for our work. In a world where there is much less work required that sharing is more difficult. Welfare will become very important to maintain the balance. Being on welfare from experience however is not exactly good for self esteem. As you have said in many of your blogs Ted, people need meaning in their lives and their work provides most of this meaning today. A big challenge for the future will be creating this meaning. If someone can think up a way to provide people with genuine meaning in their lives they will make the Zuckerberg fortune look like loose change. Now there’s an opportunity for a new industry to get into.

    1. Well Greg, you are as insightful as ever and it is hard to disagree with your conclusions.

      I have written before about the distribution of wealth and how employment is an imperfect way of achieving equitable outcomes. In our society there are few ways for people to access wealth, viz work, inheritance and welfare. Unfortunately those who must rely on inheritance or welfare lose a sense of achievement and fulfillment, both of which are major contributors to our sense of personal well-being.

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