Mar 24, 2016

Where jobs face biggest threat from digital disruption

Where jobs face biggest threat from digital disruption

Imagine if in 1966 someone had said agriculture was about to be subjected to disruptive forces that would reshape both the industry and regional Australia.
The forces that would achieve this outcome within a generation are globalisation, mechanisation and farm aggregation: farms ­became bigger; efficiencies were imposed by global pricing; villages shrunk as agricultural labour was shed. Even if someone did predict this transformation, they would not have used today’s most fashionable term — “disruption”.
What will be the transformative and disruptive forces to reshape labour markets, business and Australian society over the next generation?
Perhaps the answer lies in ­Oxford in Britain. Carl Benedict Frey and Michael A Osborne are young academics who published groundbreaking research three years ago on the future of employment. They considered the structure of the US labour market to determine which jobs might be impacted by computerisation.
Frey and Osborne concluded that 47 per cent of the US workforce was at risk from computerisation. Jobs considered safe from digital disruption require pers­onal interaction, judgment and sometimes fine hand-eye co-­ordination. Such jobs include ­surgeons, dentists, childcare workers, chief executives, fashion designers, concierges, athletes, waiters and economists.
Jobs considered to be most at risk from digital disruption include insurance underwriters, mail carriers, data-entry operators, loan officers, cashiers, file clerks, taxi drivers, truck drivers, accountants and auditors and meter readers.
So impactful was this research that Citigroup commissioned the authors to extend their analysis to a fuller review of the US workforce on a city-by-city basis.
The Citigroup report Technology at Work lists which US cities are most at risk and least at risk from digital disruption based on workforce composition.
It concluded that the modestly scaled Californian city Fresno was most at risk, with 54 per cent of jobs likely to be displaced by digital disruption. High-risk cities are dominated by manufacturing, gaming and low-level white and blue-collar work.
On the other hand, knowledge centres such as Boston and Washington are considered to be less exposed. In knowledge cities, less than 40 per cent of local jobs are considered to be replaceable by computerisation and automation.
The Frey & Osborne and Citigroup work has not been transferred to Australia. Until now.
I have had one of my team painstakingly align the US labour market classification of jobs ranked by Frey & Osborne on the likelihood of digital disruption with the Australian labour market by occupation.
The alignment is not perfect due to classification differences at the margins, but it is sufficiently close to give meaningful results. New data from the 2016 census available next year will deliver ­updated results.
Whereas 47 per cent of jobs in the US are considered to be at risk from digital disruption, the proportion for Australia is 49 per cent. The capital city range for the proportion of the workforce most at risk extends from 46 per cent in Canberra to 50 per cent in Perth. Public servants are less likely to be displaced by disruption than fly-in fly-out miners, it would seem.
Australian cities most at risk ranges from about 45 per cent in the case of Ocean Grove, Alice Springs, Torquay and Gisborne to about 59 per cent at Kurri Kurri, Murray Bridge, Cessnock and Melton. Towns most at risk from digital disruption are dominated by mining and agriculture activities or are blue-collar commuter towns where there is a poorly ­developed local job market.
The same analysis can be ­applied on a suburb-by-suburb basis, where the digital disruption risk factor ranges from less than 25 per cent to more than 60 per cent. The communities most ­immune to digital disruption are the knowledge-worker ghettos of Garran, Aranda, Giralang and Pearce in Canberra, of genteel Bellevue Heights in Adelaide’s south, of Melbourne University’s Parkville in Melbourne, of Kelvin Grove in Brisbane, of acreage’s Bedfordale in Perth’s south and of university-shaped Newtown and Camperdown in Sydney.
It is instructive that there are no “immune” suburbs in Australia’s top 50 in Tasmania.
Suburbs where most of the workforce is expected to be subjected to digital disruption include Crace, Bonner and Casey on the newer edges of Canberra, Broadbeach Waters on the Gold Coast, carmaking Elizabeth in Adelaide, Kings Meadows outside Launceston, Taylors Lakes in Melbourne, Tuggerah on the Central Coast and Hillarys in Perth.
These communities are dominated by low-level white-collar and some blue-collar jobs that are deemed replaceable by artificial intelligence, digital connectivity and automation.
The difference between largely immune and largely exposed communities is highlighted in a spot comparison of the workforce in Melton and Ocean Grove.
At the 2011 census, 5.7 per cent of the Ocean Grove workforce ­described their occupation as schoolteacher (which ranks as low-risk on the Frey & Osborne digital disruption measure). In Melton, on the other, hand just 2.5 per cent of the workforce is comprised of school teachers. The Australian average is 3.2 per cent.
On the other hand, some 3.7 per cent of Melton’s workforce described their occupation at the last census as truck driver (ranks high for digital disruption). This proportion of truck drivers in Ocean Grove is 0.8 per cent. The Australian average is 1.5 per cent.
The conclusion is that the ­digital disruption revolution will impact some communities more powerfully than others. Cities, towns and suburbs will be differentially challenged as workers lose their jobs to artificial intelligence, to automation and to digital connectivity.
If the truck drivers of Melton lose their jobs to driverless vehicles, what will be the impact in that town on property values, on social cohesion, the demand for support and retraining services? Could the struggling edges of our biggest cities become the battleground of the new economy’s digital disruption?
What can communities, governments and workers do now to mitigate the risk and the impacts of change? Stand fast and resist like the Luddites? Lower expectations of remuneration, since only knowledge workers, surgeons and athletes will be generously remunerated in the skilled and digital workforce of the future?
Or should we as a nation cultivate a culture of innovation, of adaptability, of continual learning, of fluidity and of mobility in the workforce?
We might not be able to save your job, but we can equip you to adapt to a new job.
Bernard Salt is a KPMG Partner and is an adjunct professor at Curtin University Business School. Research by James Webster. See bernardsalt.com.au; bsalt@kpmg.com.au

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