Skip to content

Interview — Andrew Charlton: Rise of the machines

By: Zilla Efrat speaks with Andrew Charlton about an increasingly automated workforce and how directors need to know the right questions to ask their executives.

While many worry that the rise of robotics and artificial intelligence will put them out of work, Andrew Charlton believes automation is an opportunity to improve Australia’s productivity and the lives of its citizens.

However, as the rate of workforce change speeds up, the former senior economic adviser to Kevin Rudd when he was prime minister believes that understanding the skills that will be required in businesses will be essential to corporate strategy, human resource management and workforce planning.

Charlton, a director of strategy advisory company AlphaBeta, says automation isn’t a force we can stop. It’s fast changing the nature of human job tasks. For example, retail workers are spending less time ringing up items at the register and more time helping customers, and factory workers are spending less time on the assembly line and more time optimising production and training other workers.

AlphaBeta’s research shows that since the start of the millennium, machines have already replaced two hours a week of our most repetitive manual job tasks.

Even managers, who are commonly thought of as being immune to the impact of automation, have gained one hour of work time per week since 2000 to spend on non-routine activities. That’s because new management automation software helps them collect huge amounts of complex data and speed up office workflows, allowing them to focus more on creative and interpersonal tasks, such as strategic planning and keeping customers and staff happy.

And, by 2030, Charlton expects machines to have, in general, replaced another two hours of dirty, dull or dangerous tasks per week.

The rate of automation today is no higher than past waves of technological progress and history suggests there is no reason for automation to spark widespread and persistent unemployment.

He says: ‘This shift of labour from human workers to machines will inevitably cause frictions. But our analysis of past workplace trends suggests that most Australian workers (71 per cent) will simply change what they do within the same job, rather than change jobs. Only 29 per cent of Australian workers are at risk of losing their jobs, as automation technology becomes more entrenched.’

Charlton, who co-authored the book Fair Trade for All with US economist and Nobel laureate Joseph Stiglitz, notes that the changes are not unprecedented.

‘The rate of automation today is no higher than past waves of technological progress and history suggests there is no reason for automation to spark widespread and persistent unemployment,’ he says.

‘Over centuries, machines have progressively replaced labour in agriculture, manufacturing, administration and professional services, but have ultimately led to increased prosperity, productivity and employment.

‘The same phenomenon is happening today: the use of machines is causing strenuous physical jobs and routine administrative jobs to disappear. On the flipside, new job opportunities are emerging in community, personal and business services and other specialised professions that rely on uniquely human skills such as thinking creatively and being able to understand other people’s emotions.

Charlton foresees numerous workplace benefits from automation. For example, allowing robots to take on more manual work will be a big boon for those involved in painstaking, physical labour, which is currently responsible for the bulk of workplace injuries.

Assuming past automation trends continue, he estimates that the amount of sick days due to accidents involving physical work in Australia could be 11 per cent lower by 2030.

His analysis shows that the monotonous, automatable tasks performed by typically low-skilled workers are also the least satisfying tasks to perform.

If current automation trends persist, he says low-skill workers will take on more stimulating and satisfying human tasks at work, and as many as 62 per cent of them would be happier in their jobs by 2030 compared with today.

In addition, automation could lead to higher pay, given that easily automatable tasks are among the worst paid.

‘In contrast, work activities that are difficult for robots to take over because they require a large amount of creative thinking, human logic and emotional intelligence earn almost 20 per cent more than automatable tasks,’ says Charlton.

To effectively guide their organisations through workforce change, Charlton says directors need to understand the trends at a high level and know the right questions to ask their executives.

He believes key questions for directors could include:

  • How is the company embracing automation? What are the plans to harness technology to improve productivity?
  • How are our competitors embracing artificial intelligence and automation? What will be the strategic implications for costs and product offerings?
  • How is the company supporting its employees to be lifelong learners and adapt on the job to the changing tasks/demand of the workplace?
  • What are the highest growth occupations in this company?
  • How is the company planning to reskill workers whose jobs are affected by technological change?
  • How can the company increase the flexibility of its workforce?

Charlton points out that the future of work will be the subject of a major cross-government review conducted jointly by the Department of Employment and the Department of Industry next year. And this review will coincide with specific initiatives in vocational education, training, pathways to work and reform to the jobs network.

He notes that if policymakers and business leaders get it right, AlphaBeta’s research shows that automation and digitisation could significantly boost Australia’s productivity and national income, potentially adding up to $2.2 trillion in value to our economy by 2030.

But to unlock these gains, he says Australia will need to encourage more companies to invest in automation and digital technology.

‘Currently, Australian companies are lagging global peers in embracing automation. AlphaBeta’s research shows that only nine per cent of Australia’s listed companies are making sustained investments in automation, compared with more than 20 per cent in the US and nearly 14 per cent in leading automation nations globally.’

Charlton adds that Australian companies are also lagging their Asian counterparts in digital innovation. For example, the number of patents granted in 2015 for digital products in Australia (around 77 per one million residents) is just a third of the number of digital patents granted in South Korea (around 214 per one million residents) and half of that in Japan (137 per one million residents) in the same year.

‘This low rate of investment in automation and digital technology acts as a handbrake on our productivity growth that will ultimately reduce our national income,’ he says.

He believes a particularly effective way to accelerate the uptake of automation and digital technology in Australia would be to help companies in manufacturing — already the most innovative sector of our economy – increase their understanding and adoption of technology associated with the Fourth Industrial Revolution, also known as Industry 4.0.

‘Australia requires a strong policy framework to ensure workers at risk of being displaced are redeployed. Government needs to have programs in place to help workers develop the skills they need to be employable in the digital economy and growth industries of the future,’ says Charlton.

But he warns against pursuing a blanket approach. Instead, different groups of workers will have different needs which policymakers will have to meet when providing support, he says.

The young, well educated, and highly skilled are likely to adapt easily to changes in their workplace. Others, including lower-skilled workers and those near retirement age, may struggle more when trying to transition from one job to another.

That said, Charlton still believes that Australia also needs to improve its education system to ensure young people are prepared for the big job market changes ahead.

‘Government should better assist education providers in aligning their curricula with industry needs, so future workers can acquire the right skills to succeed in the digital economy,’ he says.

ACNC review highlights importance of fundraising reform

Next article