Income For The Top 1 Per Cent Grew by Almost Half. See If You Can Guess How the Bottom 90 Did

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The staggering rise in Australian inequality is linked to the automation, globalisation, and fragmentation of the traditional jobs market, and with around 40 per cent of Australia’s jobs at “high risk” of automation in the next 10 to 15 years the problem could spiral out of control if not tackled.

These are the ominous warnings contained in a new report, released yesterday by the Foundation for Australian Youth, which said that over the last 15 years the income growth of the top 1 per cent has been a whopping 42 per cent higher than that of the bottom 90 per cent of workers.

Similarly, the top 10 per cent have enjoyed an increase in income 13 per cent higher than the bottom 90 per cent according to the New Work Order report, which was prepared by strategy and economic advisory firm Alpha Beta.

The report said these trends, which leave lower skilled and lower paid workers increasingly vulnerable as their jobs are replaced by technology and overseas workers, are linked to the “continued rise of temporary, part-time and self-employment” which in turn is “linked with lower jobs quality” and inequality.

However across the OECD these forms of insecure work have made up more than half of jobs growth since the 1990s, and the report shows that Australia is ill-prepared to deal with the inequality and unemployment changing jobs markets are likely to bring.

According to the report, around two thirds of Australian students are being trained in “dying jobs” that “will be radically affected by automation in the next 10-15 years”.

That figure is even higher for students enrolled in vocational education and training courses, where 71 per cent of the jobs students are preparing for are at risk of replacement or serious alteration.

Even the services jobs that have typically taken up the slack left by jobs in labour intensive industries like manufacturing as they decline may not be safe, with the report predicting that 11 per cent of services jobs could be lost to overseas workers who can do them remotely at lower cost.

Throughout the past 25 years nearly one in ten unskilled men lost their jobs and never found another, which could be seen as a terrifying precedent given that 30 per cent of young people are currently unemployed or underemployed.

While the report points out that around 85 per cent of the jobs of the year 1900 had disappeared by the year 2000, and we have not yet experienced mass unemployment, it also notes that “technology and automation does not affect all occupations equally”.

“In the past, technology has enabled firms to replace lower-skilled workers with machines…[while]…skilled workers have enjoyed efficiency benefits from the introduction of machines,” the report said.

Effectively, the benefits of automation and globalisation have accumulated to the highest skilled, and typically richest, people in society and contributed to the disproportionate growth in their income compared to the 90 per cent of workers.

To prevent that trend from continuing, the report holds, governments need to investigate what training and education young people will need to navigate the new labour market.

Chief amongst the report’s recommendations is a dramatic escalation in the digital education provided to young children, who will likely be required to develop and manipulate computer programs rather than simply use them.

Leading by example, the United Kingdom is already teaching children as young as five to “learn about algorithms as a set of instructions [and]create and debug simple programs,” the report said.

Notably, “This report disagrees with the recent Review of the Australian Curriculum that recommends Digital Technologies only be introduced from Year Nine.”

The report also recommends changes to classroom teaching to intensify the focus on entrepreneurship and problem solving in recognition of the fact that today’s young people are expected to undergo something like five career changes and work 17 jobs in their lifetime.

In these circumstances, skills in areas like communication, creativity, project management, financial literacy and global citizenship will be useful in coping with the demand to adapt and learn new skills rapidly as workers are employed in more ephemeral and insecure jobs.

The rise of the ‘cooperative economy’, which features online start ups and on-demand platforms like Uber, will also mean young workers will benefit from skills of this sort.

On top of changes like these, designed to enable young people to thrive in a changed jobs market, the report recommends a number of measures to protect low-skilled workers, including adjustments to lessen the tax burden on low-paid and unskilled workers.

Reinforcing the link between inequality and changes to jobs markets the report notes that the ‘tax wedge’ — essentially the taxes paid by a worker as measured against the cost of employing them — has remained steady at 28 per cent over the past 15 years.

That’s despite the fact that over the same period the top 1 per cent have enjoyed an income growth of 42 per cent more than the lowest paid 90 per cent of workers.

You can read the full report here.

Thom Mitchell

Thom Mitchell is New Matilda's Environment Reporter.

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