As an economist, I’m interested in the role that technology plays in the economy – how it disrupts, enhances productivity and changes the way we live, work and play.

It appears in the questions people ask of me, too. Recently, one opportunistic investor asked: will the recent upgrade in NBN speeds decrease inflation and lead to lower interest rates? Unfortunately, for Australians hanging out for rate cuts, the answer is: not so much.

While inflation has moderated, it’s still running at 3.2 per cent, and our forecasts suggest there is no path to a rate cut this financial year.

Another question I’ve been asked is: how will artificial intelligence affect my job? It’s a question that is far more complex than it seems.

Most of the time, discussion of this topic is shallow and focused on the fear narrative of robots replacing people.

The truth is much more complex.

To examine the subject, we looked deeply at every occupation to understand how many tasks in that role could be replaced (what we call substitution) versus augmented (where AI helps employees work faster or more efficiently). We then mapped this against the ASX200 sharemarket index to identify companies and sectors that stood to benefit most from adopting this technology.

The results are both surprising and heartening for Australians who fear that robots are here to take their jobs.

While disruption is universal – only one in 1000 occupations in Australia have minimal exposure to technology – the impact varies: one in three jobs have medium to high exposure to substitution by technology, and one in two jobs could be augmented.

This might seem like a big impact, yet three decades of substitution has already reshaped our workforce – routine jobs (those most exposed to being replaced by technology) have declined from 60 per cent of the workforce in 1990 to 45 per cent today. This has left us with a cognitive-heavy, professionally skewed labour force that will be exposed to AI augmentation.

Australia today is full of skilled, smart workers who will benefit from the AI revolution in which technologies are adopted that help make people work smarter and faster.

In fact, there is historical precedent for this. We know from past technology revolutions that augmentation creates productivity gains, not unemployment. While AI will reduce headcount, the impact is set to be more gradual than outright job substitution.

So, what we expect to see is adaptation, rather than devastation. Previous technology waves (computers, the internet, mobile phones) created new roles while transforming existing ones. For example, consider one of Australia’s 50,000 typists. This role looked like a “high-risk” occupation when the word processor was introduced, yet it still exists today, though its nature is quite different to what it looked like back then.

And consider accountants. In the 1990s, there was one accountant for every bookkeeper. There are now 2.4 accountants for every bookkeeper, as software automated routine tasks and drove an increase in demand for highly-skilled workers. I’d wager that a good chunk of the bookkeepers became accountants.

Upskilling takes time and effort, leaving roles vulnerable to substitution as those most immediately exposed to job losses. But while replacing roles is quite straightforward – think of all the times you have used a self-checkout machine at the shops – it is expensive, too, given the cost of purchasing and maintaining that machine. As a result, there remain 125,000 checkout operators, although the roles remain highly substitutable.

The challenge is that technologies that replace jobs today require large upfront investment and often involve navigating associated workforce challenges.

When we look at helping existing workers to do more with technology – what we call augmentation – it becomes even more challenging. These benefits are implemented and realised, role by role, person by person and company by company. They offer significant long-term productivity gains, margin expansion and new revenue opportunities, but also require a huge amount of investment and effort, often with uncertain outcomes.

It took two decades for computers to become commonplace and useful across the economy. Even if we move at double the pace with AI, the full potential (which is still largely unknown) may not materialise until well into the next decade.

So, what should we do?

As individuals, there’s an opportunity to get ahead of the curve by investing and learning how to use new technologies to augment our capabilities. We can be masters of our own destiny and choose to take the path of the bookkeepers who became accountants.

As investors, we should look at fast adopters – companies taking the risk of early AI implementation and benefiting from comparative advantage while others catch up. This includes those leading in augmentation technologies and those positioned to capture the remaining low-hanging substitution opportunities.

The technology disruption we all face is real, but history suggests we will adapt and transform our roles rather than be rapidly replaced.

There are also headwinds to rapid adoption including concerns around cybersecurity, energy usage by these technologies and cooling for them, as well as cultural adaption headwinds and regulatory action. As a result we think workforce disruption will come more slowly than some of the more extreme predictions.

Jo Masters is chief economist at Barrenjoey Capital Partners.

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