Will the changing Australian workforce ever be the same again?

In this opinion piece Chris Luxford looks at the challenges facing the local workforce, like off-shoring and the shifting skill requirements, and how these will impact how businesses access staff with the right skills for their operations.

“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change” – Charles Darwin

A 14-year-old in 2012 considering what kind of career they might be interested in once they leave school has a tough challenge on their hands. Not only because of the seemingly endless possibilities, but also because many of today’s jobs may have become obsolete by the time they enter the workforce, and many brand new ones will have been invented. Copyboy, lamplighter, typesetter … all jobs of yesteryear that no longer exist. And who would have thought all those years ago that one day we would be seeing job advertisements for the likes of ‘Digital Strategist’?

The nature of work is changing across the globe. There was a time when people lived in individual, self-sufficient communities. Over time this has gradually shifted towards an interdependent global economy. During the last century what people do, where and how they do it has fundamentally changed thanks to advancements in technology and the likes of cloud computing and ‘teleworking’. These changes are set to continue at a rapid pace.

Australia’s workforce is changing more rapidly than most. Significant downturns have occurred in retail and manufacturing due to globalisation and widespread job losses in the financial sector have also been noted.

In manufacturing, for instance, close to 1,000 Australian workers have been made redundant in the past 6 months. Australian banks are consistently announcing plans to cut staff, with the widely held belief that 5,000 jobs could disappear from the sector over the next two years.

Aside from redundancies, many companies have turned to off-shoring as a way of reducing costs. Our best estimate is that as many as 50,000 Australian jobs have been off-shored during the past decade. We should expect this trend to continue and certainly should not be fearful of off-shoring, as long as it is done correctly.

Take legal firm Baker McKenzie as a case in point. As far back as 2001 it established a dedicated back office facility in Manila, referring to the action as ‘legal process off-shoring’. The resultant shared services centre now delivers cost savings to the company of up to $US25 million ($26.8m) per year.

It is time for industry to accept that employee resources will come from many sources – local, regional, national and international. At Aegis, we have developed a model that includes what we refer to as ‘cross-shore’, whereby locals who work for an organisation actually move to another country and deliver the exact same service overseas – USA agents being relocated to Mumbai, for instance. This approach delivers improved economies of scale, development opportunities for the individual employee by offering them the opportunity to explore the world, as well as cost savings for all involved, without compromising the quality of the work. These are usually short-term stints overseas and generally involve some kind of official training program, leaving the employee with an internationally recognised qualification.

The challenge for the Australian workforce is the dramatic shift of skill requirements due to rapid advancements in technology, communication, automation and processes. Traditional organisations that once required mechanical task based skills now require “knowledge worker” type skills. Whilst unemployment in certain areas increases, skill shortages across many other sectors likewise increase.

A recent skills index highlighted an undersupply of skilled labor in corporate services, IT and engineering – another reason to consider tapping into external and overseas talent to ensure Australia does not forgo the benefits of its strong links with the growth regions of Asia.

There is a massive time commitment involved in up-skilling, therefore sourcing talent elsewhere becomes a more and more attractive option.

To address this, organisations need to re-think how they access people with the skills to execute all aspects of their business operations. The traditional hire, train, deploy, develop, promote model simply doesn’t cut it in a modern day business environment. Nor will the traditional model of outsourcing non-core business functions against a strict contractual and service level model. In short, new models for the engagement of resources will need to be developed. Mallesons Stephen Jaques, for instance, announced late last year that it planned to utilise the skills of 200 trained lawyers in India.

Conventional thinking on core versus non-core function outsourcing will come into question. Non-core functions in many companies have already been outsourced, mostly for cost arbitrage. There isn’t much more that can be extracted here, but is it delivering value? When it comes to core functions, the continued skills shortage in many areas limits innovation and causes costs to rise in the fight to retain talent, eroding margins. Organisations will need to look at unique partnering models that enable them to access highly skilled and talented resources critical to the core of their business, but with the flexibility and capacity to scale the workforce up and down and move efficiently from project to project, the same as Software as a Service (SaaS) has been adopted in IT to deal with business and traffic fluctuations.

In summary, more and more organisations are coming to realise that over the next two decades true competitive advantage will only be achieved through accepting that resources and skills will come from many different sources and locations and will be engaged for varying degrees of time.

Australia has a unique opportunity to take a world leading position in creating workforce opportunities in the new global economy. But this can only happen when companies develop the courage to boldly change their operating paradigms and adopt a new approach.

  • I refer to your writer Mr. Chris Luxford who writes a very profound and thought provoking article entitled “Will the changing Australian workforce ever be the same again?”
    The responses to his obvious in depth analyses would appear to hold many truths that Australian business should be considering and working with. His report in a way is giving a chilling wake up call for business to act or risk going under.
    His report aligns itself with the presumption that the overwhelming workings of the economy are globally linked and this probably true.
    The concern I have is that if by eventual necessity business’s are to go the way Mr Luxford is advocating for their survival the result is predictable in that big money will be saved and therefore made by these businesses.
    The question must now be asked as to where these funds will go and it would appear they will stay within the confines of the business eg. build up of premises, lifestyle of chiefs etc. Ofcourse moderate releases of funds will go to the low paid overseas worker who has helped make the “success” possible.Which brings me to the past worker of these businesses who has been your average Australian child who has done their time being trained/educated and then devoted much of their lifetime with worker loyalty to these businesses.Many pundits could say well “more fool them” for being loyal for so long but this is often said with the benefit of hindsight. Many workers particularly from Baby Boomer and Gen X backgrounds had it culturally inground that it was proper and decent to be loyal for the long haul with your boss. I’m not about to say that Mr Luxford’s observations on employer directions are stooping to new lows of disloyalty to long time workers ,not at all. But, what I am saying is that it is tragic to think that under this possible new direction there is a real possibility of losing a major portion of a generation’s or two’s workforce forever. Workforces that have been educated, primed and groomed by community elders(teachers pollies etc.) that working hard will lead you to a stable permanent job in Australia.
    We all know what Charles Darwin said about the survival of the fittest and about how those who adapt to change have a better chance of survival.
    As life is full of commitments, undertakings etc. sometimes stability is a must for some people. Therefore, some people cannot fit the mould of adaptability that Mr Luxford is advocating. Some people are just content to do a fair day’s work for a fair day’s pay and leave it at that. Possibly some olf these people in the corporate world could be viewed as non achievers and effectively “cast aside” ?
    I think that what Mr Luxford is advocating for business will exasperate the already increasing problem of a double edged economy comprising an increasing rich corporate Australia and the rest who have been left pondering on welfare with what might have been a stable career in a once proud and flourishing country.
    Mr Luxford, how can talented people who are bound to be cast aside in the process of globalisation be re-invented without the need to be on the gravy train of corporate loyalty to all corners of the globe. How can these people who just want to live humbly,stabley and satisfactorily (not extravagantly) in the best country on earth be reinvented in the work place? Your comments please Mr Luxford.

    • Chris Luxford

      John,

      Firstly thank you for taking the time to respond and engage in the discussion.

      You raise two really interesting points that I feel every company, and every executive in every company grapples with.

      The first is globalisation. The challenge for every company executive is that they would gladly hire and invest in local people, but consumers, that’s you and I are always looking for the “bargains” or cheaper / better products. This results in organisations constantly being forced to look for productivity, efficiency and cost reduction to meet the market demand.

      Protectionism doesn’t solve this problem either as it results in reducing the opportunity for exports which further impacts the local employment market.

      Look at Amazon and iTunes as a case in point, thousands of consumers taking their business offshore, buying overseas.

      Every market can sight global competitors that they are competing with locally, where those global competitors have vastly different structures and business models.

      The second excellent point you raise is the loyalty businesses show to those loyal to them. There are some great examples of companies who do amazing things for their people. Recently Ventura bus lines paid surprise bonuses to many of their staff in some cases up to $15,000 extra as a result of sale. Loyalty paid back in kind.

      Market dynamics are always a challenge and it’s well acknowledged across all parts of business and govt that our economy is in transition. Mining for example is expected to require another 300,000+ skilled workers over the next few years, but we simply aren’t skilling enough people through our education system to meet this need, hence being forced to look offshore for these skills.

      Companies, and many are, need to look at how we can invest in people’s skills development. Fair pay for a fair day’s work, I 100% agree with, the challenge is the work we’ve traditionally done, is not sustainable here due to consumer driven market forces. However the opportunities for employment in this country are unbelievable and we can create many many new jobs through a focus on education, training and skills development, and there is a role for any person from any demographic and background if companies are willing to invest and leverage the significant investments the govt is making in supporting this transition (training initiatives through RTO’s etc).

      Again thanks for your comments, and I agree that it’s a challenging debate. It’s about striking a healthy balance, and as a large employer in this country I’m very proud of the work our company does in employing locally. As example we have employed near on 500 people in the last 9 weeks in Melb, where many other companies are having to unfortunately lay off people.

      Kind regards
      Chris