For the last few weeks I have been working on a spreadsheet of 503 ANZSIC business categories across all industry sectors looking at which sectors and categories are hardest hit by digital disruption – now and over the next few years.
I was inspired to have a closer look at each individual business category, because of the many posts about future of work and jobs. Which tend to be selective, highlighting either the best or worst outcomes in different industries.
And because of the 50,000 surveys we have conducted on adoption and use of ICT across all business categories, we had some insights that might prove useful in this endeavour. Should anybody want to discuss this in more depth, just contact me.
The impacts of digital disruption are spread widely across all industry sectors not just some sectors. There is threat and opportunity in all industries.
No industry sector is immune, but impacts are not equally shared across all the categories in a business sector.
So Car retail, Domestic Appliance retail, Recorded Music retail, Book etc are more threatened than Liquor retail, Specialty Food, Swimming Pools and Spas and so on.
The more variability and specialty there is in a business category - the more protection from disruption. The more uniformity, repetition and prepackaging in a business category - the less protection. But no category enjoys full protection.
No industry sector or category is spared. All sectors and categories can be threatened and/or improved in some way.
Threat and opportunity often run side by side – ie high threat, but also high opportunity.
Most of us already understand this dual nature of threat and opportunity, because we have seen the impacts in action over the last twenty years as a range of industry sectors or business categories have met with disruption and change – music, postal, video, real estate, accommodation, TV, newspapers, printing, travel, retail, aged care, insurance, law, taxis, finance, training, education, government, associations, politicians and on it goes.
This disruption isn’t stopping or slowing down. And in many sectors and categories it has barely begun.
Even in sectors and categories where the news is good – where there is mainly digital opportunity not threat – there is a consistent downside.
Loss of jobs.
For example, automation, robotisation and software deliver enormous benefits to agriculture and mining, but at the expense of jobs. The robots, software and automated processes remove the need for lots of people. And the new job options established to support and manage the technologies demand fewer people.
With often different skills and capabilities.
Result. The organisation invests in the technology. The organisation saves on payroll. The organisation then employs fewer people with different skills.
So digital improves productivity, profitability and efficiency, but destroys jobs.
Which is good news and bad news, depending on who you are, what you do and your point of view.
So will it be 47% of jobs destroyed over the next ten years as the 2013 Oxford University report suggests?
The problem is the number of people performing the jobs that are being eliminated. And because it is now 4 years since that report emerged and the technology has proliferated, innovated and improved, the percentage is now likely to be larger.
More innovation. More software. More adoption. More use. More impact. On both jobs and the workers in those jobs.
With more to come.
At the moment we are hiding many of the impacts of digital disruption by the shifting of full time employment into contract, part time, freelance and occasional work, with the REAL employment and underemployment figures hidden for political reasons. In all countries, not just Australia.
We don’t seem prepared to look the digital revolution “gift horse in the mouth”. For it has enormous, but sharp and carnivorous teeth. Not what we expected at all.
And we can’t begin to address the problem unless we accept the problem exists in the first place.
Nearly 20% of our working population is now looking for work or for more work. There are currently not enough jobs. There are not enough well paid jobs.
Contract work, part time, freelance and occasional work produces less income. Generates less tax. Wage growth is flat. Less income leads to more borrowing and greater household debt. The condition we find ourselves in today.
And the continual elimination of jobs through software, robots and automation is remorseless. It is slow, but remorseless.
Many businesses that could replace workers are not doing so. For now.
Many businesses, households and individuals that banks could bankrupt are still operational. Given leeway and time. For now.
The can is kicked down the road. Hoping the problem will fix itself over time.
This issue needs managing.
Businesses and banks (and central banks) and politicians have woken up to the bigger picture. Push too hard or too fast and the whole house of cards tumbles.
However that doesn’t stop the digital revolution. It merely cushions some of its immediate blows. For now.
And the cost of software, automation and robots will continue to fall and the job-cost equation will become more persuasive.
Persuasive to those, who believe that business is just business. To those who believe that shareholders are the only partners in profit and loss. To those who don’t accept there is a social contract in all business, if there is to be economic sustainability. And a future for our children.
The real issue isn't actually about the future of jobs. It is about the future of organisations that employ people - i.e. organisations that offer jobs.
If these organisations disappear or are forced out of existence through digital disruption and/or digital opportunity, then the associated jobs disappear at the same time. Along with the associated income. The ability to manage debt load. To pay mortgages. To buy products and services. To keep the show on the road.
Both digital threat and digital opportunity reduce the need for workforce.
Digital threat destroys jobs. Uber, Amazon, Alibaba, Google, AirBnB etc all destroy jobs.
Digital opportunity destroys jobs. Robots, software and automation destroy jobs.
Digital threat and opportunity also destroy business categories and even industry sectors. This has happened throughout history but never so fast or across so many sectors at the same time.
It's not about "if" it is only about "when". And we still do have the ability to influence timing. Though that is about all.
What is the ultimate destination of this change? Where is this revolution heading?
It is heading towards a degree of unemployment and underemployment, such as we have never seen in our lifetimes.
Which inevitably leads towards a conversation about Universal Basic Income. UBI.
Dole. Pension. Unemployment Benefits. Newstart. Old start. Allowances. Call them what you will, they are all taxpayer funded payments of some kind.
UBI will have to be funded by taxation. We will have to revisit taxing the job destroyers who mainly benefit from this revolution. The multinational corporations and software companies, the robot makers and the automators will have to pay tax on the income they receive in the country where that income is generated. No revenue shifting.
Multinationals are the primary organisations to profit from this enormous societal change in the short term. But to what end?
Because we need to have a population with enough money to buy things or we will really have a problem. We are already beginning to see more of our population moving into poverty. Pensioners, the disabled and benefit receivers of all kinds. Under financial stress. On the streets. Living in cars. Caravans. Sofas.
They will soon be joined by more of the bankrupted, the debtridden, the beaten and defeated.
We are already experimenting with UBI in this country. Paying people who do not generate wealth from the government purse – at both ends of the spectrum.
We have the low paid on government paid, taxpayer funded subsidies, pensions and grants channeled through Centrelink.
And we have the well paid on government paid, taxpayer funded wages in local, state and federal government.
Both on UBI, but we don’t call it that yet. Non-wealth generators and producers. You could even argue that banks fall into that same category, especially when they neglect to lend to the productive industries and businesses that generate wealth.
The money to pay UBI comes from taxes.
But as tax paying businesses and organisations disappear, and ever more people lose jobs and desperately seek more work, taxable income will fall.
And we can't build enough prisons or expand the police force enough to manage half a population out of work...
It is time to understand the full impacts of technological change. Personally.
CEOs and boards need to wake up to digital threat and opportunity and not abdicate that responsibility to CIOs.
The threat to our society is greater than the threat from terrorism. We need to marshal our resources accordingly.
It is time to consider what a job is anyway. What is the purpose? What is the reason for getting up in the morning? Is it just about reward? Identity? Place in society? Self respect?
We need to redefine what work is and quickly. In relation to the world we live in today, not the 1950s. We have a conveyor belt of young students entering the workforce every year. They need to know.
It’s not enough for a CEO to decide to adopt a new software package, train staff and let one or two admin people go. Without thinking about what that means to them, as well as the bottom line.
It’s not enough to shift permanent staff onto contracts, outsource work to India, or the Philippines without thinking what that means beyond profit and loss.
And what that means to the suburb, the street, the region and the state, as more and more people join the permanently unemployed on the scrapheap.
How to do we educate children for this new condition? What do we tell them?
Not every young person can start a business.
What does the future offer to children leaving school and moving into permanent “no job, no experience, no hope, no future” land?
We are not managing this transition well.
Incubators and Workhubs are part of the solution. Vocational training and smart trades are part of the solution, but there is a lot more to discuss.
Inequality has become a public issue again. And digital revolution just magnifies inequity and what is already broken.
Given that 8 men now own the same wealth as half the world’s population, or the top 10% of the population now own 85% of the world’s wealth.
“World leaders are concerned”. But concern has not yet translated into action. Big businesses and the super rich dodge taxes, use their power to influence politics and drive down wages. And 1 in 10 people survive on less than $2 a day.
So is it really surprising that individuals and families now travel the planet seeking something better? It all joins up.
In Australia we have small insects called termites. Lots of them. They eat wood. And I have lived in houses where everything looked fine, until one day the door fell off, held in place only by a thin skin of gloss paint.
Which is pretty much the current status of our economy in Australia. A thin skin of gloss paint.
An economy held in place by continuing demand for coal and iron ore (threatened), fake employment and underemployment figures, and conditional blindness to the extent of digital disruption and its impacts (by CEOs and boards).
Looks solid. Isn’t.
Rising inequality is becoming a problem across the world, not just here in Australia. Unemployment and underemployment in Australia is now 17.9% or 2.402 million people in Australia looking for work or for more work.
Inequality in Australia has risen over the past generation. And we have all noticed. When wealth is concentrated among a small group of people it increases demand for luxury goods by that very small group of people.
When incomes are more equal and widespread, people who are less well off buy more things – right across the board. Which expands the overall market and inspires companies to create things to sell.
When people carry large household debt burdens they can’t afford to buy more than the essentials and market demand shrinks. It also prevents poor people from reaching their potential in education and invention.
Then everybody becomes poorer.
Household debt. Through the roof.
More people on the streets and in the soup kitchens.
Moribund wage growth (for most of us).
Time to wake up.
We need to discuss what a job is and how it is rewarded. How to provide useful activity in society for people with skills and rewards matched to “brain”, “eye” and “hand”. How do we value manufacture? How do we reward effort?
UBI is a conversation we have to have.
In banks where competitive risk is diminished by “too big to fail” government bail out reassurances, should the CEO be paid more than 10 times the lowest paid worker?
What returns and rewards are appropriate in public companies? Private companies are private, and on the whole risk and reward are far better matched.
But senior management in government, quangos, banks and utilities can rarely justify the salaries that are paid today. These salaries and bonuses are a contrivance of boards populated with lawyers, directors and accountants, a throwback to the last century.
And the majority of the population sits outside looking in and sees it for what it is. A closed circle of colleagues and business associates handing cash to each other – board to CEO, CEO to board – in a perverted game of musical chairs, where the chairs never get removed.
These issues need discussion in public forums. Especially when it is taxes paying the salaries.
We all need to get engaged with the big picture issues.
We all face the same problems. So let’s see what we can do about them.
How do we use digital technology to support productive industries in Australia – agriculture, creative industry, defence, manufacturing, medical and health, METS, smart trades and tourism – with skills, export, R&D and collaboration?
How do we mitigate the negative impacts of digital disruption and its role in job destruction – applying the brake, discussing UBI, role of work, inequality, vision and collaboration?
We need to work on both issues at the same time. Collectively.
For our part, we have built a number of platforms to help.
To enable collaboration and discussion around common economic themes – productive industries, export, future of work and jobs, knowledge sharing, projects and collaboration.
We need to build up and improve the economic base for jobs, sustainable regions and collaboration in Australia = the RED Toolbox.
The RED toolbox is a collaboration platform for regions, RDAs, councils and other organisations to share insights, ideas and activities. So if you aren’t already a partner, then become one.
We also need to build relationships and networks with overseas markets, connecting Australian producers and services with major markets overseas and businesses and communities within those markets = the EXPORT Toolbox.
We have some remarkable businesses in Australia and they deserve exposure and promotion to markets across the planet. And that is what the EXPORT Toolbox is about.
On the one hand the digital revolution brings threat and disruption and there is little we can do about that except perhaps to slow things down while we consider what that means, as Bill Gates, Stephen Hawking and Elon Musk suggest.
And on the other hand the digital revolution brings opportunity. Ask any of the software developers, hardware producers and ICT startups and they will explain what that means to them.
But an even bigger opportunity in the digital revolution is in the new territory of collaboration.
The Toolboxes are collaborative platforms and slowly and steadily they are evolving, based on what partners say they want, on what partners are deciding to do, and on what partners suggest might be possible.
“Can we showcase business from our region to our sister city in Korea? Yes.
“Can we establish a “sister cities” group so that our local businesses can converse with “sister cities” businesses in Hyderabad?” Yes.
“Can we establish a food cluster?” Yes.
“Can we discuss the implications of our ageing population and how to manage it with organisations in Taiwan?” Yes.
“Can we document our circular economy project so it can be shared with other councils in Australia?” Yes.
“Can we create a group to discuss the future of work and jobs?” Yes.
Where next? You tell us.
Because it is not the platforms, it is the people that decide.
This is an organic process. Some things grow faster than others. And the process is more akin to gardening than architecture.
So let’s get into the garden and start gardening.