Pandemic: inconvenient for the privileged, rough on the poor

The popular coronavirus refrain that "we're all in this together" is a call for everyone to pull together and be more conscious of the interests of others, not just our own. What it's not is a statement of fact.

Far from it. When you take a closer look, what you see is inequality and injustice – on many dimensions. Some of these have been created by the way our governments have decided who gets help to cope with the pandemic and who doesn't.

But others are the consequence of our politicians going for years pushing problems under the carpet because fixing them would just be too expensive for taxpayers.

You and I have generally been content for these problems to be kept out of our sight. But the virus has drawn these injustices to light. In some cases, the victims have continued to suffer in silence. In others, they've continued going about their business in ways that have undermined our efforts to limit the virus's spread.

Like many of us, no doubt, I've been aware of much of this. But the recent writings of Dr Stephen Duckett, of the Grattan Institute, have brought it together in a way that's shocked me. Duckett is the nation's leading health economist. Most of what follows comes from him.

His account begins at the beginning. We congratulate ourselves that we were quick to block the arrival of foreigners who could be bringing the virus with them. We closed our borders to China early, and soon added Iran and South Korea to the list. A planeload of repatriated Chinese Australians from Wuhan was quarantined well away from us at the Christmas Island detention centre.

"However, we baulked when countries like us – white and wealthy – began to show higher levels of infection," he says. "Italy had higher levels of infection than the Asian countries, but our borders remained open to Italians."

The United States was the next source of infections. "Some Aspen skiers, returning home, brought the infection with them. They were asked, probably politely, to self-isolate in their Portsea beach houses. They did not, and the virus spread. The first wave of infections was mostly these international transmissions, returning travellers, probably wealthier than the average Australian."

At that time we didn't know much about the virus, except that it seemed to have started in China. With people of Chinese appearance being vilified in the streets, Australians were not shown at their best (or brightest).

Look at Victoria's second wave, however, and you see people at the other end of the income scale helping to spread the virus and being its greatest victims. Low-paid and poorly trained hotel-quarantine guards, with precarious job security, were the human channels from supposedly quarantined travellers to the guards' families and friends.

It was not by chance that the first areas in the renewed lockdown were social housing towers where immigrant families lived cheek by jowl. "Communication problems with residents were exacerbated by the authorities' failure to adequately recognise the need for cross-cultural communication. And the authorities in turn seemed not to trust the residents, with whom they had little contact," Duckett says.

Generations of neglect of public housing have caused overcrowding in the estates and created the conditions for rapid transmission of disease. The same could be said of jails, where our enthusiasm for locking up offenders has not been matched by our enthusiasm for building new prisons. Then, of course, there's our neglect of residential aged care.

When you think about it, the device of limiting the spread of the virus by locking down large parts of the economy and encouraging people to stay in their homes inevitably hurts the poor more than the well-off.

As a general rule (to which there will always be exceptions, without that stopping the rule from holding much truth), the more skilled, better paid and permanent jobs can be done safely from home, whereas jobs that involve the face-to-face delivery of services are more likely to be less skilled, less well-paid and less secure.

Many of these jobs – particularly in hospitality and tourism – just disappeared, while others kept going, but with greater risk of becoming infected. Health workers were particularly exposed, often with inadequate access to personal protective equipment. Disgracefully, this sometimes led to them being shunned in public.

The "flexibility" afforded by the growth in part-time and casual work has been of great benefit to employers and some benefit to young parents and full-time students. But when casuals work multiple jobs to make ends meet, any infection spreads further. And when they lack paid sick leave, their temptation to keep working despite symptoms is great.

Then there's our treatment of overseas students and others on temporary visas. The moment their costs exceed their benefits to us, we cut them adrift without a shilling.

"The privileged among us have been inconvenienced by the pandemic; the vulnerable have suffered and in some cases died because of its unequal health and economic effects," Duckett concludes.

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Women are making themselves at home in the workforce

In the world of paid work, women still have a lot to complain about: unequal pay and promotion, still-inadequate childcare, and a tax and benefit system that discourages “secondary earners” from working more.

All true. But don’t let this conceal from your notice the success women are having at flooding into the long male-dominated workforce and slowly reshaping it to their needs.

In my never-humble opinion, for as long as girls continue making themselves better educated than boys, it’s only a matter of time before women are calling the shots.

Reserve Bank deputy governor Dr Guy Debelle highlighted women’s growing role in the labour market in a speech he gave last week.

You’ve no doubt heard the government boasting about how strongly the number of jobs has grown on its watch. It’s true. The rest of the economy hasn’t been doing well – wages, the standard of living, for instance – but employment has been growing at the disproportionately strong annual rate of about 2.5 per cent over much of the past three years. As a consequence, a near-record 62.6 per cent of all Australians aged 15 and over have a paid job.

But here’s what the pollies never mention, but Debelle noted: women accounted for two-thirds of the additional jobs in the past year.

This means the rate at which working-age females are participating in the labour force is now at its highest. So with female participation continuing to grow strongly over the decades, while male participation has fallen back, the gap between male and female participation is the narrowest it’s been.

Similarly, if you look just at the gender of those with jobs, women’s share is now above 47 per cent. Similar trends are occurring in all the advanced economies, of course.

Debelle says “changing societal norms and rising educational attainment have contributed to more women moving into ... employment outside the home. Female participation has also been influenced by the increasing flexibility of working-time arrangements, the availability and cost of childcare and policies such as parental leave.”

True. There was a time when most employers thought in terms of full-time workers and not much else – an attitude reinforced by the male-dominated unions. The increasing use of part-time employment has greatly added to the “flexibility” with which employers can deploy labour within their businesses, and no doubt helped to make them more profitable.

But the fact remains that the advent of part-time employment has been a boon, first, to women seeking a career as well as motherhood, then to full-time university students seeking income while they study, and now to many older workers seeking a mid-point between the extremes of full-time work and retirement. So the dread “flexibility” can benefit workers as well as bosses.

Debelle says that the participation rate of mothers with dependent children has kept increasing, rising by 10 percentage points since the early 2000s to 73 per cent. Over the past decade, the rise has been most pronounced for mothers with children aged up to 4.

Of those returning to work within two years after the birth of a child, an increasing majority are citing “financial reasons” as their main reason for doing so. Others returning to work cite “social interaction” or to “maintain career and skills” as their main reason.

Financial reasons could be capturing a number of considerations, according to Debelle, including low growth in wages, the rise in household debt or childcare costs.

Research suggests the cost and quality of childcare does have a significant effect on the willingness of women to do paid work, he says. According to the HILDA survey – of household income and labour dynamics in Australia – the share of households using (more expensive) formal childcare for young children has increased notably over the past decade.

Even so, access to childcare places and financial assistance with childcare costs remain “very important” issues for mothers not back at work.

Debelle says the rise in the level of mortgage debt owed by households in recent decades has “broadly coincided” with the increase in women’s rate of participation in the labour force. But which one’s causing what?

Are debt levels higher because more households have two incomes and so can afford to borrow more? (If so, that would suggest the increase in second incomes is helping to push up house prices.)

Or does the need to borrow more to afford the higher prices drive women’s decisions to go back to work? Maybe the low growth in wages in recent years has caused couples to have more debt than they anticipated and thus needing to work more to pay it down.

What little research evidence there is has usually found it’s the higher debt levels that lead to more women going back to work, but the evidence isn’t strong.

Looking beyond the continuing increase in participation by the mothers of young children and the ever-growing workplace role of prime-aged women – 25 to 54 years – of which it is part, women also account for a big part of the swing from early to later retirement.

Do you realise that 60 per cent of women aged 55 to 64 are taking part in the labour force? That compares with 20 per cent or so before the turn of the century. And the rising participation by women 65 and over isn’t all that much less than for men. Times change.

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For every problem there’s a job, and no shortage of problems

With the economy subsiding in a heap within days of Scott Morrison winning re-election thanks to the Coalition’s superior economic management skills, he and his ministers are being swamped with helpful hints about how they can get things moving again.

The business lobby groups are proffering some novel solutions: what would do the trick is to cut the rate of company tax and reform industrial relations so the unions are no longer running the country and extracting exorbitant pay rises from employers.

But, in doing what they always do, the lobby groups are selling business short. The conclusion I suspect our smarter business people are drawing is that the surprise re-election of a government that isn’t able to agree on many policies means that if they’re waiting for these guys to fix their problems, they’ll be waiting a long time.

We’ve entered the DIY economy: if you’ve got a problem, fix it yourself. Since the government can’t agree that climate change is more than a lip-service problem, the electricity industry will have to find its own solution.

Same goes for our low rate of productivity improvement. The nation’s productivity improves when the nation’s businesses work smarter, not from government planes dropping policy cargo from the sky.

That’s what I like about a new report from Deloitte Access Economics, The Path to Prosperity: Why the future of work is human.

According to its lead author, David Rumbens, “we don’t face a dystopian future of rising unemployment, aimless career paths and empty offices. Yes, technology is driving change in the way we work, and the work we do, but it’s ultimately not a substitute for people.

“Technology is much more about augmentation than automation, and many jobs will change in nature because of automation, rather than disappear altogether. We can use technology to our advantage to create more meaningful and productive jobs, involving more meaningful and well-paid work.”

Rumbens’ boss, Richard Deutsch, says that “for every problem there’s a job, and the world isn’t running out of problems”.

Just so. The report disputes the popular notion that robots will take our jobs. “Technology-driven change is accelerating around the world, yet unemployment is close to record lows, including in Australia,” it says.

“New technologies will have the capacity to automate many tasks, but also create as many jobs as they kill, and employment is growing in roles that are hardest to automate.”

Another mistaken notion is that people will have lots of different jobs over their careers. Despite all the things people who wouldn’t know try to tell you, overall, work is becoming more secure, not less. Australians are staying in their jobs longer than ever.

The gig economy is not taking over, and the proportion of casual jobs isn’t changing, despite what the unions claim. This is not opinion, it’s statistical fact.

Why are jobs becoming more secure rather than less? Because, with more tasks being done by machines, the kinds of skills employers need their workers to possess are changing. And the skills employers increasingly need are in short supply.

When you find people who possess the skills you’re looking for, you don’t make them casuals, you try to keep them. If they left, they’d be hard to replace. That’s particularly true if they’ve acquired those skills on the job – at the boss’s expense.

It shouldn’t surprise you that employers’ demand is shifting from manual skills to cognitive skills – from the hands to the head – and from routine to non-routine jobs. Manual and routine white-collar jobs are most easily done by machines.

What may surprise you is that, as machines get better at doing routine cognitive jobs, employers increasingly require skills of the heart rather than the head – the “soft skills” needed for “interpersonal and creative roles, with uniquely human skills like creativity, customer service, care for others and collaboration, that are hardest of all to mechanise”.

Such heart skills will be needed most in the services sector, where people rather than machines are the key to driving how value is created – government services, construction, health, professional services and education.

So, what must the government be doing to meet this need? The report doesn’t say. Its focus is on what employers – private or public – should be doing.

“With skill requirements changing faster and becoming more job-specific [good point], the future of work will require much more, and much better, on-the-job learning than Australia has today,” it says.

“Business leaders will have to make active choices, and just buying skills won’t be enough, they will have to adopt an investment frame of mind, and train them.

“With investment in on-the-job training cheaper, more relevant and more focused than classroom learning, the future of work will be a combination of learning and work integrated into one. And refreshing the skills of current, experienced workers will be just as critical as producing students and graduates with the skills they need.

“By making workers smarter and better suited to the jobs of the future, and improving the match between what businesses need and what workers have, we will make our workplaces happier and more productive.”

Who’d have thought one of the big four chartered accounting firms could talk so much sense?

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More jobs for older workers than ever before

“Too old, too senior, too experienced, too expensive – heard ’em all. Ours is a society which does not value age and lived experience. Over 50? It’s the scrap heap for you.”

I can’t remember where I saw that quote, but I bet you’ve heard those sentiments many times. The media are always bringing us stories about people who, having lost their job in late middle age, find it very hard – even impossible - to get another one.

It’s understandable that people experiencing such treatment get pretty bitter about it. And it’s not surprising the media and the politicians take their complaints so seriously. The federal government has appointed successive age discrimination commissioners, and instigated various schemes offering subsidies to employers willing to hire older workers.

All of which is just as likely to increase prejudice as reduce it. The more public figures bang on about the prevalence of age discrimination, the more they risk sending a message to employers that if everyone else is ridding themselves of older workers, why aren’t they?

And if older workers weren’t sub-standard, why would the government find it necessary to subsidise their cost?

It would be silly to deny that some employers are prejudiced against older workers – just as some are prejudiced against young workers (an injustice the media are far less eager to tell us about).

But it’s just as silly to leap from the truth that some proportion of older workers has trouble finding re-employment to the outlandish claim that every worker over 50 is headed for the scrap heap.

I don’t know the true extent of discrimination against older workers, but I’m pretty sure we’ve been given an exaggerated impression of it, with many older workers caused to worry unnecessarily.

If there was any truth to the notion that everyone over 50 is headed for the scrap heap, we should be seeing a sharp decline in the rate at which people over 50 are participating in the labour force.

But we’re not. Indeed, the reverse is happening. The statistical truth is that the participation rates of older age groups are higher than they’ve ever been – a point Reserve Bank governor Dr Philip Lowe made in a little-noticed speech last year.

The ageing of the population – and, more particularly, the retirement of the baby-boomer bulge – means the proportion of older people working should have declined. Remarkably, it’s increased.

There was a time when early retirement was all the rage. As soon as you could retire, you did. And a lot of workers were retired involuntarily.

But those days are long gone. The age at which men and women are retiring keeps rising. In the 1980s and ‘90s, less than one worker in 10 was over 55. Today it’s almost one in five.

Since 2000, the “participation rate” for men aged 55 to 64 has risen from 60 per cent to about 67 per cent. The rate for women has been rising since the early ‘80s – from 20 per cent to 60 per cent.

For men aged 65 and over, the participation rate has risen since 2000 from 10 per cent to almost 20 per cent. (Read that again if it didn’t sink in.) For women in the same age group, participation has gone from a per cent or two to about 10 per cent.

The big news is that older people are staying longer in the workforce than ever before, but the story we’re being fed is that employers are discriminating against older workers wherever you look.

How has this remarkably under-reported truth come about? Partly for negative reasons. The higher cost of homes has caused people to take on mortgages later in life, meaning some people have higher levels of mortgage debt as they approach retirement and don’t want to stop working until it’s paid off.

The knowledge that we’re living longer – combined with the super industry’s unceasing efforts to convince us we haven’t saved enough – has prompted some people to delay their retirement.

Governments have lifted the age pension age to 65 for women, and are now phasing the age for both sexes up to 67. They’ve also raised the age at which you may access your superannuation savings.

But then there are the positive reasons. The present generation of older workers is much healthier than earlier generations.

And we’re living longer. Which makes it hardly surprising we’re working longer. Of course, another factor that’s helping is greater acceptance by employers of “flexible work practices” – including allowing workers to shift from full-time to part-time. That is, there’s been a rise in semi-retirement.

Then there’s the fact that more and more people work in the services sector, in jobs that tend to be less physically demanding.

But perhaps the biggest factor is the delayed effect of the trend for most mothers to return to the workforce after childrearing. Now more of them are still working decades later.

Oldies are always expounding on the supposed shortcomings of the younger generation. But there’s one respect in which oldies set youngsters a bad example: they’re champions at feeling sorry for themselves – even when the facts don’t back them up.

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Positions vacant: economists (women preferred)

Never in the field of economic conflict was so much analytical effort devoted to so few... as in Reserve Bank governor Philip Lowe’s one-man crusade to save the economics profession.

This latter-day Lord Kitchener wants more young Australians studying economics at high school and university, then enlisting as economists in the holy war against economic inefficiency.

His message: Your country needs you. Opportunity cost is being flouted on every hand, yet we have just 3000 professional economists fighting the tide of economic illiteracy.

Young women, in particular, should look at themselves in the mirror and ask the hard question: what good reason have I not to become an economist? Why should I squander my life on any lesser calling than the orderly regulation of mammon?

And let’s have no weak excuses that you know nothing about being an economist – what kind of people they are, what they do, where they work, how hard it is to find a job. Not forgetting a question that could cross the mind of someone with the right stuff to be a dismal scientist: how well does it pay?

Field marshal Lowe has had his people working night and day scouring data bases far and wide to answer all such questions. Rochelle Guttmann (ably assisted by James Bishop, a mere male) does so in the subtly titled paper, Does It Pay to Study Economics? taken from my rapidly dwindling pile of unused reports, seasonally adjusted from 2018.

According to the 2016 census, fewer than 3000 people work as economists, even though there are 73,000 people with post-school qualifications in economics. What’s worse, only about two-thirds of people working as economists actually hold a qualification in economics.

But this is misleading. It’s not nearly that bad. For a start, the 3000 excludes about 2000 academic economists, who are classed as university lecturers. More significantly, to be classed as holding a qualification in economics, you must have that word in the name of your degree.

This is silly. In the day, the title of your degree said as much about which uni you went to as about the subject you majored in. Economics majors at Melbourne or UNSW walked away with a BCom, whereas accounting majors at Sydney got a BEc.

Little wonder people holding an “economics” degree are more likely to work as an accountant than as an economist. And you can forget the notion that a third of working economists are unqualified academically.

Returning to the recruiting drive, the authors make two observations about the huge disparity between those having done an economics degree and those getting a job as an economist.

First, it probably shows it’s hard for someone with an economics degree to actually get a job as an economist (ie, S > D). But it probably also shows that an economics degree is generalist in nature and provides a breadth of skills that allows you to work in a broader range of jobs compared to other degrees.

Get this: “80 per cent of economics graduates work in high-skilled white-collar occupations”.

More than a third of economists (narrowly defined) work in public administration, well over a quarter in private-sector professional services and about 15 per cent in financial services. But people with economics degrees work in a broader range of occupations and industries than people with degrees in most other fields.

Whether you’re talking economists or people with economics degrees, more than 60 per cent of them are men. Lowe believes – as does his teenage daughter, apparently – this disparity must be corrected. (The daughters of powerful men are far more influential than is commonly understood.)

Now to the question no economist would regard as sordid. Figures from the Australian Tax Office say economists have hourly earnings that put them in the top 3 per cent of earnings by occupation.

Graduates with economics degrees typically have higher full-time earnings than other graduates. They’re comparable with STEM (science, technology, engineering and maths) degrees, and higher than for business and other social science degrees.

Guttmann and her male sidekick say the labour market tends to pay the highest wages to people with the skills, abilities and knowledge that are in shortest supply [relative to employers’ demand].

So which skills make economists well-paid? Apart from their knowledge of economics, economists have skill in maths that’s way above the average for other skilled occupations, and above-average analytical skill, for reasoning and problem solving (which is what brings the big bucks).

Looking for the catch? You’ve found it. If you’re weak on maths, you might be happier as a journo.

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All the things that aren't causing weak wage growth

There's just one problem to remember before we work ourselves into a complete tizz over the War on Wages, convincing ourselves globalisation and digital disruption mean we'll never get a steady job or a decent pay rise again.

It's this: so far we've heard a lot of suspiciously confident predictions about the way robots and digitisation are about to destroy millions of jobs, a lot of anecdotes about law-breaking employers, a lot of scary stories about "the gig economy" and "portfolio jobs", a lot of adults assuring impressionable school children they'll have 10, or is it 17, different jobs in their working lives, a lot of propagandising by the unions about the rise of "precarious employment" and a lot of speculation about how all this somehow explains why wages growth is the slowest it's been since the early 1990s.

Know what we haven't got a lot of? Hard evidence that any of all that has actually started happening to any significant extent.

This is not to say some version of all that won't happen at some time in the future. I can't say it won't since I don't know that the future holds, unlike all the self-proclaimed experts with their precise predictions.

(Next time you hear someone telling you exactly how many jobs robots will have destroyed by 2020, or how many jobs or occupations you'll have in the next 40 years, ask yourself this question: How – would – they – know?)

But if there's no evidence this frightening future has got going yet, there's no way it can explain why wage growth has been so weak for the past three or four years.

For once, let's take a close look at what we actually know has been happening.

It is true that, as we saw in this column two weeks ago, the structure of occupations in the workforce is changing. Research by Dr Alexandra Heath, of the Reserve Bank, shows the share of routine jobs has fallen by 14 percentage points, while the share of non-routine jobs has risen by 14 points.

Similarly, the share of manual jobs has fallen by 5 percentage points, while the share of cognitive jobs has risen to the same extent.

But this is a long-term trend. These figures are for the change over the 30 years to 2016, and there's no sign of the trend accelerating over recent years.

A lot of detailed – and reassuring – research on the official statistics has been done by one of our leading labour-market economists, Professor Jeff Borland, of the University of Melbourne, and reported on his website, Labour Market Snapshots.

For one thing, Borland's been searching for evidence that our jobs are being taken by robots – and failing to find it. He breaks the issue into two parts.

First, has computerisation reduced the total amount of work needing to be done by humans, as many people assume?

No. The total amount of work available per head of population has bounced around with the ups and downs of the business cycle but, overall, has shown no downward trend. The latest figures show, if anything, a bit more hours of work per person than there were in the mid-1960s.

Second, consistent with Heath's research, Borland finds evidence that the progressive introduction of computers, which began in the early 1990s, is probably changing the types of jobs being done by workers.

But he, too, finds that the pace of change in the composition of employment "is no quicker today than in the period before computers".

"So while computers may be having some impact on the Australian workplace, most claims about their impact are vastly overstated," Borland concludes.

Next, Borland shines his statistical spotlight on all the claims about work becoming more insecure or "precarious".

You don't have a proper, full-time permanent job. You get a bit of work here and a bit there. If you do have a job, it never lasts long.

The Australian Bureau of Statistics has long published figures for job "tenure" – how long people have been with their current employer.

If all the talk of growing instability was a genuine trend – as opposed to the experience of a relatively small number of individuals – you ought to be able to see it in the job tenure figures.

But you can't. The reverse, in fact. Borland finds that, from the early 1980s to the present, the proportion of workers who've been in their job for 10 years or more has been steadily increasing. This is greatest for women, for whom it's gone from 12 per cent to 25 per cent.

At the same time, the proportion of all workers in their job for less than a year has been decreasing.

Next, how insecure do workers feel? When the bureau asks employees whether they expect to be with their present employer for the next 12 months, the proportion of men who don't has been steady at about 9 per cent between May 2001 and May this year.

Over the same period, the proportion for women has fallen steadily from 11 per cent to 9.5 per cent.

From all the talk, you'd expect the proportion of employees working for labour hire companies and temporary agencies to be rising strongly.

It ain't. Actually, between 2001 and 2015 it's fallen from a tiny 3.1 per cent to a tinier 2.2 per cent.

And though it's true the proportion of jobs that are part-time is continuing to rise, over the 10 years to 2016 it rose at the slowest rate for any decade since the mid-1960s.

Of course, none of this is to deny that wages growth in Australia has been surprisingly weak for several years, as it has been in other developed economies.

But in our guessing game about what might be causing that weakness, let's not get too fanciful.

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Occupations are changing as the jobs total grows

Have you heard that most of the jobs being created in the economy these days are part-time? No? Good. Yes, you have? Sorry, your info's out of date.

It was true last year, but not this year. As this week's figures for the labour force from the Australian Bureau of Statistics showed, of the 176,000 additional jobs created in the first six months of this year, 93 per cent were full-time.

That, BTW, was an exceptionally rapid annualised rate of growth of 2.9 per cent. Doesn't sound like the economy's dead yet.

Admittedly, it was a very different story last year. The calendar year saw growth in total employment of just 100,000 jobs – a very weak 0.8 per cent – of which 135 per cent were part-time.

Huh? Think about it: there must have been a fall of 35,000 in the number of full-time jobs. And there was.

It was a particularly bad year, and with all the happy scare stories about the rise of the "gig economy" it was enough to convince a lot of education-leavers that their chances of ever getting a decent, full-time job were low.

Moral: don't count your nightmares before they've hatched.

Dr David Gruen, a deputy secretary in the Department of Prime Minister and Cabinet, noted in a speech this week that "the displacement of jobs by technology ... is one of the developments that is leading to a sense of unease among many in the community."

People may fear that their own job may be taken over by a machine, or worry there'll be insufficient meaningful jobs for their kids.

Maybe, maybe not. Before we leap to cataclysmic conclusions, Gruen reminds us that fears of technological advances rendering many jobs obsolete is an idea with a long pedigree – back to the Luddites going around smashing machines in the early 1800s.

In the 200 years since then, employers have never ceased seeking out the newest and best labour-saving technology, but so far this has failed to cause mass unemployment.

Coming to today, Gruen says there's little sign of a quickening in the rate of change in occupations that might signal big, new technology-driven changes in the labour market. Nor is there any sign of the rapid improvement in the productivity of labour that you'd expect to see if there was widespread replacement of workers with machines.

But what's been clear for some time, he says, is that jobs across the economy are not equally susceptible to being displaced by technology and automation.

"Routine or predictable tasks are more susceptible to displacement than non-routine tasks. This observation applies to both manual and cognitive tasks – whether manual or cognitive, routine tasks are easier to automate than non-routine ones."

Dr Alex Heath, of the Reserve Bank, has used the stats bureau's figures on workers by occupation to see how these distinctions have affected our workforce over the 30 years to 2016.

She finds no sign of a recent quickening in the pace of change in occupations, but she certainly does find such change over the 30 years since 1986.

The proportion of routine manual jobs (such as labourers and machinery operators) in total employment has fallen from 40 per cent to 30 per cent, while the proportion of routine cognitive jobs (such as salespeople and clerical workers) has fallen from 27 per cent to 24 per cent.

In contrast, the number of non-routine manual jobs (such as nurses and hospitality workers) has risen from 6 per cent to 11 per cent, with non-routine cognitive jobs (such as management and professional occupations) rising from 27 per cent to 36 per cent.

This means routine jobs' total share of the workforce fell by 14 percentage points, whereas non-routine jobs' share rose by 14 points.

The share of routine and non-routine manual jobs fell by 5 percentage points, meaning the share of all cognitive jobs rose by the same.

(If you're wondering, over that 30-year period, total employment grew by almost 5 million jobs – an increase of more than 70 per cent – with the extra jobs spread about equally between part-time and full-time.)

Gruen says we should expect these trends to continue. But he makes a point first made by American economist Daron Acemoglu, that there's not one big trend going on in the workplace, but two.

The one that gets all the headlines is automation – jobs being taken over by machines. But the trend that gets much less notice – thus contributing to the public's excessive anxiety – is the continuous creation of new, useful, complex (that is, non-routine) jobs.

We've seen that, for at least the past 30 years in Oz, both trends have been at work. One displacing jobs, the other creating them. And so far, their effect on the composition of jobs has been roughly equal, and hasn't prevented continued growth in the total number of jobs.

Of course, it remains possible that the digital revolution will cause an acceleration in trend of displacement of jobs by machines, thus overwhelming the creation of new, complex jobs.

But another American economist, David Autor, has explained that certain tasks are particularly hard to automate.

These are tasks "that people understand tacitly and accomplish effortlessly, but for which neither computer programmers nor anyone else can enunciate the explicit 'rules' or procedures ... [The] tasks that have proved most vexing to automate are those demanding flexibility, judgment and common sense – skills that we understand only tacitly".

Of course, it's possible that "machine learning" may overcome these problems, but there's another constraint on machines taking all our jobs away to remember: the need for interpersonal skills in a growing number of jobs, plus our human preference for being served or helped by humans, not robots.

Don't discount the human factor.

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The future of work won't be as bad as we're told

I can't remember when there's been so much speculation about what the future holds for working life. Or when those who imagine they know what the future holds have worked so hard to scare the dickens out of our kids.

Getting on for 100 years ago – 1930, to be precise – the father of macro-economics, John Maynard Keynes, wrote an essay, Economic Possibilities for our Grandchildren, in which he calculated that if technological progress produced real economic growth per person averaging 2 per cent a year for 100 years, by then people would enjoy a comfortable standard of living while needing to work only 15 hours a week.

He was writing during the Great Depression, so I doubt if many people believed him. He was right, however, to predict the Depression would end and growth would resume, powered by continuing advances in technology.

By the 1960s and early '70s it was common for futurologists to predict that more and more labour-saving technology would allow big reductions in the standard 40-hour working week.

What a laugh. Today's futurologists – amateur and professional – are predicting roughly the opposite to what Keynes and the '60s futurologists were.

Thanks to continuing technological advance and the digital disruption it's producing, working life is getting ever tougher and less secure, we're told.

As we learnt last week, all the extra jobs created in Australia over the year to February – a mere net 100,000 – were part-time, with full-time jobs actually falling by 21,000.

So there's the proof we're going to the dogs – and it'll keep getting worse. All those part-time and casual jobs. The growing army of the "under-employed".

We're moving to the "gig economy", where full-time, permanent jobs become the exception and most workers are employed on short-term contracts, many are self-employed like Uber drivers or need a "portfolio" of jobs on different days.

Frightening, eh? I read someone confidently assuring school kids they'd have 10 different jobs – or was it 10 different occupations? – in their working lives. Then I read someone assuring kids they'd have 17 different jobs. Not 16, or 18, but 17.

This growing job insecurity is why there's a renewed push among progressives – including Greens leader Richard Di Natale – for a "universal basic income". It'll be needed because so many people will be earning little or nothing from employment.

Have you detected my scepticism? This is people during a period of weakness in the jobs market predicting – like Keynes's pessimists – it will stay weak forever – and get worse.

That's part of it. The other part is the futurologists who, unlike us mere mortals, can see with perfect clarity what our technological future holds.

If you think economists aren't good at forecasting, futurologists are much worse. Much of what they predict never comes to pass and most of what they correctly predict takes much longer than they expected. Then there's the things they failed to predict.

The only safe prediction is that the future will be different to the present. Any more specific prediction is mere speculation.

The futurologists generally know – or profess to know – a lot more than the rest of us about all the new tricks the latest technology will soon be able to do. What they almost always underestimate is the human factor: whether we'll want it to do those tricks.

If the futurologists had been right, by now most of us would be working from home. We aren't – because it suits neither bosses nor workers.

It's tempting to predict the digital revolution will eliminate many jobs in the services sector, leading to mass unemployment.

Trouble is, employers have been installing labour-saving equipment since the start of the Industrial Revolution, and so far the unemployment rate is hardly up to double figures.

That's because improving the productivity of a nation's labour increases its real income. When that income is spent, jobs are created somewhere in the economy.

Technological advance doesn't destroy jobs, it "displaces" them from one part of the economy to another.

It's possible the digital revolution is so different to all previous technological revolutions that what's been true for 200 years is no longer true. Possible, not probable.

Those predicting our kids will be tossed out of their jobs many times in their working lives forget that market forces involve the interaction of supply and demand.

Their prediction of almost universal job insecurity in the gig economy assumes this will happen because it's what the demanders of labour – employers – want.

This is naive. It assumes all labour is unskilled – so employers don't care who does it and never have trouble recruiting and training a constantly changing workforce – and that there's no such thing as "firm-specific knowledge".

No employer would treat skilled labour in such a cavalier fashion. Employers know the suppliers of labour – employees – wouldn't want to work for such an appalling outfit.

And such an apocalyptic prediction fails to allow for what economists call the "policy reaction function" – if things get too bad for too many workers, governments will step in and legally require employers to treat their staff fairly – just as they already impose paid public holidays, annual leave, minimum wages, penalty payments and much else on unwilling employers.

Why do they do it? Because, in a democracy, workers have far more votes than bosses.

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How digital disruption affects jobs and wages

A lot of people worry about the bad economic consequences of the digital revolution. Among the worriers is Dr Andrew Leigh, the shadow assistant treasurer and a former economics professor at the Australian National University.

Leigh made his concern clear in the "distinguished public policy lecture" he delivered this week at Northwestern University in Chicago.

But whereas most people worry that the digital revolution will lead to mass unemployment, Leigh's concern is that it will make our incomes a lot more unequal.

It's not surprising that people observe all the workers whose jobs are taken by computers and worry about widespread joblessness. As Leigh observes, this concern has been around at least since 1811, when disgruntled Nottingham textile workers wrote to factory owners under the pen-name of Ned Ludd, threatening to smash machines if they continued to be used.

But economists soon learnt not to worry. Why not? Speaking to an audience of economists, Leigh regarded it as too obvious to need explaining.

But let me fill you in. New technology leads to increased productivity – more goods and services produced per worker.

This constitutes an increase in the community's real income. When that increased income is spent, more jobs are created.

So whereas non-economists see only all the jobs that have been lost as industries X and Y digitise, economists understand this is just the most visible part of a more complex process in which jobs aren't so much destroyed as "displaced" – taken from some industries and moved to others.

This is why, after 200 years of labour-saving technological advance, we're still only up to having 6 per cent of the labour force unemployed (or about twice that if you add in underemployment).

Of course, this is the economy-wide outcome. The new jobs being created elsewhere in the economy may be very different to the jobs being lost. So this still leaves a problem for those individuals whose skills fitted the old jobs but not the new ones.

This is where Leigh comes in with his concerns about the effects of a newer idea – "skill-biased technological change" – on the unequal distribution of income between workers and, hence, families.

This is the idea that digitally driven technological change tends to disadvantage workers with less skill, and advantage those with more skill. It tends to lower wages for those with less education and raise wages for those with more education.

But the story's a bit trickier than that sounds. Research by David Autor, of the Massachusetts Institute of Technology, suggests jobs can be divided into three categories: manual, routine and abstract.

Abstract jobs – which typically involve problem-solving, creativity and teamwork – tend to be paid a lot more than manual jobs, with routine jobs – occupations such as bookkeeping, administrative support and repetitive manufacturing tasks – in between.

Autor has found that, over the past 30 years in America and the past 20 in Europe, it's routine jobs that have shrunk most. Why? Because they're the jobs that can be done most easily by a computer.

It's turned out that manual jobs – such as cooking, cleaning, being a security guard or providing personal care – are much harder for computers to do. For instance, the problem of shape recognition means that, a best, it takes a robot 90 seconds to fold a towel.

Robot hairdressers do a job similar to what you'd do if you drank a bottle of tequila and tried cut your own hair without a mirror, Leigh says.

He says the job characteristics that are hardest for computers to mimic include those involving communicating clearly with co-workers, showing empathy to clients and adapting to new situations. A lot of manual jobs require these skills.

Many studies – including some Australian ones – show that recent decades have seen a polarising or "hollowing out" of employment. There are a lot more abstract jobs (particularly managers and professionals) and modest growth in the number of manual jobs, but many fewer routine jobs in the middle.

But Leigh says this loss of mid-skill jobs doesn't mean the pain has been greatest for mid-skill workers and middle-income families.

Why not? Because what happens to wages is a product not just of the (declining) demand for mid-skill workers, but also of the supply of workers willing to do low-skilled manual jobs. And as job opportunities have declined for mid-skill workers, more of them have become willing to do manual work rather than be jobless.

So it's been wages at the bottom that have grown most slowly, not wages in the middle. (Because our wage-fixing system is more regulated, this is probably truer in the US than it is in Oz.)

At the top, Leigh says, it's altogether a different tale, with technology actually adding to the skills of the most skilful, making them more productive and so adding to their pay. A top surgeon, for instance, can use technology to do a better job and do more operations per day, thus adding to the demand for his (rarely her) services.

This may partly explain why chief executives' pay is rising, according to Leigh. The biggest firms have got bigger in recent years, and this is partly explained by better technology making it easier to manage larger and more far-flung businesses. As companies get bigger, the boss's pay gets bigger.

This is skill-biased technological change. Technology also helps explain the rise of "winner-takes-all" job markets for such people as actors, pop stars and top sportspeople.

People want to see the very best, much more than the almost-as-good, they'll pay more to do so and technology makes it possible.

At a time when technology is working to make the rich a lot richer and the poor only a little less poor, should we be "reforming" the tax system in ways that add to this income inequality or reduce it?

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It's skilless men, not mothers, we should get into jobs

One of the main things I've concluded after years in this job is that, although the economic dimension of our lives – the earning and spending of income – is vitally important, it's far from being the only important aspect. And we disregard those other dimensions – the relational, the social, the cultural and the spiritual – at our peril.

In this age of hyper-materialism, we're in constant danger of forgetting that. It's true of both sides of politics, but was well illustrated by Tony Abbott's changes to paid parental leave and childcare in the budget.

The nation's economists are worried that, between the ageing of the population and the end of the resources boom, we face much slower growth in our material standard of living than we've become used to.

Their solution – as advocated in the government's recent intergenerational report – is to get more of us participating in the paid workforce and to raise the average worker's productiveness (by working smarter, not harder).

During the years Abbott was pushing his far more generous paid parental leave, one of his key arguments was that it would increase young mothers' participation in the workforce.

But a report by the Productivity Commission seems finally to have convinced the government that if increasing women's participation was its main objective, raising the subsidy to childcare would do more than more generous parental leave would (though it wouldn't all that much).

Thus was the announcement of yet another broken election promise hidden behind the announcement of more generous childcare subsidies. Predictably, the media missed the sleight of hand.

But having lost its enthusiasm for paid leave, the government took its Labor predecessors' scheme – whose parsimony it had repeatedly criticised – and made it more inadequate by removing the ability of some mothers to supplement the government's 18 weeks of paid leave with further weeks paid for by their employer.

This saved the taxpayer about $1 billion, as well as having the presumably intended effect of encouraging the mothers of babies to get back to work earlier.

Oh yes, cried the feminists, what about the rights of the child? What about the official recommendation that new mothers not return to work for at least six months, something Abbott had previously harped on when criticising Labor's mean scheme?

Whoops. A classic case of (male) politicians putting "the economy" – actually, our material prosperity – ahead of such lesser matters as a mother's bonding with her child and the crucial early mental development of the next generation.

Let's hope the newly more reasonable Abbott will correct this simple misstep. But let's also consider the views of Dr Mike Keating, a retired super-senior econocrat, whose contributions to the public debate are often greatly enlightening, especially relative to the official obfuscation.

The Other Keating makes two important points. His first is that there's a lot more to be gained from paid employment than just money. "Being employed creates many of the social contacts and sense of self-esteem that are vital to our individual wellbeing," he says.

"Increasing employment participation is most important if governments want to improve living standards, individual wellbeing and equality."

His second point is that, contrary to what some argue, the weak point in our participation isn't married women. Our overall rate of "employment participation" as he calls it – the proportion of the working-age population with a paid job – is just under 61 per cent, which breaks down into averages of 67 per cent for men and 55 per cent for women.

Surprisingly, this overall 61 per cent is the same as it was 50 years ago. But its composition has changed markedly. Male employment participation is as much as 18 percentage points lower than it was in 1966, whereas the female rate is 15 percentage points higher.

The decline for men is explained mainly by the decline in blue-collar jobs, as computerisation has eliminated many unskilled jobs. The rise for women reflects changing social attitudes and women's greater suitability for filling jobs in the ever-growing services sector.

Here's the point. Almost all the long-term decline in employment participation by men aged 25 to 55 was accounted for by those who didn't complete secondary school and have no further qualifications.

What's more, in that age range, employment participation is much lower for those who didn't complete year 12 and have no further qualifications – 71 per cent for men and 60 per cent for women – than it is for those who did complete schooling and may have further qualifications: almost 18 percentage points higher for men and 22 points for women.

Keating notes that the overall rate of employment participation for Australian women is only a little lower than for women in comparable countries, and for women with tertiary qualifications there's virtually no difference.

Get it? It's not women who are causing our employment participation to be lower than we'd like, it's the less skilled.

"It is people whose educational qualifications are poor and who lack skills who have most scope to increase their employment participation." So "the focus should be on policies to improve the job prospects of low-skilled and disadvantaged people".

For Keating's more specific proposals, you'll have to see my little video on the website.

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Drawing a line between the market and the social

The hard part of economics, politics and public policy is deciding where to draw the line. It's as easy as pie to take a position at one extreme or the other. To buy the whole Liberal or Labor package - which, after a change of government, will often involve supporting things you opposed six months ago. To oppose virtually all government regulation or to think more regulation is never enough. Doing it this way always feels good - so neat and tidy.

But though it's easy and neat, it's not satisfactory. It's pretending the world is either black or white when in fact it's a quite unsatisfying shade of grey. To say I agree with the Libs on this and that, but with Labor on that and the other. To accept that some regulation is good, but too much is bad. It takes more effort, leaves you under attack from both sides, and it's messy.

It involves doing your own thinking, which is hard work. I've been thinking lately that, while I want very much to live in a market economy, I definitely don't want to live in a market society.

In a market economy, you and I are pretty much free to make our own decisions about what we'll consume, what occupation we choose and where we'll work - all within the limits of what's available, of course - while the great majority of decisions about the goods and services - and jobs - we're offered are made by private businesses.

You and I are motivated by the desire to get the most satisfying deal we can - to buy what appeals to us and not buy what doesn't - while businesses big and small are motivated by a desire to make profits by successfully catering to our wants (which aren't necessarily our needs).

Their desire to make more profit than they did last year is what drives our economy on, making it ever bigger and creating more jobs, but also contributing to its continuously changing structure.

Fine. But it's not that simple. Anyone who didn't know before the global financial crisis must surely know now that if you let businesses do whatever they want in their search for greater profits, the system will run off the rails and cause horrific injuries.

So we do have to ensure profit-obsessed businesses work within government-imposed guardrails designed to protect them and us from their greedy excesses.

We also need to understand that, if we left it to profit-seeking business people - and their public-policy consultants, economists - they'd gradually turn every aspect of our lives into a marketplace, with everything commercialised. Everything changed into a profit-making opportunity.

Where there was some legal barrier preventing the market from spilling over into some part of our lives, businesses would pressure governments to remove it in the name of "reform". And because, in this hyper-materialist era, business is on top - and the unions are pariahs, subject to regular besmirching royal commissions - the politicians are usually keen to give business what it demands.

This is why I've been thinking I want to live in a market economy, but not a market society. I like the commercial to be commercial, but I don't want the non-commercial made commercial just because business people imagine it would increase their profits (and the economists' model tells them it would be more "efficient").

An example is penalty rates. Until relatively recently in our history, weekends and public holidays were social institutions largely outside the market economy. They were essentially commerce-free zones, where as few people as possible worked and we were free to socialise with our kids, other family and friends.

Fools that we were, we thought we worked five days a week so we could relax and enjoy the other two together.
Weekends were kept largely commerce-free by two legal institutions: restrictions on trading hours and industrial award provisions that sought to discourage employers from instructing staff to work at "unsociable" hours by requiring them to pay a penalty, which rose according to the degree of unsociability.

Most restrictions on trading hours were removed in the 1980s and '90s in the cause of "micro-economic reform". And now employers have renewed their attack on penalty payments, portraying them as some kind of hangover from the dark ages of socialism, which are preventing businesses creating more jobs (note they never mention profits).

Thus are we being pressured to shift the line separating the commercial from the non-commercial, the economic from the social. Already that line is blurred and the temptation to remove the last legal barrier is great.

It's tempting because, in this more materialist, less religious age, almost all of us like the idea of being able to shop and patronise commercial sport and entertainment on the weekend. Naturally, we'll take the kids and meet our friends there.

Trouble is, what we want is for us to be able to shop and be entertained, but not be required to work ourselves. We'd like to be part of the upper class that doesn't have to work, served by a lower class that can't afford not to.

When you turn a social institution over to market forces, those with money do well and those without don't. We'd raised our material standard of living, but do it by lowering our quality of life.

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Invest in children of knowledge revolution

It's annoying the way business people keep slipping the words ''going forward'' into almost every sentence and it was even worse when Julia Gillard kept repeating the slogan ''moving forward'' in the last election campaign. But I have to admit they've got the right idea: we do need to keep our minds focused on the future and what we need to do to secure it.

The world keeps changing and we must respond appropriately to that change. Most of us feel threatened by change, and it's only human to want to resist it. The temptation is to try to preserve things as they are, rather than adjust to the way they will be.

As we wonder what to do about the threat to our manufacturing industry, it's tempting to see that threat as temporary. We're in the middle of a resources boom which has lifted the value of our dollar to a level which could wipe out some of our industry. But the boom won't last long and, if we're not careful, we could find ourselves high and dry: no boom and a big chunk cut out of manufacturing. What do we do then?

This is a serious misreading of our situation. What we're dealing with isn't just another of the transitory commodity booms we've experienced many times before. It's a historic shift in the structure of the global economy as the Industrial Revolution finally reaches the developing countries. The two biggest countries in the world, China and India, which were also the biggest economies before that revolution, are rapidly industrialising and within the next 20 or 30 years will return to their earlier position of dominance.

Does that sound temporary to you?

As part of their urbanisation and industrialisation, those countries - and the Vietnams and Indonesias following in their wake - will require huge quantities of iron ore, coal and other raw materials. Not for several months but for several decades. Much of what they need will be coming from us. That says it's likely to be many moons before our dollar falls back to the US70? levels our high-cost manufacturers are comfortable with.

The other side of the re-emergence of China and India is the global shift of all but the most sophisticated manufacturing from west to east. This is a disruptive trend affecting all the developed economies, not just us. All the rich countries are having to find other things to do as their manufacturing migrates to the poor countries.

This, too, is not a process that's likely to stop, much less reverse itself. So it's not a question of hanging in until the world comes back to its senses and things return to normal. The day will never come when we're able to reopen our steel mills and canning factories.

It's a question of whether we dig in and try to prevent our economy changing, or we adapt to our changed circumstances and move into areas more suited to a rich, well-educated, highly paid economy.

In truth, we're making so much money from our sales of raw materials to the developing countries that we could afford to use a fair bit of that income to prop up our manufacturers. That wouldn't make us poorer, just less prosperous than we could be (though keeping labour and capital tied up in manufacturing would mean a lot more immigration and foreign investment to meet the needs of our rapidly expanding mining sector).

And the fact is that, throughout most of the 20th century, we diverted a fair bit of our income from agriculture and mining to subsidising our then highly protected manufacturing sector. This may help explain why so many people - particularly older people - are so ready to do whatever it takes to stop factories being closed. It's the traditional Australian way of doing things: passing the hat.

But what's the positive, future-affirming alternative? What else can we do?

Embrace the newer revolution in the developed world, the Information Revolution. While the poor countries are becoming manufacturing economies, the rich countries are becoming knowledge economies.

The knowledge economy is about highly educated and skilled workers selling the fruits of their knowledge to other Australians and people overseas. It covers all the professions and para-professions: medicine, teaching, research, law, accounting, engineering, architecture, design, computing, consulting and management.

Jobs in the knowledge economy are clean, safe, value-adding, highly paid and intellectually satisfying.

The developed economies are fast becoming ''weightless'', as an ever smaller proportion of income and employment comes from making things and an ever increasing proportion comes from providing services. Some of those services are fairly menial, but the fastest growing categories involve the highest degrees of knowledge and skill.

Employment in Australian manufacturing has been falling since the 1980s. It's sure to continue falling whatever we do to try to prop it up. By contrast, since 1984 total employment has grown by almost three-quarters to 11.4 million. Get this: all of those 4.8 million additional jobs have been in the ''weightless'' services sector.

Notwithstanding our future increase in the production of rural and mineral commodities, our economy - like all the rich economies - will continue to lose weight. The real question is whether the services sector jobs our children and grandchildren get will be at the unskilled or the sophisticated end of the spectrum.

And that depends on how much money and effort we put into their education and training. We've gone for the past two decades underspending on education and training at all levels, falling behind the other rich countries.

If we've got any sense, we'll use part of the proceeds from the resources boom to secure our future in the global knowledge economy.

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