Executive summary
While Australia has weathered the COVID-19 crisis better than most OECD countries, some communities were initially hit hard. Like many other countries Australia’s labour market felt strong impacts from the first wave of the pandemic, with employment dropping by almost a million between March-May 2020 and the unemployment rate reaching over 7% in July 2020. However, employment was back at pre-pandemic level by February 2021, and unemployment rates dropped below pre-pandemic levels in all regions except the Australian Capital Territory. Until August 2021 when New South Wales began experiencing a spike in COVID-19 cases, Victoria took the brunt of COVID-19 and accounted for about 75% of COVID-19-related infections in Australia, which led to the state implementing some of the most stringent measures against the pandemic. Between February-September 2020, employment in Victoria dropped by 6.6%, but as of June 2021, the number of jobs surpassed the pre-pandemic mark.
Looking at the past, automation often accelerates during economic downturns as firms look to re-organise their business models. Facing lockdown measures, some firms expanded their use of technology to sustain their operations. An OECD survey found that over 26% of Australian firms reported an increase in the take-up of new technology or automation because of COVID-19, with firms in New South Wales (27.0%), Victoria (35.1%), and Australian Capital Territory (35.7%) reporting take-up rates higher than the Australian average. Acceleration of automation is likely to continue, as firms will want to better protect themselves against future economic shocks such as another pandemic.
Automation was already a consideration for local labour markets in Australia before COVID-19. OECD estimates pre-pandemic show that 36% of jobs in Australia are at risk of being automated, compared to the OECD average of 46%. About 11% of jobs face a high risk (i.e. high probability) of being automated, while another 25% are likely to face significant change. Automation will impact places differently. Across Australian states and territories, the share of jobs at risk of automation varies from 29.3% in the Australian Capital Territory to 36.9% in Tasmania. In addition, there are large differences in the risk of automation at the regional level across Australia, depending on the occupational profile and the characteristics of the local economy.
The risk of automation is likely to affect some communities and segments of the population more than others. Across regions, the risk of automation is highest in Mackay-Isaac-Whitsunday in Queensland (41.2%), followed by South Australia-South East in South Australia (40.3%). On the other hand, Sydney-North Sydney and Hornsby and Sydney-Eastern Suburbs have the lowest risk of automation in Australia, standing at 24.6% and 25.5% respectively. Australian men face a higher risk of automation than women (37.1% and 32.0% respectively), as they are more likely to be employed in occupations involving routine and repetitive tasks. Indigenous Australians often work in jobs requiring lower skill levels, which face the highest risk of being automated over the long-term
Risks from automation have already been shrinking in Australian regions. About 81 regions in Australia (91% of total regions) have seen disproportionately higher jobs growth in predominantly less risky occupations between 2006 and 2016, in turn, reducing vulnerabilities of potential job losses to automation. The occupations that have grown the most in terms of total employment at the national level include health professionals, teaching professionals, production and specialised services managers, and business and administration professionals. The transition to net-zero carbon emissions will also have important implications on many sectors and skills needed.
Automation is more likely to change tasks within jobs rather than replace entire jobs, requiring workers to develop new skills. In the future of work, digital skills will be more important than ever. Australian adults have above average proficiency in problem-solving in technology-rich environments, with about 40% scoring in the top two levels, compared to the OECD average of around 30%. In addition to basic digital proficiency, it will be crucial for Australians to develop know-how of specific digital applications. A recent survey conducted by the NCVER shows that the top five technologies with the greatest impact on skill requirements across Australian industries are mobile, cloud, automation, big data and the internet of things. Digital skills and digital proficiency will be important, but not in isolation. The future of work requires workers to develop a broad mix of skills, including strong basic, cognitive and socio-emotional skills, to succeed in the workplace and be able to adapt to a changing labour market.
Fortunately, all Australian states and territories are shifting primarily from middle-skill to high-skill jobs. The employment share of high-skill jobs increased by about 3.8 percentage points in Victoria, the largest increase recorded across Australian states and territories. Job polarisation dynamics vary substantially at the local level in Australia. Some regions have experienced increases in the employment share of middle-skill jobs over the past decade. The most prominent example is the Outback North region in Western Australia, where middle-skill jobs increased by nearly 5 percentage points between 2006 and 2016. Increases in mining activity may partly explain the increase in middle-skill jobs in the region.
Recent policy efforts in Australia have focused on providing support to workers and firms in light of the pandemic. The Australian Government has also taken important steps to prepare workers for the upturn and future-proof communities. For example, the recently established National Skills Commission places skills development at the core of the government policy for the future of work. There are also relevant initiatives to support local development and job creation across regional areas, such as the Local Jobs Program.
The following recommendations emerge from this report, focusing on future-proofing people, places and firms in Australia:
Ensure workers most in need receive targeted support to re-skill and up-skill. Targeted measures in support of low-skill workers as well as workers from sectors at risk of automation or hard-hit by COVID-19 could be introduced. For the most disadvantaged groups, the social economy can play a role.
Support the emergence of local partnerships for skills development. Businesses and governments could work together at the local level to develop practical solutions and help workers transition to the jobs of tomorrow. Co-designed and co-funded training programmes as well as online learning platforms could play an important role.
Strengthen programmes with sector-focused training. There is an opportunity to mainstream sectoral approaches to skills development to ensure workers in key sectors for local economies have the right skills.
Facilitate transitions towards sectors facing a lower risk of automation, building on the existing skills base of the local population. The establishment and promotion of sectoral networks could help identify opportunities to build on the existing skill base of the population to shift employment towards occupations facing a lower risk of automation.
Consider developing measures to incentivise SME training uptake. The government could consider providing grants to SMEs, in order to undertake workforce training. The digitalisation of SMEs will require new technical and managerial skills.
Promote the emergence of SME networks for skills development. The creation of partnerships between SMEs can play a crucial role in helping them navigate labour market changes and get easier access to skills development.