RBA says the future of work lies in non-routine ‘thinking’ jobs

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The Reserve Bank of Australia says the best way to prepare for a future world ruled by automation and artificial intelligence is to teach your kids how to solve problems and give them a solid grounding in “core” maths and science skills that will support their ability to adapt.

Warning that the biggest threats will come in jobs that can be copied by technology, the central bank suggests the most safe sectors are in “non-routine cognitive” jobs, such as child care or architecture.

By contrast, there appears to be trouble ahead for what have been dubbed “routine cognitive” jobs, which have experienced a steady decline since the early 2000s.

One explanation, according to the Reserve Bank’s head of economic analysis, Alex Heath – who presented the findings in a speech in Brisbane on Wednesday – is that the IT revolution is exposing a new set of jobs to the possibility of automation.

Routine manual jobs have lost around a quarter of their share of the total workforce.
Routine manual jobs have lost around a quarter of their share of the total workforce. supplied

Technology has also made it possible for some routine cognitive jobs to be done in other parts of the world where labour costs are lower, she said, citing offshore call centres and back-office functions as as examples.

In contrast, non-routine jobs have become steadily more important, largely because they require problem-solving, human interactions and creativity.

“The Australian workforce may… have a comparative advantage in many occupations in the non-routine category because of our relatively high education levels,” she said.

Among jobs considered non-routine and cognitive, the fastest growing by far have been in the health care and social assistance sector, followed by professional, scientific and technical services, and education and training.

The Reserve Bank’s research shows that wages have remained relatively stable in the health sector for most of the past 15 years, a sign that the surge in demand for workers has been largely met by supply of suitably skilled labour.

Services jobs have surged, partly because they aren't so vulnerable to automation.
Services jobs have surged, partly because they aren’t so vulnerable to automation.

By contrast, in education and training, construction and mining, there has been a trend increase in relative wages over that time, suggesting the supply of workers has fallen short of demand, something that has been clearly evident in the mining boom.

Dr Heath says learning how to solve problems will increase the ability of workers to keep their skills up to date and adapt to likely technological changes.

“Encouraging this sort of investment in human capital is also important at the macroeconomic level to make sure we sustain our high living standards.”

“Just as the natural environment generally adapts to gradual changes, the workforce also appears to be able to respond to relatively slow-moving and predictable changes in demand for skills, such as those associated with the aging of the population,” she said.

Wages in the high-growth health-care sector have remained level, suggesting enough supply of labour.
Wages in the high-growth health-care sector have remained level, suggesting enough supply of labour.

“However, both the natural environment and the workforce have more difficulty adapting to rapid change.”

Finally, Dr Heath warned that technological change would have a “profound” impact on how work is organised, forcing employers to allow more flexibility and encourage “team-based styles of work”.

“There is also increasing awareness that an organisation’s ability to adapt to changing circumstances is greatly enhanced by having diversity in the workforce.”

She said within the central bank itself examples include economists with previous experience in IT project management or with strong mandarin skills.

Among jobs considered non-routine and cognitive, the fastest growing by far have been in the health care.
Among jobs considered non-routine and cognitive, the fastest growing by far have been in the health care.

Dr Heath’s speech was delivered to a function organised by the Committee for Economic Development of Australia on education and training.

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