What does our projected change in the 2028 jobs landscape mean for Australian policymakers, employers, and workers as they ready themselves for the future demands of the economy? Today’s workforce does not possess many of the skills and experience that the future economy will demand of it. The better that these shortcomings are understood, the better prepared these various stakeholders will be to smooth Australia’s transition to a more technologically advanced, productive, and larger future economy. For the next stage of our study, we used Oxford Economics’ Skills Matching Model to simulate iteratively how all the job vacancies that result from our technology scenario will be filled in 2028. To do this, it is not enough to understand where, ultimately, jobs will be created and lost in the economy, since this misses all the incremental job changes in the middle. For example, we would not expect each displaced taxi driver to retrain as a healthcare assistant or software designer. Instead, there will be a “ripple effect” throughout the economy, as most affected workers seek out new jobs with task-profiles closely aligned to their own. Our Skills Matching Model is designed to simulate the mechanisms that play out in the real-world labour market. This enables us to explore the routes to new employment that displaced individuals will most likely take, and the additional skills they will require to get there.10 (See Appendix 2 for more information on how this model works.)
Our analysis shows that today’s workforce faces the most acute challenge in terms of acquiring the required level of new IT skills. For example, the workers most likely to be pulled into occupations needing programming skills are found to fall 57% short of the overall level required in our 2028 technology scenario. Similarly, for technology design, workers are estimated to be 43% short of the economy’s future requirement. For jobs requiring the complex cognitive skills of maths and science, employers will be drawing from a pool of labour that currently falls, respectively, 20% and 30% short of where it needs to be. Such highly technical occupations will be in great demand in future and are at the heart of delivering the kind of technological progress that define our 2028 scenario. Relatively acute skills challenges also show up in other technical areas. Our model suggests today’s workforce is not sufficiently prepared for future jobs demanding operations skills such as equipment maintenance, installation, operations analysis, and technical repairs. In these skill areas, the best available candidates to fill emerging positions are currently 25 to 35% short of the levels required, overall. In Fig. 13, below, we set out the Australian labour market’s full skills challenge, with the skills grouped into six overarching categories.
10 The Skills Matching Model focuses on those workers that change occupations as a result of the creation and displacement of jobs across industries and occupations. Many displaced workers are in fact “re employed” in the same occupation and industry in our 2028 scenario as today, as a result of the income effect offsetting the displacement effect, and they are therefore excluded from this analysis.
To illustrate how skills shortfalls are estimated, we present an example of a common job move in our model: a contact-centre clerk becoming an advertising and marketing professional. The contact-centre clerk has adequate skills to complete some aspects of the advertising role, such as those relating to social perceptiveness and speaking. But the clerk would face a significant learning curve in others. The advertising and marketing jobs typically require higher skills in operations analysis, systems analysis, and judgement and decision-making. In order to estimate the size of her “skills shortfall”, we quantify the skills profiles of both occupations, using O*NET data (see Appendix 3) and the difference between them. The clerk’s shortfalls for each task are illustrated by the light-blue areas in Fig. 14. Figure 14. Skills shortfall for contact-centre clerk becoming an advertising professional
From the point of view of the numbers of workers affected, it is the softer human and elementary skills that pose the largest challenge for today’s workforce. While the skills shortfall is typically narrower for this category — making the individual challenge typically less acute — the number of workers falling short of various softer skillsets is much greater. A much larger share of future jobs will demand interactive, communication skills than they do today. While technological innovation is driving change, and many workers will be required to work more closely with technology, the biggest shift in employment levels in Australia will be into jobs requiring more of these softer skillsets.
Our model shows that more than 350,000 workers will find themselves moving into jobs that require an upgrade to such skills as active listening, speaking, and critical thinking skills. More than 150,000 will need to upgrade their ability to negotiate, persuade, and learn—functions that are much less important to their roles today. This largescale softer reskilling requirement poses a very different challenge to stakeholders in the Australian labour market to the need for STEM skills training. The mode, method, and frequency of training will differ accordingly, which is a critical consideration for businesses, policymakers and educators in how they should prepare to provide the necessary skills training.
Fig. 16 illustrates the relative acuteness and breadth of the skills challenges in each of our six overarching categories. The length of the segment represents the relative size (acuteness) of the skills shortfall for each category, while the angle represents its share of the total skills gap.
IT skills and operations skills protrude from the pie, emphasising the difficulty of preparing today’s workers with such sophisticated skills. However, the largest share of the pie is taken up by elementary and human skills — categories that are characterised by relatively small skills shortfalls but on a vast scale. For this reason, the Australian economy has as much of a job to do in readying today’s workers for these new demands as it has in training the next generation of STEM specialists.
