June 17, 2018

The future of work and the future of skills

By Jim Stanford

The world of work is being transformed by powerful and unpredictable forces, and many Australians worry about their future ability to support themselves and their families through paying work. The incredible capacities of new technologies, computers and robots have sparked fears that many workers will be replaced by machines.

And technology is not the only force transforming work. Changes in work organisation and employment relations are also disrupting working life – and more quickly than robots and artificial intelligence. The traditional ideal of a stable, permanent, full-time, paid job with normal entitlements (like sick and holiday leave, and superannuation entitlements) is increasingly out of the reach of many Australians – especially young people. Indeed, less than half of Australian workers now work in a traditional full-time permanent paid position. Instead, temporary, part-time, casual, irregular, and nominally self-employed positions are now the norm for most workers (and the overwhelming share of young workers). In the extreme, jobs are being replaced by “gigs”: digitally mediated, on-demand, piece-work tasks allocated and compensated through faceless digital platforms.

In response to these challenges, politicians and policy-makers often dispense familiar advice that Australians can best protect themselves is by acquiring more skills (or “human capital”). The need for more public investment in training, and for repairing the vocational education system in particular, is obvious. But the knee-jerk assumption that training alone will protect workers from the coming disruptions is quite wrong. And the parallel assumption that it’s solely up to individuals to make the right choices about their own skills, feeds into the mantra of privatisation and market delivery that has so damaged Australia’s vocational education.

Offering patronising advice that workers should go and get retrained, certainly constitutes a glaring contradiction with Australia’s vocational reality: namely, a training system that is crumbling under the weight of austerity and privatisation. If training is so important, why do governments consistently treat vocational education as an afterthought when budget time comes?

Worst of all, advocating training as a magic bullet for facilitating adjustment is often used to implicitly blame the victims of unemployment and underemployment for their own problems: if only they had bothered to acquire more skills, it is suggested, then workers wouldn’t experience economic hardship. By blaming workers’ supposed failure to attain enough education, or the right kind of education, for their failure to find and keep good work, responsibility is shifted away from employers and government.

The reality is that Australia’s economy is not fundamentally held back by any general “lack of skills.” And acquiring new skills is never an automatic ticket to a better job: millions of Australians have learned that the hard way. They worked hard to attain training and credentials, yet fund themselves filling menial jobs that do not remotely utilize their skills and capacities to the fullest.

In fact Australians, especially young workers, are better educated than any previous generation, and better educated than workers in almost any other country. According to OECD Education Statistics, some 44 percent of Australia’s core labour force (ages 25-64) possesses tertiary education: 5th highest among all industrial countries, and 8 percentage points higher than the OECD average. Yet those superior skills have not prevented the continuing deterioration in job conditions so evident in today’s labour market.It is a shortage of good jobs, not a shortage of skills, that truly holds back our labour market, and our quality of life.

To be sure, accelerating technological change, and the advent of new business models (like digital platforms), certainly enhances the need for high-quality, well-funded, and publicly-accountable vocational education. But that need was already there – unmet by politicians who make ritualistic appeals to training as a salve for labour market displacement, while slashing training funding further with each successive budget. Our arguments and campaigns for investing in training, and repairing the TAFE system, should indeed tap into the public’s concern about the impact of technology, digital platforms, and other disruptors on the future of work. But we must also highlight the contradictions of government economic policies as we make our case: such as how their rhetoric about training is never matched by adequate real resources, and how they have failed to ensure the creation of good jobs to actually utilise the skills they want Australians to acquire.

After all, training alone does not create jobs to utilise the skills that it imparts. (Of course, investing in training does create jobs in the broader education sector, which has been one of the most important source of job creation in Australia over the past decade; that’s another good reason to boost education spending!) An effective training strategy needs to be matched by a parallel effort to place trained workers into good, secure, rewarding jobs. This means a stronger emphasis on job-creation in macroeconomic and fiscal policy (to increase the quantity of work), as well as much stronger labour rules and standards (to improve the quality of work).

Germany’s vocational education and apprenticeship system provides an outstanding example of how a dual focus on world-class training, and the creation of decent, productive jobs, can generate outstanding results. The German model is organised around several hundred officially designated trades and occupations. Well-funded, high-quality vocational institutions (partly funded through compulsory levies from private employers) graduate a steady flow of well-trained young workers, actively matching them with employers who need their skills. No wonder Germany’s high-tech exports perform so well in world market.And no wonder youth unemployment is just 7 percent – barely half Australia’s rate.

In summary, investing in high-quality skills and training must certainly play a role in any broad effort to create more and better jobs. It’s not a “magic bullet,” but it can make a positive difference. Australia’s overall labour market is not held back by a general lack of skills; but there are certainly some specialized occupations where the supply of qualified labour is inadequate to meet expected demands in coming years. Furthermore, upgrading workers’ general capacities with language, STEM skills, and other transferable skills enhances the overall flexibility and productivity of the workforce. Workers with especially challenging job search prospects (such as workers with disabilities, those who haven’t finished school, migrants, and others) can particularly benefit from targeted, job-relevant training.

Australian workers face enough uncertainty regarding the future of work. That uncertainty shouldn’t be made worse, by an inability to access trustworthy, top-quality, affordable vocational training. Rebuilding Australia’s once-world-famous TAFEs, to serve as the anchors of a modern, well-funded, high-quality, public vocational education system, would help all Australians prepare for the change that lies ahead.

Dr Jim Stanford is an Economist and Director of the Centre for Future Work.