Introduction
4.1
In its 2016 report Tomorrow’s Digitally Enabled Workforce, the CSIRO’s Data61 research group (Data61) focussed on the effect of new digital technologies on employment. In common with other periods of rapid technological development, Data61 commented, there is currently a ‘growing fear of “technological unemployment” as machines become dominant in the economy’. Data61 added that while technological development has led to long term increases in living standards in the short term it has also ‘led to considerable hardship among the workers it displaces’.
4.2
Research indicates that increased international trade has delivered economic benefits but also has resulted in industries in high wage countries such as Australia being vulnerable to competition from overseas. The growth in internet shopping has opened up Australia’s retail sector, which employs 1.2 million Australians, to significant new competition from overseas.
4.3
This chapter considers the effects of internet competition on employment levels and conditions, and the skills required to enable Australian businesses to benefit from the digital economy.
Review of the Evidence
Effects on Employment Levels
4.4
The retail industry is Australia’s second largest employer. Compared to the overall workforce, retail employees are younger, more often women, and more likely to be working part-time.
4.5
The Department of Industry, Innovation and Science (DIIS) stated that increased internet competition is likely to result in some retailers cutting staff and others exiting the market, resulting in job losses.
4.6
Nevertheless, the DIIS forecast the effects of internet competition were ‘highly unlikely to have a net detrimental impact on employment in the retail sector, and it’s more than likely that it will have a net beneficial influence on employment in the economy at large.’
4.7
The DIIS added that ‘while Amazon’s arrival will put further downward pressure on job growth in traditional retail. This may be offset by employment growth in other areas.’
4.8
The DIIS also drew attention to the effect of e-commerce on employment in the United States of America (USA). In the USA between 2007 and 2016, e‑commerce created 355 000 jobs but only 51 000 were lost in the retail sector. The DIIS noted that as Amazon is headquartered in the USA, these figures may not directly translate to Australia, but suggested the figures ‘do suggest that fears of widespread job losses are overblown’.
4.9
The Digital Industry Group Inc. (DIGI) highlighted the potential that online platforms and digital technologies have for assisting small businesses to create jobs. The DIGI citied research by Deloitte and Google which found that SMEs with advanced levels of digital engagement were eight times more likely than other small businesses to be creating jobs.
4.10
In a report commissioned by eBay, Deloitte Access Economics (Deloitte) drew attention to the number of Australians who are already making use of digital platforms to attract work or business. Deloitte stated that in Australia there were currently:
28 000 small businesses using eBay;
80 000 tradespeople using hipages; and
850 000 suppliers offering to complete tasks on Airtasker.
4.11
Deloitte also stated that many people would prefer flexible working conditions but may struggle to find suitable work arrangements. Deloitte suggested that, for these people, ‘running a small business from home, supported by various online platforms, can be an attractive option’.
4.12
In contrast, the Accommodation Association of Australia (AAA) expressed concerns about the impact that sharing economy platforms were having on jobs in traditional industries. The AAA stated that the accommodation industry employs 82 800 people, whereas ‘sharing economy providers employ very few, if any, people directly at properties where they advertise rooms’.
4.13
The AAA commented that the impact of sharing economy platforms was of particular concern in regional and rural regions where ‘even a minor drop in the number of guests staying at traditional hotels or motels results in job losses.’ Regional jobs may also be at risk in the bookselling industry, as while local bookstore jobs are geographically dispersed, jobs at online book retailers are more likely to be concentrated in specific areas.
4.14
The Australian Booksellers Association also suggested that an increase in online shopping would result in a transfer of staff from customer facing retail roles to back-of-house warehousing and logistics roles.
Increased Use of Automation
4.15
The DIIS suggested that one of the competitive advantages that Amazon has over Australian retailers is its use of ‘sophisticated automation to improve efficiency in warehousing, logistics and distribution’. The DIIS added that Australian retailers will need to invest in automation in order to provide a similar level of service.
4.16
Any significant increase in the use of automation is likely to have impacts on employment in the warehousing and logistics sector. The Master Grocers Association (MGA) commented that initially the growth in online shopping could lead to an increase in warehousing jobs but, over time, tasks such as sorting and packing would increasingly be automated leaving only the delivery stage of a transaction requiring human staff.
4.17
Master Grocers Australia (MGA) drew a comparison between online shopping and the introduction of self-service checkouts at supermarkets. Once installed, self-service checkouts were cheaper for the supermarket and had reduced the number of staff needed. The MGA stated that if there is an increased move towards online shopping then ‘it is inevitable that the number of employees in supermarkets will decrease. They will simply not be needed in the same numbers that exist currently.’
4.18
Data61 cited three recent studies that looked at the likely impact of automation on employment. These studies had reported similar results, finding that between 44 per cent and 47 per cent of occupations were at risk from automation.
4.19
In Tomorrow’s Digitally Enabled Workforce, Data61 described jobs that undertake routine tasks following defined procedures as those most susceptible to automation. Due to machine learning technologies susceptible jobs include those that primarily undertake cognitive tasks.
4.20
The Australian Industry Group (Ai Group) agreed that the scope of jobs that will be affected by automation has moved ‘well beyond the factory floor’ and will be soon felt in the personal and professional services. Ai Group suggested that while some jobs will disappear more will be transformed ‘as workers shift focus to managing machines and programs to augment and increase their total productivity’.
4.21
Data61 added that due to automation higher skilled jobs may replace lower skilled jobs and provided the example of the introduction of automated teller machines (ATMs). Since the introduction of ATMs approximately 50 000 bank teller jobs have been lost but a similar number of higher skilled finance professional jobs had been created.
Effects on Employment Conditions
4.22
In the USA, workers in the e-commerce sector, including those working in warehousing, are paid on average 27 per cent more than those working in the traditional retail sector. The DIIS suggested that this shows that ‘the shift to e-commerce is also improving the quality of jobs’.
4.23
The DIIS did note, however, that there have been reports ‘of poor treatment of staff in Amazon warehouses overseas and significant use of temporary and “gig” workers’. Amazon has denied these reports.
4.24
The Ai Group stated that the growth of the ‘gig’ economy was a ‘major part of the change digital technologies are making to employment’. Gig economy workers are freelance, employed on a task-by-task basis. The Ai Group highlighted forecasts that gig workers will exceed 40 per cent of the USA workforce by 2020 and stated that already 32 per cent of Australian workers had undertaken freelance work in 2014 and 2015.
4.25
The ACCC highlighted that one consequence of the gig economy is that some digital platforms, such as Uber and Deliveroo, could argue that they do not employ people. The ACCC added that this was a controversial issue as there are ‘certainly lots of young people who are contractors with those organisations that perhaps don’t feel like they’re running their own business, but as a matter law they might be.’
4.26
The Ai Group added that the retail and small business sectors will be affected by the growth in gig economy workers. Managing a workforce that includes a significant number of freelance workers will be ‘a new challenge for many companies and new techniques will be needed’.
4.27
Deloitte also stated that many people prefer flexible working conditions and for these people, ‘running a small business from home, supported by various online platforms, can be an attractive option’.
4.28
Two Australian companies act as digital platforms for the gig economy. Freelancer.com is used to connect freelance workers with companies and currently has over 27 million users. Airtasker is a platform people use to outsource everyday tasks to suppliers that, to date, has resulted in $81 million of tasks being undertaken at an average price of $80 - $100 per task.
4.29
As freelance work platforms emerge Australian workers may increasingly need to compete with workers operating in lower wage countries. As an example, wages paid for graphic designers on Freelancer.com are ‘far below Australia’s domestic expectations’ and Data61 suggested that the gig economy is likely to ‘disrupt similar professions across Australia’.
Skills in the Digital Economy
4.30
Data61 stated that it believes there will be a ‘massive transition ahead of all Australian workers into a new digital economy, where digital will affect just about every job and how it’s done, and there is a huge reskilling and education challenge.’ Data61 added that:
Digital technology will transform the labour market, requiring new skills and aptitudes for young and old workers. The vocational education and training sector, the VET sector, has a critical role to play, along with all parts of the education system.
Existing Skills in the Australian Workforce
4.31
The DIIS stated that many Australian businesses were currently prevented from participating in e-commerce due to a low level of digital skills and capability. The DIIS stated that the ongoing Digital Economy Strategy consultation process would consider ways to increase the digital capabilities of Australian businesses.
4.32
The Council of Small Business of Australia suggested that ‘many small businesses are delaying the adoption of new technology and software as they have a limited understanding of technology or its long-term benefits.’
4.33
The DIIS made a similar point, stating that due to a lack of digital literacy some businesses faced difficulty understanding the choices and options available when considering purchasing digital services.
4.34
Professor Marek Kowalkiewicz agreed, noting that some businesses were making decisions in the digital space, for example around whether to use a digital platform to participate in an online market, without fully understanding the consequences of this decision.
4.35
The Master Grocers Australia (MGA) stated that for independent grocers the expertise required to maintain online services was an even greater concern than the initial cost of setting up these services. The MGA stated that ‘running a supermarket does not require great computer skills or intricate knowledge of digital platforms’ and that grocery staff would need training in order to maintain online systems.
4.36
The MGA added that ‘as technology advances so must the individual be willing to learn. It does not seem that retailers are unwilling to learn but they are concerned about the cost of the learning process.’
4.37
The Australian Retailers Association (ARA) reported that ‘skills shortages continue to impact on the retail industry, which contributes to the disadvantages retailers face in combatting overseas competition online’.
Future Skill Requirements
4.38
The Ai Group stated that many of the trends that would impact the workforce were already apparent. The Ai Group highlighted the sharing economy, automation, and the ageing population as being likely to have significant impact on future workforce needs.
Forecasting Skill Needs
4.39
Data61 suggested that developing government capability in forecasting future skills requirements would help in identifying which digital skills could offer the most employment opportunities.
4.40
Data61 added that it was hoping to soon commence research to enable it to forecast the skills that are likely to be in demand in the coming decades. Data61 hoped that this would provide valuable information to the Vocational Education and Training (VET) sector to assist it with training Australians in key digital skills.
Digital Literacy and STEM skills in Australia
4.41
The Ai Group suggested that all workers needed to have generic ICT skills and that ‘rapid change in computer software and hardware can make learned skills redundant, however there are likely to be enduring concepts of digital literacy that will be important for future workers to have mastered’. The Ai Group added that ‘businesses are prepared to digitally upskill their workforce through training or recruitment’.
4.42
Data61 suggested that the Australian workforce did not have the required skills and capability in the STEM (science, technology, engineering and maths) and ICT (information communications technology) fields. Data61 suggested that digital literacy skills, including the ability to use coding to manipulate machinery, were going to be essential requirements of careers in the near future.
4.43
The Ai Group stated that Australian SMEs were increasingly going to need workers with specialist STEM skills in order to compete in the global economy. In addition to STEM specialists, the Ai Group suggested that there needed to be an increased level of STEM literacy among the general workforce.
4.44
Data61 highlighted that as more Australian businesses are becoming heavy users of data there is an increasing shortage of data scientists. Data61 suggested that there was a need for people who could not only find relevant information but also analyse and interpret the information for CEOs.
4.45
Data61 also highlighted that despite programs to encourage girls to stay engaged in STEM subjects, there was still far too few girls and women studying STEM. Data61 provided the example of a university engineering course where only 16 per cent of the student base was female.
4.46
Data61 added that ensuring that teachers have the necessary skills to teach ICT, even if they were not necessarily subject matter experts, would have a significant positive impact.
Entrepreneurial and Business Skills
4.47
The Ai Group also suggested that business leaders and managers would need to have the skills to manage the implementation of the ‘workforce and organisational changes that will have to be put in place as automation upends entire business processes, as well as the culture of organisations’.
4.48
Data61 advocated helping school students develop an entrepreneurial mindset by showing that becoming an entrepreneur was a viable career path. Data61 also suggested that many Australian entrepreneurs were lacking the skills and ambition to develop global companies, stating:
[Australian entrepreneurs are] building their business to sell it for $20 million to $30 million to an international, versus saying, as the Atlassian team did ‘actually there is a global opportunity here’. The skill set required to start a business and take it from zero to $5 million in revenue is very different than taking it from $5 million to $100 million.
4.49
The ARA suggested that there was a need for government support for VET based retail industry training courses focussed on encouraging retail entrepreneurship. The ARA stated that:
Action needs to be taken to encourage entrepreneurship in retail, and to prepare the next generation of retail entrepreneurs. Stimulating and encouraging innovation in the local retail industry begins with equipping and educating our budding entrepreneurs.
Other Skills
4.50
Data 61 emphasised the importance of students learning digital skills such as coding but also pointed out that this should complement, rather than replace, social and creative skills. Data61 explained:
We want our kids to be fully up to speed with how to manipulate [machines] via coding of some sort, but once they [have a job], we found that the human skills which differentiate you from a computer, the things the computer and robot cannot do, are what grow your career most quickly: judgement, creativity, and social and emotional intelligence all become important.
4.51
Professor Marek Kowalkiewicz also emphasised the need for skills beyond pure technological skills. Professor Kowalkiewicz stated that it there was a need for non-technology skills such as the ability to think differently, to generate new business models and to drive cultural change.
4.52
The Ai Group suggested that workers in the retail sector and in small business ‘must develop the boundary-crossing skills of communication, leadership, problem solving and design thinking’. These skills, especially when coupled with technical skills, would assist workers to deal with the increasingly complex environment which business must operate within.
Improving the Digital Skills of Current Workers
4.53
Data61, quoting researchers from MIT, stated that it is crucial that employees learn to ‘race with the machine, not against it. If you are doing the same thing it does, it will beat you, but if you are plugging your skills into it, it will push you along and give you a better career.’
4.54
Data61 suggested that ‘Australia’s current and future workforce needs to be re-skilled for a future digital economy’. Data61 highlighted the role of the vocational education and training (VET) sector as being critical in providing opportunities for young and old workers to improve their digital skills.
4.55
Data61 suggested that the Australian Government establish a digital retraining fund. Data61 stated it would recommend:
… opening a digital retraining fund for Australian’s, so, if your job is likely to be extinguished by digital technologies in the retail sector, you are able to access modest funds but enough to give you a kick-start to early transition into something else. It’s much easier for you to get a job when you’ve got one, so we want you to make the transition sooner rather than latter’.
4.56
The ARA suggested that small retailers, many of whom operate alone, found it particularly difficult to increase their skills without assistance to undertake training. The MGA suggested that consideration should be given to grants or other forms of government support to assist retailers to improve their digital skills. The MGA stated:
Government funding for programs to learn about the procedure for setting up a digital platform or how to deliver online products would be invaluable to small businesses.
Committee View
4.57
New digital technologies and online platforms are changing the world of work. Automation and artificial intelligence is allowing computers and robots to undertake tasks that previously required humans, while the internet is allowing businesses to connect with customers and partners across the world. As has been the case in every preceding wave of rapid technological development this will result in some jobs being fundamentally altered and other jobs lost. These jobs will, however, be replaced by jobs in occupations that previously did not exist.
4.58
The impact of internet competition and emerging digital technologies will be disruptive, but overall is likely to be positive for the Australian economy. The experience in the United States, where online shopping is much more established, is that the jobs created by e-commerce comfortably outnumber the jobs lost in the traditional retail sector.
4.59
As an increasing number of people choose to visit a website rather than a physical store to purchase a product there will be a need for additional workers in the warehousing, transport, and logistics sectors. Regrettably, however, it is likely that some jobs will be lost in customer facing retail roles. No doubt this is a concerning situation for the many Australians employed in these roles in the retail sector.
4.60
There is an important role for governments to play in helping Australians, especially those in jobs at risk from internet competition, to develop the digital skills required to ensure they can take advantage of new digital economy employment opportunities.
4.61
The Committee is therefore recommending the establishment of a digital retraining fund to assist Australian workers to improve their digital literacy and develop new skills that will be valuable in the digital economy. It is preferable for Australian workers to develop these digital skills, and if necessary make the transition to new jobs, now rather than waiting until digital disruption places them at risk of unemployment.
4.62
Many Australian workers already have advanced digital skills, or have the means to comfortably support themselves to undertake training. Therefore, the funding should be targeted at Australian workers with relatively low level digital skills or in occupations at significant risk of being replaced by digital processes. This includes many Australians currently employed in customer facing retail roles.
4.63
The Committee heard from the CSIRO’s Data61 group of its desire to undertake research to develop tools for forecasting Australia’s future skill needs. The Committee believes that this research could be beneficial to the Australian economy. Without the ability to forecast future skill needs there will always be a lag between when a skill first becomes important to the economy and when graduates appear in the workforce. If future skill needs could be accurately forecast this would assist the education and training sector to prepare appropriate courses. This may also assist local Australian businesses to better prepare and train their staff to use the emerging technologies of the digital economy.
4.64
The provision of education materials and the promoting innovation and the use of digital technologies to local businesses in Australia are discussed further in Chapter 5.
4.65
A solid grounding in the STEM (science, technology, engineering and maths) subjects and knowledge of IT skills, including basic coding, is likely to be increasingly important for a wide range of occupations in the future. Australia’s education sector needs to ensure that Australian students are well equipped with these skills.
4.66
In particular, an area of current concern is the low level of girls and young women studying STEM subjects at school and university. The Committee welcomes the government’s initiatives aimed at female participation in STEM subjects in the National Innovation and Science Agenda and also notes that this is an issue that will require ongoing focus over a sustained period of time.
4.67
In the last few years there has been a rapid growth in freelance, or gig, workers. It is still unclear what impact the growth in the gig economy will have on employment levels and conditions in Australia. It is possible that workers in many occupations will face direct competition from overseas workers. All Australian Governments should carefully monitor the impact the growing freelance work has on employment in Australia.
4.68
The Committee recommends that the Australian Government establish a digital retraining fund. The fund should provide a small, means tested, subsidy to Australian workers to undertake training to improve their competency in digital skills that will assist them to find or maintain employment in the future.
4.69
The Committee recommends that the Australian Government fund the development of the nation’s forecasting capability for future digital skills needs. The funding should be provided on the condition that research findings are shared with Australia’s education sector and also communicated as widely as possible with the Australian business sector.