3.0 Emerging Challenges and Opportunities

3.1 Job Losses

Computers, robotics, and automation are driving more and more of production. In turn this is leading to an enormous impact on the number and type of jobs. An Australian report released in June 2015 found that 40 per cent of the Australian workforce – or around 5 million jobs – are at high risk of being replaced by computers in the next 10-15 years. This backs up the Oxford Martin School’s 2013 study finding 47 per cent of jobs in the United States are at risk of being automated using artificial intelligence. We need to move urgently from a discussion about protecting the jobs of today, to creating the jobs of the future.1

3.2 Commercialisation and innovation

There are significant emerging opportunities and challenges for commercialisation and innovation resulting from technological changes to becoming a more sustainable, broad- based economy:

  1. Reducing the tyranny of distance, boosting trade and creating new business models but also promoting outsourcing of work overseas.

  2. Internationalising labour markets are expanding the skilled labour pool.

  3. Developing commercially functional goods and services from new technologies often takes a lot longer than expected.

  4. Leveraging clean technologies to improve sustainability.

  5. Fostering entrepreneurship and addressing constraints for Kiwi companies.

  6. Addressing slow uptake of new technology due to redundancy risks or ease of sticking with the status quo and supporting workforce mobility.

  7. Managing business change in a disruptive and dynamic business environment.

3.3 On-demand economy

Stable, permanent fulltime jobs are increasingly being replaced by an anywhere, anytime work model, facilitated by digital technology which is resulting in a shift towards more contract work and a more rootless and flexible workforce.

The “on-demand economy” is the result of pairing that workforce with smartphones and other devices, which now provide far more computing power than the desktop computers which reshaped companies in the 1990s, and reach far more people.2

The on-demand economy is starting to revolutionise commercial behaviour in cities around the world. Fast-moving tech companies competing in this arena have developed new models – such as Uber, Handy and AirB&B – that are transforming industries which have been historically slow to innovate. Transportation, grocery, restaurant and personal service industries are seeing hyper-growth in the on-demand world.3

However this means a growing gap emerging between workers and their ultimate boss. Ensuring workers retain their voice within their company is crucial to ensuring new business models remain responsive. Emerging technology provides more ways than ever to ensure that this remains possible.

The on-demand economy gives consumers more choice. Consumers may be winners, as can workers who value flexibility over security such as younger workers, those with portable skills in demand who attract higher wages, or those who don’t want to work fulltime. But those who value security over flexibility, have families or have mortgages are all threatened. In addition, there are inequities for those who work in the on-demand economy but do not qualify for superannuation and other benefits. Care is needed to minimise the impact of change on employment rights and health, safety and environmental protections.4

Smart policy makers can’t stand in the way of change. We can’t outlaw on-demand firms. But we can improve the ways in which we measure employment and wages, and we must stop treating contractors and freelancers as second class citizens. In effect every contractor is a small business with the insecurities, demands and potential that goes with that title.

3.4 Redefining work

Increasing use of digital business models alongside automation and computerization of jobs will see organisations shift to a smaller number of highly skilled people with scarce skills working in very different patterns, in order to enhance their competitiveness. Risk and change management will be crucial to ensuring success here. This has implications not just on how we manage work but also on the quality of life for our workforce. An AUT study into mobile technology found it contributes to irregular patterns of work, amplifies social pressures making boundaries between work and non-work indistinguishable, brings more work into personal time, and speeds up the way organisations function. Defining when a person is working and when they are not will be an increasing challenge.

3.5 Accessibility

Cheap computing power is transforming the way consumers and workers access technology as even more sophisticated and powerful hand-held smartphones become available. This eliminates some of the barriers for how work is done. Complex tasks such as programming a computer or writing a legal brief can now be divided in component parts and subcontracted to specialists around the world.5  It also gives greater flexibility – providing an opportunity for workers and workplaces to create flexible working arrangements.

3.6 Big data

Big data is changing the way big business operates. Big data involves data collection and mining to ascertain consumer preferences and behaviour trends that assist companies to customise their offerings and specifically target their markets. Prompts on Amazon.com for related book titles are one example of this.

Big data creates new markets and new opportunities.  It also drastically increases privacy risks and raises issues of resilience of cloud based applications and storage to hacking and other vulnerabilities.

3.7 Education and Training

Our education system will need to adapt. There is a tension between a model of education which is aligned to current industry demands churning out work-ready drones who will ‘hit the ground running’ and a model which enables rounded professional development and boosts worker’s capacity to learn and think in a world where creative and critical skills are at a premium.

We are not currently training our workforce to be adaptable enough to changes in technology or providing proper lifelong education solutions for retraining. More needs to be done to prepare our workforce for the changes to come including looking at universal teaching computing and coding in schools and improving how we teach technology.

3.8 Infrastructure

New Zealand is rolling out ultrafast broadband which is transformational. However there are road blocks to UFB roll-out and uptake. There are huge opportunities for smaller geographically distant countries like New Zealand where IT has reduced the tyranny of distance. This raises important issues around getting our infrastructure right inside New Zealand and reducing the digital divides that exist. We must have robust, resilient and future proofed affordable international connectivity.

3.9 Digital Divide

Many people and businesses still lack basic access to broadband particularly rural, Maori, and Pasifika communities. The cost of access to the internet, digital devices, and big data also means many small businesses and lower income households miss out. This means some of our kids don’t get the education they need because they can’t access the internet at home, our small businesses are held back and too many New Zealanders miss out on their right to enjoy access to emerging technologies. Technology is now essential to modern life and learning. This divide applies not just within society but between countries and New Zealand must ensure it remains on the winning side of that divide. We are failing to deal with the growing digital divide. We are losing ground because of lag in the ultra-fast broadband rollout. Schools, businesses and homes need access to high speed internet as soon as possible while free WiFi access in more community areas would do much to bridge the digital divide. Options like Google’s Project Loon to use high-altitude balloons to deliver internet to rural areas also need to be explored further.

1   Catherine Livingstone, 29 Apr 2015, http://www.bca.com.au/newsroom/national-press-club-address-by-catherine-livingstone

2   Economist, 3 Jan 2015, “There’s an app for that”, http://www.economist.com/news/briefing/21637355-freelance-workers-available-moments-notice-will-reshape-nature-companies-and

3   Business Insider, 13 July 2014, “The 'On-Demand Economy' Is Revolutionizing Consumer Behavior — Here's How”, http://www.businessinsider.com/the-on-demand-economy-2014-7#ixzz3hPlgyxoU

4  Economist, 3 Jan 2015, “Workers on tap”, http://www.economist.com/news/leaders/21637393-rise-demand-economy-poses-difficult-questions-workers-companies-and

5  As per 4.