Peak Jobs | Random Analytica

December 4, 2013

Random Analytics: PeakJobs – Australian Full-time vs. Part-time Employment (to Oct 2013)

Alan Kohler wrote and excellent piece for the Australian Broadcasting Corporation titled: What jobs will be left once the machines take over? He finalises with:

In Kerry O’Brien’s riveting interview with Paul Keating, the former treasurer and prime minister said the people who lost their jobs in the “recession we had to have” (1991) ended up getting better ones. That’s what the optimists say about automation: that the machines are just replacing unpleasant machine-like jobs with better ones. Except that this is not a recession – employment is going backwards while the economy is booming. Maybe jobs growth will catch up with capital expenditure and GDP later, but it’s hard to imagine the definition of full employment getting back to what it was before the rise of the machines.

I posted some thoughts and charts on this very subject back in February (see Random Analytics: Peak Employment (Part I): Australia) but I thought it might be worthwhile having another look at the updated data and republishing the full-time/part-time charts. I’ve also included a new chart looking at how full-time employment and part-time employment has progressed since the Global Financial Crisis (aka Global Recession).

The first phase of peak employment was not due to ‘the rise of the machines’ but to the rise of China. Machine like jobs, such as manufacturing were not immediately automated but rather offshored to less developed parts of the world. Since 1978 as Australia’s economy has moved from labour intensive industries to one dominated by service and digital employments there has been a 59.4% increase in full-time employment and a massive 285.4% increase in part-time work. As the above chart shows part-time employment has been steadily increasing, even through the last Australian recession of 1991-1992. At the same time full-time employment has atrophied during recessionary periods (1983, flat-lined 1987, 1991-1992, 2008 and currently flat-lined since 2011).

To emphasise the rise of part-time employment the next chart looks at new job creation since 1978. As you can see, when times are good the full-time employment numbers spread increases above part-time employment. During two of the last three recessions (1983, 1991-92) the full-time employment numbers have collapsed back under the part-time line. Between 1995 – 2005 both employment types grew at an even pace but as the last big boom kicked on past 2004 the spread increased substantially. The start of the GFC saw full-time employment decrease substantially but dual local and Chinese stimulus packages allowed Australia to avoid recession.

This is the new inclusion and my favourite chart. Since the collapse of Lehman Brothers the Australian economy has created two part-time jobs for every new full-time job created. At the bottom of the crisis Australia shed 189,300 jobs at the same time creating 198,800 part-time employees.

To summarise.

As was recently discussed in a Business Spectator piece the Australian automotive industry is in crisis, with 150,000 automotive manufacturing jobs on the line. According to Bernard Salt, the entire Manufacturing Sector could further decline by 300,000 over the next decade.

Robert Gottliebsen believes the tapering of mining sector investment will cost another 150,000 jobs, penalty rates and a move to online trading will see another 150,000 jobs go from retail. The public service is also cutting back on employment, especially full-time thus up to half-a-million jobs are on the line over the next few years.

To summarise, the first phase of peak employment was the offshoring of machine like jobs, the next phase which is currently underway is as Alan Kohler points out the ‘rise of the machines’.

It doesn’t mean the end of employment, but…

The future global employment story will be one that will be dominated by reducing full-time employment, an explosion in part-time, contingent, contractual and freelancing structures and the ongoing integration of robots and algorithms into our workforce.

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July 17, 2013

Peak Jobs and HR Automation

During a recent recruitment discussion on #NZLEAD I brought up the concept that not only could most of the recruitment process be automated but there was a body of evidence that was proving this methodology was now successfully competing with traditional (human) practices.

What quickly became apparent was that the HR and recruitment crowd partaking in the conversation were very uncomfortable with the idea of any sort of replacement but especially by robots. A follow-up review of the #NZLEAD Recap Recruitment Processes ignored any discussion on automated process and concentrated on human inputs only.

It’s not just the recruitment process that is susceptible to an augmentation and automation overhaul. Many components of the Human Resources role could and can be downsized via augmentation or replaced by automation. It might even be argued that after automating most of the payroll function away in the 1980’s that HR itself has reached its next ‘peak job’ phase as its functions get outsourced or further automated.

So here is my ‘Good Read Guide’ on the subject of HR automation in recent times. Got one you think I have missed? Shoot me a comment with a link as I’d love to include more HR automation stories.

HR Automation – Good Read Guide

Laurie Ruettimann: Cold Reading: Sylvia Browne, Amanda Berry & Recruiters

I thought I would get kicked off with an article that sums up the topic without realms of detail and given that it’s written by the Cynical Girl it’s also a very punchy start to my reading guide. Laurie suggests that the methodology of recruitment is little better than an “unsophisticated psychic trick”: and “that technology can solve for bias and discrimination in the hiring process”.

Naomi Bloom: HRM Analytics – Dashboards, Cockpits And Mission Control

One item that keeps coming up in my ongoing conversation with HR is that I believe all things can be measured (but not all things should be as you should look for value against effort). There is always lots of discussion about this in the HR space. Naomi Bloom believes that all things HR should be measured. In an earlier 2009 piece she stated:

“If the real purpose, the only purpose, of HRM is to achieve organizational outcomes, then we’d better be able to measure the effects of specific investments in HRM on those organizational outcomes. Otherwise, why would anyone trust us with a budget?”

I reached out via Twitter to Naomi Bloom, given that she has spanned the entire modern HR journey between old and new (the picture is a copy of her 1992 opus on the subject which she kindly sent me). She suggested the above recent analytics article as a primer. It’s worth a read given that analytics is a key augmentation step and who does robots better than NASA!

The Ladders: Keeping an eye on recruiting behavior

Here is a resume service provider using eye tracking technology to highlight where recruiters spend their “four to five minutes per resume”. Don’t think resume writing or reviewing can be automated…. Think about it as a series of transactions and then ask yourself, can each of these transactions become automated?

Fiona Smith (via the Australian Financial Review): Driven by data: moneyball recruitment takes away all the guesswork

On the subject of recruitment Carol Howard suggested this piece by Fiona Smith on using data and analytics to take the guess work out of the hiring process. The case study utilised is Sears Holdings Corporation which put all of its applicant data against its employee data and found that their “best employees did not come from their previous talent pool”. If robots aren’t in the process of taking over the job of recruiters, big data is certainly going to assist in the downsizing of that role.

John Sumser: The perils of Automation

Before I leave you with links to a HR future that might not need (much less) humans in it I came across this thoughtful 2012 piece by John Sumser. Very wisely John suggests that “Automation strips the fuzzy stuff out of relationships to turn them into transactions. In that process, things get much more efficient. It’s less clear that we understand what we’re leaving behind.”

David Creelman (via HRVoice.org): Unending Automation

Maybe the role of HR won’t be in looking after your current employee’s but assisting those who are technologically displaced prior to their own exit. David Creelman suggests:

“Many countries do not require organizations to protect workers from technological change. If self-driving vehicles can replace your truckers then perhaps you can just send them a note wishing them luck finding another job. However, ethically we have a responsibility to at least inform workers about their longer-term prospects and preferably find ways to help. Ways to help could include early retirement, job-sharing, or retraining. HR should explore all those options.”

Steve Boese: Virtual HR, or, ‘Did you ask the HR chatbot’

My final link (and my favourite) is from Steve Boese, not only a HR technology professional but also someone with a keen interest in how technology is transforming work. In this blog Steve looks at Intel’s incorporation of Ivy, the virtual HR agent who at the time of publishing could respond in 4,331 ways to staff interactions. On the subject of HR automation Steve states:

“Most of us, (admittedly me too), say of think things like ‘My job is just too complex and ever-changing for it to even be outsourced to a less-expensive human (much less a robot).’

The criticism of this potential HR future was summed up nicely by David Gordon, a recruiter, who replied to my original tweet/link with “@gmggranger it is a good read – still not fit for purpose for recruitment (yet?!), Ivy answers factual questions, recruitment is subjective”.

I’ll agree with you David (at the moment). Yet, a journey starts with a single step…

Final Thoughts

Human Resources are being asked to assist in the transition of human workforces to augmented or automated workplaces. From automated trucks in the mines, DIY checkouts at the supermarket or robotics augmenting people on the factory floor every industry is under increasing competitive pressure.

Yet HR itself seems totally against a conversation about HR automation.

I get it. You’re a knowledge worker and the things that you do for the organisation are just too complex to be replaced by SkyNet.

But maybe its time for HR to review this thinking. As Steve Boese states:

But it also seems likely that given enough time, access to ever-improving technologies, and the right economic incentives, there are enterprising people and organizations that even if they couldn’t completely automate or robot-icize everything you do, chances are a fair amount of even what we creative types do is already routine enough that the robots could do a passable, if not better (and cheaper and will less of a bad attitude), than we do.”

The kind of hollowing out of HR, last seen when payroll was automated from the 1980’s is already starting to impact on the HR function and recruitment seems to be the current automation focal point.

Better start getting involved in the conversation people!

It’s going to happen with or without you.

Acknowledgements: In an effort to shine some light on this subject I started tweeting HR automation stories from various writers. My twitter-sphere colleague Michael Carty of XpertHR suggested it might be good to compile these into a single resource. Great idea Michael and I hope you like the post!

Special Note: For those who have not read any of my previous articles on peak jobs and need a little background. ‘Peak Jobs’ is the idea that technology is replacing jobs faster than it’s creating them. For those more technically inclined it can also be attributed to the finalisation of the increased growth in average output (and income) per labour unit due to technological change since the 1820’s as put forward by Robert Solow (1956) or the commencement of technological unemployment as put forward by John Maynard Keynes (in the 1930’s) without the opportunity to transition into new roles as productivity increases but global employment declines.

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June 21, 2013

Peak Jobs, Disruption and Micro-Enterprise

Outside of the Cloud and Big Data there is a word that is over utilised and often miss-purposed in modern employment (plus unemployment or underemployment) parlance.

That word is Disruption.

Looking at the modern meaning of the word via freedictionary.com

1. To throw into confusion or disorder.

2. To interrupt or impede the progress, movement, or procedure of.

3. To break or burst; rupture.

Having a look at some of the mainstream HR discussions taking place at the moment you would think that the disruption taking place in our modern workplaces only offers opportunities and that the liabilities of disruption and disruptive technologies can only ‘revolutionise’ tired industries.

Rachel Botsman will be discussing disruption at one of Australia’s largest HR conferences this year. Specifically she will talk about:

“Publishing, music, retail and travel have all been revolutionized by digital technologies. Who’s next in line? In this big-picture speech, Rachel explains the need and radical opportunity for industries, from education to finance to manufacturing, to reinvent their business model over the next decade to get ahead of the great disruption. As more industries ‘blow up hierarchy’ and move towards reaping the benefits of collaboration, how will it change the way employees think about work and what does this mean for the HR industry? Participants will be inspired by examples from all around the world that are challenging the status quo, and using technology internally and externally to stay relevant in an age of unprecedented change.’

What does disruption look like (macro-view)?

Malcolm Farr wrote an excellent piece about micro enterprises in 2011 titled ‘Australia shuts up shop: the effect the GFC has had on your local stores’. Although I would suggest that the GFC is not the major reason for the slide in Australian micro-business some of the interesting findings in his piece include:

According to the Australian Parliamentary Library the amount of small businesses in Australia that employed 1-4 persons decreased from 528,669 to 497,191 between 2007 and 2011 (impacting between 31,528 to 126,112 persons or 0.2 – 1.2% of the participatory population during that time).
During the same period small businesses which employed between 5-19 persons increased from 227,883 to 233,832 an increase equal in-line with economic growth.

This is what disruption really looks like (micro-view):

That photo, taken only this week was one of two DVD micro-businesses left in Gympie, a small regional city of around 20,000 souls some two-hours north of Brisbane Queensland. It’s been operating for around 20-years, is a family run business and employed around half-a-dozen first time workers in a part-time capacity. There would have been an extensive list of maintenance and supply-chain inputs which allowed this business to run and assisted other small enterprises who provided those services.

Next month there will be one less family run micro-business in this small regional town which can ill afford the loss of any business. That family will now be looking for other employment as will the part-time workers and all the inputs required to run will now be less one client.

What will replace this business?

If you believe Rachel the business has been revolutionised, much like Blockbuster UK was recently revolutionised! What is actually happening is that the model was expensive and out-dated and has been replaced by a number of options all requiring much less in cost input terms, including employment in source countries although there may be employment in digital supply chains. Options which are commonly replacing bricks and mortar micro-enterprises such as this one:

DVD vending machines (same cost without the service);
Bundled digital options (with bundled extended bill each month on your phone or pay TV carrier service);
Online (PAYG, assisting global corporations while helping multi-nationals such as Amazon avoid their tax burdens);
Outright piracy;
Turning the telly off.

Final Thoughts

‘Peak Jobs’ is the idea that technology is replacing jobs faster than it’s creating them. For those more technically inclined it can also be attributed to the finalisation of the increased growth in average output (and income) per labour unit due to technological change since the 1820’s as put forward by Robert Solow (1956) or the commencement of technological unemployment as put forward by John Maynard Keynes (in the 1930’s) without the opportunity to transition into new roles as productivity increases but global employment declines.

For Australia this meant that not only was there a movement by larger businesses toward part-time or flexible work options but also a Darwinian attrition of small businesses. This was especially impactful on micro-businesses which employed 1-4 persons since the GFC and now is impacting on the next tier in the SME chain. All of this without a likelihood of same-for-same employment transition across the economy as disruptive (read technological) replacements are sourced, placed and deployed.

Publishing, music, retail and travel are just the tip of the spear.

Wait until disruption really starts to squeeze.

Note: My previous posts on Peak Jobs can be found at:

Peak Employment (Part I): Australia; and
Peak Employment (Part II): UK.

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February 25, 2013

Random Analytics: Peak Employment (Part II): UK

I recently published a blog looking at Australian Peak Employment. Given some very good feedback and responses from the UK especially I thought it might be useful to have a similar look at the situation there.

Although the Office of National Statistics longitudinal depth was not as good as the Australian Bureau of Statistics in breaking down full-time and part-time employment pre 1992 there was some very good data not readily available in legacy ABS data captures, especially in areas like the self-employed.

Although I could only get data as far back as 1992 the picture it tells is as interesting as the Australian story (with data going back as far as 1978).

Here are the analytics.

Figure 1: UK Full-Time and Part-Time Employment (Mar – May 1992 to Oct-Dec 2012). Source: ONS.

Like the Australian example, the first graph highlights the almost identical increase in contingent (part-time) and full-time employment over the past decade. Since early 1992 full-time employment has increased by 10.3% (2.021-million) while part-time employment increased by 34.5% (2.072-million).

Figure 2: Increases in UK Full-Time and Part-Time Employment (Mar-May 1992 to Oct-Dec 2012). Source: ONS.

Like the Australian example the increases in both full and part-time employment are identical. Unlike the Australian example which has not seen a downturn since 1991/92 the UK data shows a massive 1-million full-time jobs disappearing post GFC but over the past 12-months or so that has improved by around 400,000 new positions. Additionally, the start of this data series showed negative full-time employment through to early 1994 as the UK struggled out of the late 1980’s and early 1990’s downturns (oh, how I wish I had the data going back to 1987).

Figure 3: Overall UK Employment versus Working Age Labour Force (Mar-May 1992 to Oct-Dec 2012). Source: ONS.

Here’s a look at the differential between total employment creation and the UK defined, economically inactive numbers. The UK created an additional 4.093-million new jobs; from 25.635-million in early 1992 to a record 29.729-million jobs at the end of 2012 (the pre-GFC high was 29.572-million in Mar-May 2008). The UK has steadily increased its working age population since 1992 (due to a combination a slightly lower than replacement fertility rate plus a higher immigration to migration ratio) which has left it with 3,734,000-million less jobs than that required to employ the 7.828-million increase in the working age labour force.

A quick point on the above. Like my previous article on this subject (avoiding wonkish angst) it should be noted that my Working Age Labour Force number in this graphic has been worked out utilising the ONS economically active rate data rather than my preferred method of using actual population statistics (you can see an example of this in my 2012 Abbott’s Promise piece).

In conclusion looking at the UK ‘employment type’ data is further confirmation of a global trend toward greater reliance on part-time employment, which on one hand is increasing employment to record levels while at the same time decreasing the amount of work available.

Has the UK reached peak employment yet? I’m not convinced it has but the more I look at the global data the more I am convinced we are reaching that point in the next decade. As I stated in my initial Australian analysis:

With an increasing working age population and a growing gap between jobs available the future is looking anything but certain, especially with the rise of labour augmentation and robotics replacing jobs quicker than they can be created.

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February 20, 2013

Random Analytics: Peak Employment (Part I): Australia

One of the great aspects of research is that it often takes you in unexpected directions.

Over the past two months and previously in 2010 I conducted a series of hands-on research assignments in the area of contingent staffing. Although my current contingent research assignment has not completed (it has at least another two months to go) I started to delve into the macro level data and have made some interesting discoveries.

It has also got me thinking seriously about the following question which was not related to contingent staffing analysis.

When will Australia reach ‘Peak Jobs’?

First of all, let me explain what ‘Peak Jobs’ means.

In simple terms (via the blogosphere) ‘Peak Jobs’ is the idea that technology is replacing jobs faster than it’s creating them. For those more technically inclined it can also be attributed to the finalisation of the increased growth in average output (and income) per labour unit due to technological change since the 1820’s as put forward by Robert Solow. For another take on this subject the ABC’s online business reporter Michael Janda recently did a piece on Australia’s peak participation rate (it’s an excellent piece, however I am not a big fan of participation rate analytics, as it’s a data input which hides many sins but more on that in later articles).

Unless there is a major catastrophe and given that Australia’s population will increase significantly toward 2050 I am not going to go on the record today and say that Australia has reached the upper limit of its ability to employ more people. I will go on the record and say that within the next decade Australia will reach that number.

To commence the first in potentially many blogs about this subject here are some analytics.

Figure 1: Australian Full-Time and Part-Time Employment (Feb 1978 – Jan 2013). Source: ABS.

In the first graph I wanted to highlight the almost identical increase in contingent (part-time) employment over the past 25-years. Since February 1978 full-time employment has increased by 59.2% (3.016-million) while part-time employment increased by a massive 276.4% (2.520-million).

Figure 2: Increases in Australian Full-Time and Part-Time Employment (Feb 1978 – Jan 2013). Source: ABS.

To emphasise the almost identical nature of full and part-time employment creation here is a look at the increases in both employment types since 1978. Notice the big drops in full-time employment from 1982/1983 and 1990/1991 (the last recessionary periods in Australian history) and the steady, almost linear growth of part-time employment during the past two and a half decades.

Figure 3: Overall Employment versus Working Age Labour Force (Feb 1978 – Jan 2013). Source: ABS.

Using a similar representation I wanted to finalise the graphs with a look at the differential between total employment creation and the working age labour force. Australia has created an additional 5.536-million new full and part-time jobs, from 6.010-million in February 1978 to a record 11.546.7-million jobs as of January 2013. Contrary to populist belief the working age population of Australia has steadily increased since 1978 (due to a combination of higher than replacement fertility rates plus immigration), effectively outpacing employment creation by 2,400,000.

Two quick points in relation to the above. Firstly, to avoid wonkish angst it should be noted that my Working Age Labour Force number in this graphic has been worked out utilising the ABS participation rate data rather than my preferred method of using actual population statistics (you can see an example of this in my 2012 Abbott’s Promise piece). Secondly, although not included in the above graph from 2018 the Australian labour force grows by approximately 475,000 as the working age officially increases to 67 (as at 2011 there were 507,252 people between the age of 59 and 60 who will be 66 and 67 in 2018 and I’ve factored in a high mortality rate of approx. 6%).

In conclusion the start of my ‘Peak Jobs’ discussion is focussed on the increasing use of contingent labour in the Australian economy and a widening gap between growth in employment and the working age population. As shown in the data there is an undeniable trend over the past two and a half decades in terms to utilise part-time labour solutions rather than traditional full-time employment. In fact in 1978 the ratio of PTE to FTE jobs was 1:5.6 but this has decreased to just 1:2.4. It would only take another recessionary period to decrease this ratio further as demonstrated in the loss of FTE during previous downturns.

In part two of this series I’ll be looking at similar data from comparable countries to see if the shift to part-time employment and potentially peak employment is a global phenomena.

Update 1 (25/02/2013): Initially this blog was going to be a series about Australian Peak Employment issues. However, given some excellent feedback and interest I’ve decided to look at other countries to see if this is a global issue (which I believe it is). For consistency, I have amended the original blog name from Australian Peak Employment (Part I) to Peak Employment (Part I): Australia.

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Category: Peak Jobs