Video killed the radio star…or did it?

In its most recent research paper analysing the effects and possible responses to digital disruption, the Productivity Commission observes that with each wave of change “speculation about the effects of technologies often suffers from extreme optimism or pessimism”.

While perhaps raising more questions than it answers, the Productivity Commission focuses on the potential of digital technologies to deliver economic benefits if regulated appropriately.

Automation

It has been predicted that over the next 10 to 15 years, up to 40% of jobs in Australia will be put at risk because of automation. However, the outlook probably isn’t so grim, when you consider that:

  1. automation of tasks has been occurring for centuries, sometimes with surprising effects. The automation of bottle making in the early 1900’s for example not only jolted productivity but also eliminated child labour from that industry.
  2. automation does not necessarily equate with an increase in unemployment because new jobs are often created. For example, higher skilled jobs may be created to complement new technology.
  3. certain jobs are not susceptible to automation – for example, managerial, creative and caregiving roles.
  4. just because a job can be automated, doesn’t mean it will be. As anyone who has attempted to drop off their baggage at an airport knows (or maybe it is just us!) there are times when a machine or computer is no substitute for a human being.

On the other hand, the Productivity Commission acknowledges that automation will replace some jobs. Young people with little experience and low skills and older people in industries subject to major structural change are especially vulnerable to unemployment or underemployment.

The sharing economy

Online sharing platforms like Uber and Airbnb and the spread of mobile technology gives rise to the potential for businesses to buy services on an “as needs” basis. This may also create opportunities for people to work flexibly, control their working hours and supplement their income.

However, the sharing economy remains small and its growth is uncertain. While some commentators have predicted that secure employment will soon give way to an endless series of “gigs” (see our previous blog The sharing Economy – what’s the potential?), the Productivity Commission says that employers will be less likely to hire labour in a range of circumstances including where there is:

  • high interdependence between workers;
  • concern about the expropriation of intellectual property;
  • difficulty controlling the quality of work provided by contractors; and
  • the need for loyalty and/or in-depth knowledge of the business.

The report notes that if the sharing economy does take off, there will be risks to be managed by government – but simply blocking these technologies is not the answer (pardon the pun, but it really is a case of we can’t rewind, we’ve gone too far). Rather, systemic changes to the workplace relations and income support systems may be required to support individuals who engage in the workforce in this way.

Further insights and recommendations can be found in the Productivity Commission’s research paper – Digital Disruption: What do governments need to do?”.