Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Select Committee on the Future of Work and Workers
04/05/2018

ANDREWS, Dr Juliet, Partner, People Advisory Services, EY

HALLORAN, Mrs Lucille, Partner, EY

ROLLAND, Prof. Louise, Executive Director, EY

[12:09]

CHAIR: I understand that information on parliamentary privilege and the protection of witnesses and evidence has been provided to you all.

Mrs Halloran : It has.

CHAIR: Thank you very much for coming along today. I know you haven't made a formal written submission, but you've provided us with some recent work of your firm which is right on topic, so we're looking forward to hearing some more about it. We invite you to make a short opening statement.

Mrs Halloran : Thank you very much for the opportunity to discuss the important issues raised by this select committee. I am the Oceania leader for EY's government and public sector practice, where I work with a range of government departments and agencies to improve outcomes for citizens, build capability and deliver better government services. Louise Rolland is a labour demographer and an expert in the changing nature of work and workforce. Juliet Andrews is an expert in talent management, leadership and learning. Together, we have been working on our firm's Australian response to the future of work and have been advising corporate and public sector clients on workforce readiness. Globally, EY has been researching and publishing on digital transformation and the future of work and supporting clients as they respond to the complex work landscape. We included a number of these reports to you in our submission.

Much has been said in recent years about the disruptive nature of technology on traditional working patterns, but the lack of realised job losses in the short term has blunted the impact of many of these forecasts. This is translating into a sense of complacency in our response to workforce disruption. We believe that Australia is soon to reach a tipping point that we are not prepared for. As a firm, we believe that technology should be the enabler not the driver of our future, that we can control this future and our place in it, and that government has a considerable role to play in this evolution.

The two roles we see for government are: (1) the role of government as a leader for our society, an important employer of our citizens; and (2) the response of departments and agencies to the future of work for their own workforces, as a major employer. Globally, we are seeing governments prepare in different ways. While we think there are lessons to be learned from this, there is much to learn also in Australia from our own leadership in related spaces. For example, the introduction of intergenerational reporting has helped sharpen government policy responses for nearly two decades, and our compulsory superannuation system is the envy of many of our global contemporaries. In the case of the future of work response, it is a challenge of similar if not greater magnitude, which we must move on much faster. The government managing your role in this transition effectively, while enabling lifelong learning for our citizens are both critical policy settings to consider.

We believe managing the ebb and flow felt as technology impacts the workforce will be critical. To date, the narrative has focused on job loss, and this is driving anxiety in workers. While we know technology will displace labour and create new jobs, we need to start planning our response for this, as there are opportunities as well. We also know that lifelong learning has been a requirement for the last 40 years, but not much has changed. While 35 per cent of the skills demanded for jobs across industries will change by 2020, at least one worker in every four in OECD countries is already reporting a skills mismatch with regard to the skills demanded by their current jobs. This is a fundamental area for government and employers, and we are happy to share more relevant data with the committee today.

We urge the committee to consider three recommendations based on our work here in Australia and overseas. The first is investing in a future work commission which will continue the work of this committee and quickly create short-term actions for government as well as guide the development of a long-term policy framework. This will require the creation of the evidence base we need to act with insight into what jobs are changing, where and how quickly, as well as emerging skill requirements. The second recommendation is: reframe the narrative in the public domain to counter the hype around the job losses and balance with plans for the opportunities. This narrative needs to be evidence based, providing employers and workers with realistic scenarios for the future in Australia. The third is act now to prepare the public sector for the future. Get leaders aligned in the future for the public sector and equip them to lead the transition. Invest in lifelong learning for public servants, across two or three foundation skills.

Thank you again for the opportunity to provide an opening statement. We now look forward to answering any questions the committee may have.

CHAIR: Thanks very much, Mrs Halloran. There are a lot of documents here that I'll certainly have a good look at, on the plane, on the way home; I haven't had an opportunity here yet. Thank you for bringing that work with you. Your first recommendation, about investing and establishing a future-of-work commission, I think is something that a number of us have been kicking around as a possibility because we've had similar evidence.

What do you know about other countries and whether they have similar bodies, and how effective they have been in dealing with these issues, and am I right in thinking that Australia lacks anything like this at the moment or are the functions of that kind of commission currently being done but by a range of bodies rather than one?

Mrs Halloran : I might kick off. I think what we need is a stake in the ground to show real commitment to this, and Louise might comment on what's happening elsewhere. That's one of the reasons for the recommendation.

Prof. Rolland : We are seeing similar initiatives in other countries. The UK, for example, as I'm sure you know, has established a commissioner. I think it's early days yet to talk to the efficacy of those commissions but, as Lucille has indicated, we think it's an important symbol to the public and to employers in Australia that the government is taking this seriously and focusing on this discretely. While there are other agencies that are holders of some of the responsibilities that a commission might bring together, I don't think we have a focal point for it at the moment. We're looking for a commissioner that would create a really sound evidence base. We think there's a lot of misinformation and a lot of disparate dispersed information out there at the moment that's not consolidated and not really accessible to either employers or our citizens. I think that lack of a focal point is making it difficult for employers to make good decisions and it's also making it difficult for our citizens to understand what is changing and when it's likely to change.

CHAIR: In terms of lifelong learning, could you elaborate a little bit more on the key changes you think we need to see to the education and skills system that Australia has, to ensure that we are properly preparing people?

Mrs Halloran : One of the fundamental changes is more modularisation of the programs. We launched a report just a couple of days ago, on 1 May, on universities of the future. It articulates a need to move from vertical program based linear education and training to more of a modularised one where people can enter and exit the system. Louise, I don't know if you want to add to that? I think it would also be good for Juliet to share a little bit about how our corporate clients are thinking about this.

Prof. Rolland : Sure. I guess that when I look at the data around participation, particularly in formal education and training, we still have a very traditional pattern of participation. The highest level of participation happens before the age of 25, in those bridging years between secondary education and career start. We really haven't seen those patterns shift much at all over the last 30 or 40 years. So I think there's probably a complex interplay of factors that realise that outcome.

Part of it is that people are uncertain about where they should be participating and learning, what learning is suitable, what's going to hold them in good stead in the future. There are cost and time barriers for people to participate. There's also a bit of a lack of a burning platform at the moment around why participation is the way to secure your employability into the future, and that's going to be increasingly the case. When you look at policy settings, they are really not incentivising our educational institutions to target other cohorts of learners.

Mrs Halloran : One of the things our paper outlines, and we'll share it with the committee, is the need for Australian universities and TAFEs to interact more closely with industry and employers, in terms of what's relevant today but also trying to anticipate what will be relevant in the future.

Dr Andrews : What we're seeing in corporates is a greater investment in learning internally. They're are certainly looking to build learning platforms—access to learning—that makes it easier for their workers to upskill in areas they think they're going to need for the future. Going to Louise's point, there are still quite a lot of questions about what those skills might be. They're making some educated, strategic decisions based on the evidence that they can find. Going back to the commission recommendation on the drawing together of evidence that provides a direction for corporate organisations, that does seem to be lacking for them at the moment. So they're probably making decisions that are disparate across different sectors. There is potentially an opportunity to pull that together and give them a bit more guidance around what to learn.

CHAIR: On the issue of technological change and the risk of job displacement, I completely take your point that there are opportunities in this space as well. But, again, there are very few people we have come across who think we've got to stop change altogether. But we got a very strong message about the need for employers to consult with their workforce and unions about change—how it happens, who gets displaced, the potential for redeployment and retraining and those kinds of things. Do you have anything you can share with the committee about the attitude of your clients? Presumably you are engaged to help them through change processes. I am interested in what they are saying and their openness to consultation.

Prof. Rolland : We are seeing this differentially affect industry. We know that some industries are more at the pointy edge of this than others. Generally, our clients are asking the questions that we are all asking: 'How quickly do I need to change as a business? Where should I push that change first? How should I manage my workforce through the change? What are the investments in technology that really make sense at this point in time?' So I would make the overall observation that there is a real willingness to engage in this and do it well for their people, but I don't think there is clarity about what 'doing it well' looks like at the moment.

Dr Andrews : Where we see organisations starting to do it well is around transparency. They are bringing the employees into the conversation rather than making decisions that are then implemented onto them. That can raise their level of anxiety and their reluctance to change. Where we have seen organisations do this well is where they bring employees into the conversation: 'What can technology do for you in your roles to make the work better and more valuable to you and our customers?' Where they do that, they get high levels of engagement. Then they are able to test and learn and roll out those good examples across the organisation. But those are probably at the upper end of the spectrum; most organisations are still grappling with how to even start that conversation.

Mrs Halloran : I would like to add one case study. I'm not close to the details but this was stark in my mind. Where they're not clear is the pace. We have been helping some clients with automating some back-end really high volume transactional work. In this particular instance, three people are doing that work. We have been doing this more strategic work across that particular organisation. In anticipating how long it can take for the automation to occur and what impact it has, there have sometimes been mistakes. In this particular instance, it took three days, when they had planned for it to take a lot longer. That is a stark example. But I think the pace of change from automation or from robots is not able to be anticipated unless you try it.

Prof. Rolland : I think the time horizons are shortening to a degree. The change is so rapid and difficult to predict that clients—and I see this in our own organisation—are fearful about bringing their people into the conversation in case they get it wrong and in case they disrupt or create fear within that workforce. It's a chicken and egg situation in a lot of cases.

CHAIR: In short, though, you would accept that it is good practice for organisations to consult with their workforce and unions around technological change?

Prof. Rolland : Absolutely. And I think it is even more than 'consult'; there needs to be a very strong spirit of partnership around this. The people need to step into this change as well. The employing organisations cannot pull you through the change; you have to step into it as an individual.

CHAIR: The only other topic I want to raise with you is the effects of change on older workers. Again, that is something that has come through very strongly in our hearings. I have noticed some media coverage in recent days about the practices of professional services firms, large law firms—your own firm has had a bit of a mention, I think—around compulsory retirement clauses in the contracts of partners. I don't know what the situation is in your own firm. In some of the big four you have to go at 55 and for some it is 60. I would be interested to know what the situation at Ernst & Young is, and whether you think those sorts of causes are appropriate in an environment where people need to work longer and pensions are not available until later. What do you think is the place of these kinds of clauses these days?

Prof. Rolland : My academic background is that I established the Centre for Work and Ageing at Swinburne University in the early 2000s and worked quite closely with government around the establishment of the intergenerational reporting. So it is a question close to my heart. To answer broadly, there is little place these days for barriers to participation for workers as they age. I do think that the changes that technology will bring to our workplaces are going to be more harshly felt by older workers, particularly those older workers in the more low skilled occupations. In saying that, there are others in the workforce who will be impacted harshly as well. We are seeing that at the younger end of the market; even graduates are not getting graduate opportunities. And for women it is a different proposition again. There is no doubt that whatever policy response the government takes, we are going to need to be sophisticated in the way we respond to the level of disadvantage faced by different segments. There are some good examples in Finland, which are somewhat lateral. They take into account eligibility for retirement allowances based on the physical nature of work across a lifetime, recognising that it is not always possible for people to work into later age if they have been working in highly physical jobs. So we might need to take a more differentiated view around our policy settings.

The whole thing around EY's situation—and I hope I'm not talking out of turn here—is that it has been a tradition in professional services firms to maintain a retirement age for partners. It is limited to partners; it is not anyone else. I have managed to sidestep that retirement age! And it is a bit anomalous based on the structure of the organisation that allows firms like us to do that. It is a conversation that we have on an ongoing basis internally, and it is a conversation we have been having again recently around the appropriateness of that particular policy in this era.

Mrs Halloran : Interestingly, we speak a lot within the firm about our changing workforce. We talk about 'gig now'. We did produce a paper some time ago. We are going to have a whole range of different skills. There are parts of our firm that we know will be automated—in some of the tax and some of the insurance—and we talk about that. We also know that some of our workforce won't want to work where there is a career path in a firm like ours, so we will then want to create different opportunities. Now we are looking at how we enable people to come in and out more. A lot of our young people start and then they want to leave to go into something that aligns with their social purpose. From our perspective, we think this is going to change in a significant way. The business that we have had and the business model that we have had in the past will change and that will create opportunities. Our global vice-chair is retiring and coming back to Australia. She has so much energy. I am meeting a lot of people who are at that point. What we are talking about in technology and disruption creates a whole set of new careers, and a lot of people are thinking about what they are going to do for the next 10 years.

I think Louise's point is that that is our heritage but it will need to change. Also, I think it is an opportunity for people who otherwise wouldn't be thinking about making a change to actually go and contribute in a different way.

CHAIR: I hear what you're saying. Clearly it's something you're looking at internally. In your own firm is the retirement age around 60?

Mrs Halloran : Yes.

CHAIR: Do you have some partners who are older than 60 despite that?

Mrs Halloran : Yes.

CHAIR: So it's not strictly enforced.

Mrs Halloran : It's a mutually agreed continuation.

CHAIR: I acknowledge, again, that you're not the only firm with those sorts of practices.

Senator STOKER: I've seen a lot of evidence to suggest that millennials and younger people generally aren't looking for a traditional career ladder progression. How does that factor into your assessment of what the future of work should look like?

Prof. Rolland : We need to be very careful about generational stereotyping. There's no doubt that the generation you're born into has some influence over your characteristics, needs and preferences, but it's only one of about eight influences. In my 15, 20 years of researching age difference, the conclusion I come to pretty strongly is that there is more difference within an age range than there is between age ranges in just about anything you could look at. I think we love the notion of focusing on that new generation coming through and ascribe characteristics to that generation because it is interesting, but we need to be very careful about buying into those stereotypes generally, and particularly when we are thinking about policy settings. When we look at some of the influence of life stage then we start to realise that, while we might have ambitions in our 20s to work and to structure our lives in a certain way, we come across some realities as we move into the next life stage. We know the family formation stage is now around the early 30s. With family formation come all the pressures of finances, housing and those sorts of things. Those pressures tend to shift our needs in such a way that our preferences may not play out as strongly. We're more likely to conform to the behaviours of that life stage—that is, seeking greater security of income and employment. I was having this exact conversation with our ELT recently around our own GigNow initiative—that we need to be careful with the expectations that there are going to be a lot of people across different ages and stages of their working life who want to engage in more flexible forms of employment that may not provide the same level of security. That is my view about millennials.

Mrs Halloran : ELT is executive leadership team.

Prof. Rolland : Yes, apologies.

Senator STOKER: Does that mean we can be more comfortable with the basis that some of the traditional benefits of employment remain things that are going to continue to be priorities for people into the future?

Prof. Rolland : Yes, I would say so.

Senator STOKER: Dr Andrews, we've heard some information in the course of today that suggests employers aren't presently investing what they historically had in allocating employee time to training and development. Does that correspond with your understanding of the way employers are operating, or does it sit a bit differently?

Dr Andrews : It's interesting: we were talking about that on the way here. We don't have data to tell us whether or not they are investing more in training or learning, but I think we are seeing a lower take-up of learning opportunities within organisations. It appears that work is the primary reason you are at your organisation for the course of your day, and learning is the bolt-on that happens at another time at some point, and I think people are struggling to fit that in. I'm not quite sure whether the employer isn't providing the necessary time and permission for learning or employees don't feel they can take that time or permission, but we're definitely not seeing enough of an uptake in continuing that to the point of lifelong learning in your employment. On the job, in our organisations, we're not seeing enough of what we need to prepare ourselves for the future.

Senator STOKER: That's interesting.

Senator PATRICK: There's a body of work here. Is this work that's done internally to inform your company across a number of different tasks asked for by clients or for internal reasons or what? There's a huge body of work here.

Mrs Halloran : All of the above. A lot of that material has been produced by our global GPS practice, government and public sector practice, or by EYQ, and so part of it is informing ourselves, but importantly it's a culmination—probably not dissimilar to the conversation we're having today—of issues or questions our clients are raising. We try to supplement what we see in the community or in academia in a world that we can use and deploy with our clients as well.

Senator PATRICK: So it's a task that you do—

Mrs Halloran : As part of our business.

Senator PATRICK: almost as an overhead that puts you in the right place for helping customers. Professor Rolland, in terms of global experience you mentioned the Brits. Have you looked at Singapore? Have you looked at Industrie 4.0 and how the Germans organised that? We are getting a brief from them.

Prof. Rolland : Juliet, you were looking at Singapore.

Dr Andrews : We have looked at Singapore. I think you may be aware that the way that the Singapore government approached the problem of capabilities into the future was that they broke up the workforce into a number of sectors and then they actually asked for external support to identify what those capability groups were. EY supported them on one of those sectors. We think that the work that they've put together there is excellent in terms of direction, because—I think to our earlier point—employers seem to be grappling with: 'What does the future for my sector look like? There's so much information out there I actually don't know how to make sense of it.' At least, by providing that platform, there is somewhere to go to start that sort of directional strategy making. I don't think any of us are really close to the work that's coming out of Germany. We've looked at it, but we haven't really gone into it in a huge amount of detail.

Senator PATRICK: You're a demographer. Temporarily, I guess, it's a key feature of what you do. I'm just thinking of locksmiths going to swipe card experts, and blacksmiths going to some other role. Do you track that in terms of—

Prof. Rolland : Transferability and mobility.

Senator PATRICK: Even trending it, just saying: 'Can you see from the data that this is where it's likely to go?'—you know, computer sciences.

Prof. Rolland : As a demographer, you're probably not so much occupationally tracking the relationships, but I think that what I have observed across time in my research is that, when you have, particularly, low-skilled workers displaced from a job, they're more likely to leave the labour market, particularly if they are older, than they are to find another job at a commensurate level, with commensurate income, or they are likely to take a job that is lower paid and may be lower skilled, more tenuous. That's sort of the effect generally. It's going to be difficult to tell, in this emerging environment, whether that continues to be the case, as we predict that technology will eat away more into those mid-tier jobs—whether that mid-tier workforce is more capable of adaptation and building on the higher order skills that they've brought to their jobs to date. I think that's yet to be seen.

Senator PATRICK: So you're not really in a position where you can say there is a trajectory.

Prof. Rolland : No, but I think it's a really important question, and someone certainly should be getting across that. I think it's a really important question around: what are the job pathways as technology changes jobs? What are the adjacent jobs that people should be thinking about? What are the building blocks of capability that they need in time to be able to make that transition? I think in the past that's been the nub of where we've failed—that we've often waited until the individual is, or that group of individuals are, redundant before we start thinking about how we help them to relocate somewhere in the labour market.

Senator PATRICK: In your statement you said that Australia is soon to reach a tipping point that we are not prepared for. But in some sense we are always seeing this change. Your evidence in some sense says that, and evidence provided to this committee by other people has suggested that's just normal, as opposed to some tipping point. I just wonder why you've made that remark.

Prof. Rolland : Something in the nature of technology is changing, which make us all feel something different is going to happen. We're starting to see a confluence of all those artificial intelligence, machine learning, and digital technologies, which is quite different to what technologies have done in the past. In the past, technology has augmented human capability; it hasn't replaced it. Now we're starting to see evidence of the ability of technology to replace human capability. That's why I think we're moving towards a tipping point. I liken it a bit to the beginning of the web, the internet. In the mid-nineties I was playing around with economic development in regional areas, and we were working with business on online retail portals. We thought that was going to transform the world of retail in the mid-nineties.

Senator PATRICK: What a crazy idea!

Prof. Rolland : Here we are, and it didn't transform the world of retail until about 2008, but the momentum grew, and all of a sudden with retail we hit that tipping point. I think what we're going to see with technology and jobs will be similar. We'll get to that point and it will move pretty quickly.

Dr Andrews : I would add one extra point to that. We said earlier that there is a sense of complacency in some of the organisations we're working with, 'Maybe this is happening to somebody else and I don't really need to worry about it, because it's just change and we're all changing.' That's is lowering their feeling of urgency to respond, but our point of view with them is always, 'It's going to take you a lot longer to change human behaviour than it will to turn on a technology, so you need to start attending to the behavioural side of your future long before you can switch something else on.' That's where the tipping point will occur, when all of those technologies are switched on, and as people we're just not ready. We don't have the skills, capabilities or behaviours.

Senator PATRICK: If we went back in time to the first industrial revolution, I wonder whether someone at a Senate inquiry said, 'We're at the tipping point; all this technology is going to replace manual labour.'

Prof. Rolland : That's true, and we've been through waves of this many times, but when we look back in history we also see that swathes of people have been impacted. While new jobs emerged, and we adjusted over time and things settled back down again, during those periods it was highly disruptive. There is a risk of seeing the same massive dislocation of people from those lower skilled, rote jobs, and also pushing up into the middle tier, if we don't think proactively about how you equip people to adapt.

Senator PATRICK: We had a tipping point at that point, then we had another a bit later on, now we have another one coming, whereas it sounded like a singular tipping point. Are you suggesting that it comes in waves?

Mrs Halloran : I just came back from an event we hosted in Amsterdam, Innovation Realised, and Yuval Harari, who spoke at the World Economic Forum, also spoke there. He's an historian who wrote the books Sapiens and Homo Deus. It was interesting. He spoke very briefly, but he alluded to your point that we didn't think there would be a replacement of humans. He talked about how much society needs from an historical perspective. People were needed in the Industrial Revolution, the wars and so on. He talked about how we have to reinvent ourselves as people in jobs every 10 years. That is just one source, but I thought it was quite fascinating, given that historical reference.

CHAIR: Thank you very much for coming along today. It was really interesting.

Proceedings suspended from 12:43 to 13:49