COMPASS: Describe the mood of companies you work with in terms of how they view digital disruption. Are they more excited or nervous?
STEPHEN KOUKOULAS: Digital disruption is seeing winners and losers. The winners are moving with speed and agility to implement their business strategies. There is intense competition from firms looking to implement the next great idea. Their biggest fear is that some other new entrant will beat them to the punch with a new business model; thus, there is some risk that plans are implemented prematurely.
For the old establishment firms, the future is problematic. There is denial. They look for legal or other regulatory roadblocks to stop or slow the new disruptors rather than embracing change. They have generally been caught napping as the disruptors move in.
In your role as an economist, do you see a connection between digital disruption and sluggishness in the global economy? Can you explain the link?
SK : It’s definitely a contributor. At one level, the casual worker has less optimism about their financial position. The proportion of workers in regular 9-to-5 jobs with regular paychecks is falling, with more people earning erratic paychecks with no holiday pay, health care and the like. This is leading to what I call the ‘cautious consumer.’Even with low interest rates and a reasonable rate of economic growth, the consumer isn’t really spending at the speed they used to. They are saving more, not taking on too much debt. It’s not a traditional consumer-led economic growth story.
What impact is digital disruption having on jobs?
SK : It’s not just the number of jobs, but the style of work that’s changing. Before, a worker would generally show up for work 9-5, had full-time jobs, paid leave, sick days and pensions. Now we’re seeing what I call the ‘casualization of the labor force,’ where individuals just do their job on a piecemeal basis and whenever they work, they get paid. This makes it a lot more difficult for many individuals to buy a house for example, or even get a loan.
It means that workers are even more vulnerable to the economic cycle. If the economy is weak, they will have less business and fewer hours. Previously, at least some workers were at least partly quarantined from the business cycle if they worked for a firm that may have kept them on during a period of weaker economic growth.
The job numbers for bank tellers are down around 75% in 15 years. The upside for the bank tellers is that in an economy that’s growing at a reasonable pace, they can find employment elsewhere.
Some people say some form of digital disruption transition has been happening since the Industrial Revolution with the production line of automobiles. Now building cars has become much more automated … and in many cases, we’re doing it now with robots.
What are the keys to workers staying competitive and relevant?
SK : Flexibility is critical. There’s a big debate in Australia about education funding, from kindergarten to university, and this is spreading to a debate about retraining the 40-50-year-old manufacturing worker who loses their job because of technology. Society needs retraining for these people, rather than having them stuck in chronic unemployment. More effort is needed to retrain that 50-year-old who was on the production line not to be a tech guru, but to be a semi skilled worker in a different industry. The big issue is how do we create a system so obsolete workers don’t become unemployed for 20 years?
Is there any silver lining to the situation? Are there upsides once we reach the other side of it?
SK : The progress in technology is fantastic, and it’s wonderful to see how the economy is changing so fast in front of our eyes. Our lives are being transformed for the better. There are people who lose out, of course. I feel there’s a huge role and obligation for policymakers to be looking after these people where this is happening. There should be an opportunity to be retrained if you’re in an industry that’s being overtaken by technology. And those who do benefit from all these changes will be part of a highly productive, efficient economy going forward. ◆