Automation to underpin Australia's economic shift: KPMG

KPMG has predicted that as Australian industries adopt the use of automation and robotics to keep up with productivity levels, there will be a shift towards more knowledge work and STEM skills.
Written by Aimee Chanthadavong, Contributor

Australia, along with other developed nations including Japan, China, and Germany, are in the middle of a structural skills shift towards knowledge work, according to the latest results by KPMG.

Bernard Salt, KPMG Demographics partner in charge, has pointed out that while there has been a rise in automation across sectors, jobs continue to grow, adding that to improve workforce productivity, the use of robotics will be necessary.

Data by KPMG showed that in the last 16 years up to February 2016, 3.1 million jobs have been added to the Australian economy, growing from 8.8 million to 11.9 million. This was despite the fact that 360,000 jobs were also lost during the period, with Salt highlighting closures of factories by companies such as Ford and Holden were possible contributing factors.

The data showed the growing workforce has been in healthcare, professions, construction, and retail, while contracting sectors including manufacturing and agriculture.

Salt went on to point out the shift towards knowledge work in Australia may be following the lead of the United States, a country that has started to see a resurge in engineering bachelor degrees.

According to Salt, America's investment in engineering degrees contracted between 1986 and 2009 from 97,000 to 84,000, mainly because US manufacturers began to offshore their engineering skills. He explained America's recovery in engineering skills has come as companies talk about "re-shoring, not off-shoring, and bringing back home the production process that was conducted in China".

"There is a structural shift taking place in Australia where knowledge workers are advancing. What is happening in America I think is a shift towards engineering, towards STEM skills. I would be interested in going to the universities and seeing whether they have documentation of whether there is a revival in engineering skills," Salt said.

"Is the re-shoring process feasible in Australia? It seems feasible in America. Maybe our labour is so expensive, but not so expensive if we invest heavily in cognitive production process."

He further noted the need for automation and technology is even higher as baby boomers begin to exit the workforce.

"We have a population that is ageing and so we need to get better productivity out of each worker. How might we do that globally is through robotics, and in order to do that we need to skill up in STEM."

When asked how the structural shift will impact on workers in the contracting manufacturing and agricultural sectors, Salt said based on previous experiences, the Australian workforce has shown resilience in adapting to structural change.

For instance, a year prior to BHP Billiton closing its skilled rolling mills in Newcastle, New South Wales, which resulted in 3,000 job losses, the local unemployment rate was 4 percent above the Australian average; conversely, the unemployment rate today, according to Salt, is only 1 percent above the country's average.

"The initial reaction was there was going to be an increase in unemployment, but in actual fact Newcastle shows the economy and people are resilient," he said, concluding that the skills people need will be around fluidity and flexibility.

Last year it was reported by the Newcastle Herald that the city had the highest youth unemployment rate in New South Wales, sitting at almost 21 percent. Earlier in 2015, the Herald reported Newcastle had an unemployment rate of 10 percent.

According to numbers released by the Department of Employment on Wednesday, the national unemployment rate is 5.8 percent, while Newcastle and Lake Macquarie sit at 6.9 percent.

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