Changing jobs: Supporting workers in dynamic labour markets

| March 31, 2018

Australia has experienced an extraordinary period of economic growth, but beneath the seemingly placid surface of our economy, there is tremendous change. Career changes have become more frequent and job changes are increasingly commonplace.

In the future, how we support workers through job transitions will be equally, if not more, important as preparing them for their first job.

Over the past 25 years, Australia’s labour market has been in constant flux. We have lost around 100,000 machinery operator jobs, nearly 400,000 labourers, nearly 500,000 secretaries and clerks and nearly 250,000 jobs from the technicians and trades.

Offsetting these losses, there has been an explosion of more than 400,000 new jobs in community and personal services and 700,000 new jobs across the professional and business services.

At the macroeconomic level, much of this change has been positive. The economy has created new jobs that are, on average, better paid, more satisfying and safer than the jobs that were lost. But the impact on the individuals who must transition between jobs is significant.

What do we know about workforce transitions in Australia? Each year 190,000 Australians either lose their job due to being laid off, made redundant or their employer going out of business. That’s about 25 per cent more such transitions than occurred 15 years ago.

The average time these people will spend out of work during their transition is two months, and one third of them will drop out of the labour force entirely for a period (i.e. they will stop looking for work). Nearly one in five will receive some form of welfare or public assistance during their transition, 9 per cent will undertake some retraining or other education and 18 per cent will ultimately move occupations to find a new job.

In an increasingly dynamic economy, these workforce transitions are not only a common feature of careers, they are an increasingly important economic issue. Adding up the cost of lost wages, retraining, welfare and the depreciation of unused qualifications, the total cost of workforce transitions to the Australian economy is more than $6 billion each year.

But not all transitions are negative. About half of all workers actually come through transitions better off, with higher wages and reporting higher workplace satisfaction.

So, if we accept that career transitions will become common, how can we help ensure they are positive for more people? The answer starts with equipping students with skills of durable value through their careers.

Our current education system is not responsive enough to the changing labour market. AlphaBeta research in partnership with the Foundation for Young Australians (FYA), shows that almost 60 per cent of Australian students are currently getting educated for jobs that will be radically affected by automation and digitisation over the next 10 to 15 years.

An entire generation of young Australians is at risk of learning skills that will be of decreasing value in the future world of work.

We also need to equip workers with portable skills that they can take with them as they build careers from multiple jobs and top up through further education as they go. Changes in the labour market are increasing the premium on general rather than specific skills. By 2030 workers will spend on average 30 per cent more time per week learning on the job, spend double the time solving problems, spend 41 per cent more time on critical thinking and judgment, and 77 per cent more time using science and maths.

They will also likely use verbal communication and interpersonal skills 17 per cent more often per week and develop a stronger entrepreneurial mindset. Responding to these trends, employers are increasingly looking for workers with general skills such as team work, presentation skills, problem solving and creativity.

Finally, there is also significant room to improve the matching of workers to jobs. Australia doesn’t have a good record of finding new work for people displaced from the labour market. Over the past 25 years, nearly one in ten unskilled men lost their jobs and did not return to the labour force. Today, more than one in four unskilled men don’t participate.

This need not be the case. In an environment of near full employment we should be able to quickly match workers in declining industries to jobs that require similar skills and prevent people from falling out of the labour market.

The availability of big-data analysis on employment opportunities should significantly help policymakers, education providers and employers to target training and re-training opportunities.

Increasingly, periods of transition are becoming a common part of career trajectories. Creating a resilient workforce that can manage — even benefit from — career transitions will be one of the most important labour market objectives over the coming decades.

This piece was published in the Department of Industry’s new ‘Industry Insights‘ report.

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