The great skills shift: everyone’s an expert now

Buried deep within the mountain of data generated by the 2021 census there lies a rich seam of figures that reveal one of the most profound impacts of the pandemic.

Tide turns: a customer uses a self serve checkout at Coles. Picture: Mark Scott

Buried deep within the mountain of data generated by the 2021 census there lies a rich seam of figures that reveal, in my view, one of the most profound impacts of the pandemic. This great finding, this rich seam of data, can be summarised as the great skills shift.

It is the result of an ascendant and unstoppable tectonic force that is reshaping the workforce and impacting every Australian household.

The Australian Bureau of Statistics classifies every job in the Australian workforce into one of five skill-level classifications.

Skill level I jobs require a university degree (for example, accountant) or some kind of acquired specialist skill including being an owner/manager of a business (such as a farmer).

Skill level 5 jobs require no formal training but rely on on-the-job training (such as kitchen hand).

Between these extremes there lies the work performed by middle Australia and which includes jobs such as chef and police office (SL2), electrician and personal assistant (SL3) and aged and disabled carer (SL4).

The great skills shift is evident in the acceleration in demand for more highly skilled workers. Over the five years to 2021, the Australian workforce increased by 13 per cent but the number of skill level 1 workers increased by 21 per cent.

Across the same period the number of skill level 4 workers increased by 1 per cent while demand for skill level 5 workers increased by 3 per cent.

Close to one million net extra workers have been added to the workforce’s two most highly skilled job categories since 2016. This compares with roughly 70,000 jobs added to the two least-skilled category of workers.

The workforce is contorting, demanding ever more skilled workers to feed into the seemingly insatiable demands of the professional services, education, information and healthcare sectors.

Skill level 5 jobs, including the single most popular job in Australia, sales (aka shop) assistant with 514,000 workers, dominate the retail trade industry. These are jobs offering on-the-job training in more or less every city, suburb and town across the continent.

But even in this “most popular job” category there is structural change. I suspect the most recent census shows, for the first time ever, a net diminution in the shop assistant workforce, down 12,000 jobs or 2 per cent since 2016.

Australians have embraced online shopping, boosting demand for skill level 4 jobs such as storeperson, up 26,000 jobs or 24 per cent. Storeperson jobs are located in warehouses and logistics centres.

But this behavioural shift goes further. If more Australians are buying online, then there is also a greater need for (SL4) delivery drivers, up 29,000 or 71 per cent since 2016. And also increased is demand for more (SL1) software engineers, up 25,000 or 80 per cent since 2016.

The no-formal-training-required job of shop assistant is being displaced by more highly skilled jobs that are based on a different model of consumer behaviour.

The value of young Australians investing in skills and training is evident in the census. A comparison of the median income of full-time workers by skill level classification across the life cycle shows the material benefits of training.

Peak annual income for SL5 workers ($57,000) is reached at age 36. Investment in a Certificate II (vocational) qualification enabling access to skill level 4 jobs, such as storeperson and aged and disabled carer, lifts median annual income to $69,000, which is reached at age 43.

Completion of a university degree on the other hand, and on average, lifts the peak median annual income to $125,000 at age 49.

Peak income for full-time workers is achieved between the ages of 36 and 49, when most Australians have families and buy houses. But this analysis also shows the value that is accrued across a lifetime of early investment in education and training.

Interestingly, at the time of the census (August 2021) the Australian waiter population, a job classified by the ABS as skill level 4 (requires Certificate II), was 89,000, down 19,000 or 18 per cent on the 2016 level.

This may have been due to the highly restricted access to hospitality services across the nation at that time (Sydney and Melbourne were still in lockdown), but it may also reflect another structural behavioural shift.

The pandemic taught Australians how to use a QR code. I suspect many cafes pivoted into fewer waiters because their clientele was quite comfortable ordering using technology to access a menu.

If this is a long-term trend, as I think it is, then Australia has just passed peak waiter in the same way that in the 1990s we passed through peak bank teller.

The same logic applies to the skill level 5 job of checkout operator, whose numbers dropped by 2000 or 2 per cent across the five years to 2021. This may have been caused by lockdown. It may have been caused by more shoppers shopping online.

Or it may be the beginning of a bigger shift towards a greater self- checkout capability. Consider, for example, the shift towards self-checkout facilities in most supermarkets, in discount department stores and across the entire big-box retail store format. Gone is the one-on-one human checkout facility; in has come a corralled bank of self-service checkouts supervised by a single shop assistant. This requires the co-operation of customers plus some technology navigation skills.

The pandemic has accelerated the encroachment of technology into the skill level 5 workforce.

I suspect this shift will be supported and continued by management throughout the 2020s, and not just on productivity grounds but also as a necessary response to the skills shortage.

It may be that unskilled workers believe there are better remunerated and more fulfilling options in the workforce.

The least skilled workers in the workforce, those with jobs classified as SL4 and SL5, dominate the transport and warehousing, retail and accommodation and food services industries. In these three industries, low-skilled workers comprise no less than 66 per cent of all jobs.

But not all low-skilled jobs in these industries are safe from the effects of technological change.

Skill level 4 jobs such as truck driver (148,000 jobs in 2021), storeperson (135,000) and delivery driver (70,000) may be expanding now, but by the end of the decade these jobs could be displaced by the rise of autonomous vehicles and by the further automation (via robots) of warehouses.

The same may be said of (admittedly fewer) skill level 1 jobs such as accountant (139,000 jobs in 2021). The greater integration of financial systems with taxation and regulatory requirements may result in less demand for direct annual accounting advice across middle Australia.

The same may be said of the roles of solicitor (70,000 workers in 2021) and primary (165,000) and secondary (156,000) teacher.

It is unlikely that these jobs could be replaced entirely by technology, as is the case for, say, checkout operator, but there could be ways in which technology assistance delivers productivity gains within the education system.

Assisted-learning technologies may simply reduce the rate of growth in the teacher workforce over a decade.

Use of mass information scanning technology may reduce the need for graduate solicitors in the “discovery” process.

Technology diminishing demand for Australia’s half-million shop-assistant workforce is one level of social and workforce change.

Another level, perhaps just bey­ond the horizon at this stage, could diminish demand for the far more highly remunerated skill level 1 jobs of the Australian workforce.

The biggest issue of the late 2020s could be the advisability and/or effectiveness, or otherwise, of machine learning.

The mapping of skills across Australia is visually dominated by the farming community where owner/managers are classified as skill level 1 workers.

Skill level 4, with its surging truck driver cohort, dominates the Pilbara, the Bowen Basin and other mining communities.

Within the capitals, our cities naturally divide with skill level 1 (university-educated) workers gravitating to Canberra, Sydney and Melbourne in particular.

And skill level 4 and 5 workers huddle especially in Sydney’s west and Melbourne’s west.

As is so often the case, the census confirms our everyday experience of learning new technology such as navigating QR codes, such as downloading apps and ordering goods online, such as noticing a heightened presence of delivery vans in our streets, such as initially being annoyed that there is no checkout worker but then preferring self-checkout once the process is mastered.

All of these new behaviours, for many learnt during the pandemic, have an effect on the shape of the Australian workforce. That shape reflects the great skills shift.

It portends an even greater requirement of current and future workers and that is the agility to adapt, to learn, to adjust, to accommodate the new way of working and of delivering workplace value.

Bernard Salt is founder and executive director of The Demographics Group.
Research and data by data scientist Hari Hara Priya Kannan.