Episode 7: Dr Ben Hamer on equipping today's Australians for the jobs of tomorrow

Episode transcript

Peter Van Onselen: Covid-19 has highlighted pre existing workforce challenges right across Australia while making them more urgent and complex. But it is not all doom and gloom. There are some silver linings and positive gains that have been accelerated by the pandemic including new ways of working, digital adaptation and collaboration.

At a policy level this has been supported by the JobMaker, JobKeeper and JobTrainer plans. In this episode we'll look at whether the 2020 Federal Budget builds on that momentum and what policies will be put into place to use jobs and skills as a key foundation for economic recovery. My name is Peter Van Onselen and you're listening to the PwC Federal Budget Podcast.

I'm joined now by Dr Ben Hamer lead Future of Work at PwC Ben thanks for your time. Before we even get into the budget and what's in it and what it might mean for the future of work and for workforces more generally. The future of work just feels like one of those things where the future is now because of COVID-19 and the profound impact that it has had. What are your thoughts on that?

Ben Hamer: Yeah it's a really interesting one Peter I think leading up to COVID-19 the rhetoric was all about the robots coming to take our jobs and really it was this microscopic invader and a coronavirus that's accelerated the future of work conversation.

I mean we've seen the world's largest work from home experiment, we've seen CBDs become quiet, a whole heap of industries have been absolutely upheaved and new industries are emerging. So overall it's been a real challenge in terms of the pandemic itself of course but from a future of work perspective it's driven some of this much needed reform.

Peter Van Onselen: I know that your clients and frankly most people are really wondering how permanent this disruption might be. How permanent do you think it is likely to be, this idea of more people working from home, less people in offices and therefore less people in CBDs and so forth?

Ben Hamer: It's a really interesting one and I think we're still all trying to really grapple with what that looks like at the moment. We've seen a lot of client conversations really be steered around returned to workplace now and to what extent they'll be either fully in the office fully, working from home or somewhere in the middle so it's really up in the air it's going gonna be different depending on different sectors and different organisations.

We're even kind of seeing already though the emergence of this city flight phenomenon where we have a lot of people who are looking at; if I don't need to be living in the inner city because I don't need to be going into a CBD office can I actually move to the regions and work from home there. So there’s a lot of questions up in the air and the next six months will be pretty telling.

Peter Van Onselen: Let me take you specifically to the budget now and not just in the general terms of what the future of work looks like but looking at what's there in relation to the workforce and particularly skills as well.

Because we know that part of the changes of course that skill sets might need to change if there is some level of permanent disruption, before we get to specifically into things more generally in the budget. What do you see as the way that they've framed it in that space?

Ben Hamer: Yeah I think it's really clear that this budget is all about jobs and skills and that that's at the heart of post pandemic economic recovery. And if I think back to the Treasurer's speech when he delivered the Budget in Parliament he set the scene by focusing on employment and rattling off some pretty hefty numbers.

So he spoke about the 600 million people who lost their jobs globally and then in Australia that in the space of one month they were over 1 million workers who either lost their jobs or had their hours reduced to zero.

He described measures as being temporary, measured and proportionate and saving around 700,000 jobs. And then the really pleasing thing that he then spoke about was that half of those who had lost their job were now back at work.

So overall I think people have called it a bit of a cash splash when it comes to jobs and skills. But personally I think is really appropriate because the cost of not getting people back to work is just too large. And as the Treasurer said when he delivered the budget more people in jobs is going to equal a stronger budget position.

Peter Van Onselen: And what about the numbers because some economists have made the point that they're fearful that the unemployment rate may be higher than is being forecast depending on what happens for example in JobKeeper comes off. Is that something the client should be worried about as well?

Ben Hamer: Yeah absolutely. I mean JobKeeper does shield the true extent of what the unemployment numbers look like and we know that some of the modelling that was done in the budget is based on some pretty bold assumptions around boarders opening and a vaccine becoming available.

So I think come the May 2021 budget there'll be a lot of attention given and a lot of expectation around how that goes about driving more longer term growth for the job market and some more structural reform there.

But what it also tells me though is I think that the Treasurer said in his budget delivery speech that they're expecting unemployment to jump to 8% by December 2020. And if we think about what's happening across the country different states are having very different experiences right now. So you've got Victoria that's still currently in lockdown whereas in Perth in August 2020 job advertisements were up by 10% from the same time the year prior.

So it's a really different picture and organisations are going to have to take a real jurisdictionally specific approach when they think about talent attraction and retention

Peter Van Onselen: What should PwC clients be aware of or be cognizant about when it comes to something like for example the youth wage subsidy within the budget?

Ben Hamer: Yes. So I think that the young Australians were a real focus of this budget and there was obviously the announcement of the JobMaking hiring credit. So $200 a week for 12 months for 16 to 29 year olds and $100 for 30 to 35 year olds if they meet the criteria around coming off particular programs and that's expected to create 450,000 jobs for young people.

There's the $1 billion dollar job training subsidy to provide low cost training for school leavers, $1.2 billion dollars to fund 50% of an apprentice's wage for up to 1000 places and then just before the Budget the Treasurer actually announced the fringe benefits tax exemption for skills training which kind of flew under the radar but it is a tax incentive to encourage employers to go at that upskilling and reskilling that people as well.

Peter Van Onselen: So you've moved into that skills base a little bit there which was essentially my next question. Do you think there's enough in the budget for retooling reskilling to be able to ensure that workers who perhaps for example have lost jobs or are at risk of losing their jobs can ensure that they move with the change in times?

Ben Hamer: Look we did expect skills to be a bit of a highlight in the budget and there definitely was an incentive or an emphasis on incentives to support upskilling and reskilling efforts particularly around cushioning the impact from the massive drop in skilled migration but then also to support re-engagement and reemployment in the labor market.

I mean on top of what I've already just said you've got 50,000 higher education short courses around key areas of growth in demand say agriculture, health, I.T. science and teaching. The Commonwealth supported places in higher-ed and the 2000 Indigenous student places in the Clontarf program as well to support First Nations education and employment. There is quite a significant amount of programs and policies that were announced in the budget. What I think is most interesting is the narrative that it paints around the different demographics across young Australians, older Australians and females.

Peter Van Onselen: Well let's build off that. I mean there are those different cohorts within the working community in these different amounts of support.Do you share any of the concerns that I've seen expressed publicly by some people about for example they're not be more being done for older workers?

Ben Hamer: There's been a lot of questions around why the focus on young people specifically which is probably worth just going into a little bit of detail to give the context around why and then the older Australians.

So we know that in a recession young people are hardest hit when it comes to employment and they're also the last to bounce back and when you look at unemployment figures in Australia young Australians who are 25 and under have an unemployment rate that's more than double that of the national average which in pre COVID times equated to almost $16 billion in lost GDP.

And then not only this, the research then also shows us that young people are unemployed for longer and if they can't find meaningful employment under the age of 25 they're going to face a future of welfare dependency which is just going to cost taxpayers more in the long term.

So it's really important that the government did have a focus on young people but naturally there is that concern then that it does raise around older Australians who did face and do face their own unique issues through the pandemic with a lot of older Australians laid off pre-retirement and a lot of them dipping into their super as part of one of the government's schemes.

Which means that we can expect to see people staying in the workforce for longer and exacerbating what we were already predicting around the ageing workforce while at the same time these incentives to employ younger workers could unfairly discriminate against older workers.

So I do say that it's a concern and something to keep our eye on but I think my time will tell as to how that plays out.

Peter Van Onselen: Ben let's get into some of the specific areas within the budget when it comes to workforce and skills. Construction and manufacturing - big hot topics certainly from the political class even before we saw the budget handed down. What do you see in that space?

Ben Hamer: It's a really interesting one with regards to some of the industries that the government did decide to back in this budget. So as you say construction had $14 billion in new and accelerated works and then manufacturing as well with $1.3 billion through the job make platform.

I think that the manufacturing sector particularly is going to be an interesting one to watch because what we've seen in the past is the government pre-covid actually predicting a decline in the manufacturing sector. It was one of only a couple of sectors they predicted a retraction. But because obviously the pandemic has driven trade uncertainty and the prevalence of nationalism there's now this focus on domestic production.

So to me that test will really come to say whether or not we've shot ourselves in the foot by winding back and offshoring the manufacturing sector over the last few years. And what that means in terms of skills availability. Altogether backing these sectors really makes sense because they’re roles with low barriers to entry which means that we can get people back into the workforce quicker. But the concern that comes with it is whether or not it could drive gender inequality because it really does focus on some male dominated professions.

Peter Van Onselen: Well let's talk about women in the workforce in particular which I think is what you're alluding to there. And also I suppose any issues around cyber and how that's changing workforce practices. What do you see in those spaces?

Ben Hamer: With regards to cyber. There were a few announcements in the workforce that really backed that and shows the transition towards a more digitally connected and enabled workforce. So when it comes to cyber security and digital literacy more broadly it's this piece around the expectation of workers reskilling and upskilling in some of their digital capabilities and we know the government's got incentives around how you can go about doing that. Whether or not it's through dedicated programs to school leavers or focusing on my career credentials.

When it comes to women, it's a really interesting one because there's some concerns around whether or not this budget's going to further exacerbate what's called the Pink Recession. So what I mean by that is that with the pandemic women were impacted much more than males at first. And when it comes to workforce participation and employment they'll be the slowest to recover because we see females have higher representation in sectors like tourism, hospitality, retail and accommodation services.

And while there's some explicit policies in the budget which is really awesome to see, it's the implicit impact of other announcements that’s to the detriment of females. So there's a fair bit of criticism around the lack of social policy and associated fiscal measures in the budget. What the international research actually tells us is that the social system creates five times more direct jobs than construction and that these jobs are predominantly in female dominated roles.

Plus then there was childcare, which was another obvious mission in the budget which we know disproportionately impacts female participation while at the same time there was the funding injection for male dominated industries. So the second Women's Economic Security Statement does go part of the way to supporting female participation but it's really some of those indirect impacts that could drive the pink recession.

Peter Van Onselen: There's been plenty of references to concerns about more needing to be done for women in the workplace. But there are also measures to try to help women into work in the budget. Can you take us through some of those details?

Ben Hamer: Absolutely. And it was really positive to say that there was some deliberate measures around supporting female participation given the disproportionate impact when it comes to female employment from the pandemic and the key one there was the announcement around the second Women's Economic Security Statement. And so that really talks about investment in job creation, entrepreneurialism, safety for women and also driving participation in STEM.

And what this is really focusing on is some of those areas where females have been traditionally underrepresented in the workforce. So we know with science, technology engineering and math we need to drive greater female participation. And similarly the focus on entrepreneurialism comes from a real darth of females driving startups and emerging businesses as well so hopefully we can start to say this stimulate some of that activity and female participation.

Peter Van Onselen: You referred earlier to the drop off in immigration including skilled immigration or referred to in the budget at least temporarily before it picks back up. How much should PwC clients be looking at that? And what sort of planning do they need to make in your view for that reality?

Ben Hamer: Yeah to be honest we probably expected a little bit more in the budget around skilled migrants and skilled migration. It was fairly light on. I mean that the Treasurer did talk about net overseas migration being expected to be negative for the first time since 1946.

And so when it comes to the budget it's not just about how do we help unemployed people with upskilling and reskilling but also being really conscious of the hole that's left by the stark decline of skilled migrants. What this means for organisations is really a focus on how they go about retaining and then retraining and redeploying their staff internally rather than necessarily relying more on the job market more broadly.

Peter Van Onselen: You've alluded to some of what needs to come next in relation potentially to that issue around skilled migration. What else when you look at this budget not so much he's missing but more is there is what is required is a next step come May when we have a sooner than usual follow up budget?

Ben Hamer: Yeah. So I think that there are a couple of things that we can expect to come maybe not more so in a budget sense but to support a lot of these measures there does need to be significant industrial relations reform to support flexible work practices and provide worker protections. So the pandemic really did highlight the vulnerability of certain demographics will sort of set employment types like the gig economy. So we can expect to see a lot happen in the background in the lead up to the next budget around that.

And the Social Services Minister has also come out and said that there will be more announcements about JobSeeker before the end of the year because there was some concerns around an absence of the uplift in the JobSeeker rate. Beyond that though I think we really will start to see in the next budget more longer term measures. This is very much around how do we try and stimulate short term growth in the labor market to bring down unemployment. But it doesn't necessarily drive the structural reform that's necessary.

Peter Van Onselen: You mentioned workplace reform workplace relations reforms the Liberal Party has traditionally been at the vanguard of such changes. Do you see an appetite for that and more importantly I suppose from your perspective with your expertise do you see a real necessity for that? You certainly alluded to it.

Ben Hamer: I think that we're still using quite outdated industrial practices for a 21st century economy and with the scale and pace of change in the labor market and in the workforce at large we really need to make sure that the IR capability catches up.

We are starting to see that happen though particularly at a state based level. For example, Victoria is currently undertaking an inquiry into the future of the gig economy, which is in response to perceived concerns around the exploitation of gig workers.

We're also starting to say a lot more cases come up in the Fair Work Commission that are quite complex and challenge the nature of some of IR guidance. For example, there are cases where someone spilled a cup of tea on themselves at home but they've classified the home as a work place and so they’ve received compensation as a result of it.

So it's those sorts of instances that will keep occurring which are going to nudge the system forwards.

Peter Van Onselen: Dr Ben Hamer lead future of work at PwC. Thanks so much for your time.

Ben Hamer: No worries thanks for having me.

Peter Van Onselen: Thank you for listening to the PwC 2020 Federal Budget Podcast. We hope you enjoyed our commentary. For additional in-depth analysis head over to pwc.com.au/federalbudget where you will find articles and information about the 2020 Federal Budget and what it means for the economy, our society and you. This PwC 2020 Federal Budget podcast brings together experts to explore what the budget means for you and your business.

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