NEWS
25 Aug 2015

Income For The Top 1 Per Cent Grew by Almost Half. See If You Can Guess How the Bottom 90 Did

By Thom Mitchell
Keywords: 
alpha beta
labour force
unenployment

A new report has called on government to intervene to equip young people with the skills needed in Australia's changing jobs market or face deepening inequality. Thom Mitchell reports.

The staggering rise in Australian inequality is linked to the automation, globalisation, and fragmentation of the traditional jobs market, and with around 40 per cent of Australia’s jobs at “high risk” of automation in the next 10 to 15 years the problem could spiral out of control if not tackled. 

These are the ominous warnings contained in a new report, released yesterday by the Foundation for Australian Youth, which said that over the last 15 years the income growth of the top 1 per cent has been a whopping 42 per cent higher than that of the bottom 90 per cent of workers. 

Similarly, the top 10 per cent have enjoyed an increase in income 13 per cent higher than the bottom 90 per cent according to the New Work Order report, which was prepared by strategy and economic advisory firm Alpha Beta.

The report said these trends, which leave lower skilled and lower paid workers increasingly vulnerable as their jobs are replaced by technology and overseas workers, are linked to the “continued rise of temporary, part-time and self-employment” which in turn is “linked with lower jobs quality” and inequality.

However across the OECD these forms of insecure work have made up more than half of jobs growth since the 1990s, and the report shows that Australia is ill-prepared to deal with the inequality and unemployment changing jobs markets are likely to bring. 

According to the report, around two thirds of Australian students are being trained in “dying jobs” that “will be radically affected by automation in the next 10-15 years”.

That figure is even higher for students enrolled in vocational education and training courses, where 71 per cent of the jobs students are preparing for are at risk of replacement or serious alteration.

Even the services jobs that have typically taken up the slack left by jobs in labour intensive industries like manufacturing as they decline may not be safe, with the report predicting that 11 per cent of services jobs could be lost to overseas workers who can do them remotely at lower cost.

Throughout the past 25 years nearly one in ten unskilled men lost their jobs and never found another, which could be seen as a terrifying precedent given that 30 per cent of young people are currently unemployed or underemployed. 

While the report points out that around 85 per cent of the jobs of the year 1900 had disappeared by the year 2000, and we have not yet experienced mass unemployment, it also notes that “technology and automation does not affect all occupations equally”.

“In the past, technology has enabled firms to replace lower-skilled workers with machines…[while]…skilled workers have enjoyed efficiency benefits from the introduction of machines,” the report said.

Effectively, the benefits of automation and globalisation have accumulated to the highest skilled, and typically richest, people in society and contributed to the disproportionate growth in their income compared to the 90 per cent of workers.

To prevent that trend from continuing, the report holds, governments need to investigate what training and education young people will need to navigate the new labour market. 

Chief amongst the report’s recommendations is a dramatic escalation in the digital education provided to young children, who will likely be required to develop and manipulate computer programs rather than simply use them.

Leading by example, the United Kingdom is already teaching children as young as five to “learn about algorithms as a set of instructions [and] create and debug simple programs,” the report said. 

Notably, “This report disagrees with the recent Review of the Australian Curriculum that recommends Digital Technologies only be introduced from Year Nine.”

The report also recommends changes to classroom teaching to intensify the focus on entrepreneurship and problem solving in recognition of the fact that today’s young people are expected to undergo something like five career changes and work 17 jobs in their lifetime.

In these circumstances, skills in areas like communication, creativity, project management, financial literacy and global citizenship will be useful in coping with the demand to adapt and learn new skills rapidly as workers are employed in more ephemeral and insecure jobs.

The rise of the ‘cooperative economy’, which features online start ups and on-demand platforms like Uber, will also mean young workers will benefit from skills of this sort. 

On top of changes like these, designed to enable young people to thrive in a changed jobs market, the report recommends a number of measures to protect low-skilled workers, including adjustments to lessen the tax burden on low-paid and unskilled workers.

Reinforcing the link between inequality and changes to jobs markets the report notes that the ‘tax wedge’ — essentially the taxes paid by a worker as measured against the cost of employing them — has remained steady at 28 per cent over the past 15 years. 

That’s despite the fact that over the same period the top 1 per cent have enjoyed an income growth of 42 per cent more than the lowest paid 90 per cent of workers.

You can read the full report here.

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This user is a New Matilda supporter. nobody456
Posted Tuesday, August 25, 2015 - 15:34

An interesting article but there seems a disconnect with reality. People have different capabilities and that needs to be acknowledged in terms of jobs and training. I am also sceptical that teaching five year olds algorithms and programming is the way of the future because that would need a complete reversal of the current fear of maths and science in education. Many people seem, at present, to think that they are computer literate if they can sort of use an ipad.

Bennite
Posted Tuesday, August 25, 2015 - 15:55

Of course the main reason is the Labor Party adopting "free market" economic policies favoured by John Howard and the Treasury boss John Stone in the late 1970s and early 1980s. When they came to power in 1983 Labor drove these free market "reforms" to their logical conclusion. Their logical conclusion is much greater wealth at the top and much more poverty for very many people. Just as happened in Ronald Reagans America and Margaret Thatcher's Britain. Thatcher said she found Keating "refreshingly orthodox" when it came to economics. Read her memoirs. Additionally Labor's attack on the welfare state and adoption of Liberal policies in this area has also had its effect. It did not raise the Newstart allowance once in 2007 to 2013 and its attacks on single mothers and disabled pensioners were well publicised. In addition its record on housing affordability was deplorable while it pursued population growth policies and encouragement of foreign investment in real estate that increased housing stress for low income people while making asset owners much more better off. All this is to be expected from the Liberals but when Labor join in, then the poor have next to no hope. 

Nicholas Gruen
Posted Tuesday, August 25, 2015 - 16:22

This piece is a bit of a mystery - to me anyway. Couldn't we expect a link to the report? I can't find the "Foundation for Australian Youth" on the net. Do you mean the Foundation for Young Australians? I went to their website and couldn't find the study, though I may have missed it. If you have the link I'd be grateful if you'd post it. 

calyptorhynchus
Posted Tuesday, August 25, 2015 - 16:43

www.fya.org.au/wp-content/.../fya-future-of-work-report-final-lr.pdf

..Or we could just have a society where robots do the work and people are paid a social wage to stay at home growing vegetables and weaving baskets.

Nicholas Gruen
Posted Tuesday, August 25, 2015 - 17:57

OK - thanks. I had found that study, but the report of it so emphasised stuff that was a relatively small part of it that it seemed to me there might have been another. Anyway, thanks again for the link. 

The NM report seems a bit of a beatup if it's on the report as linked to. Jan Owen (FYA's CEO) mentions inequality once in her launch press release, commenting on it as a risk, not something that's already happened. "the report also found significant risks, including rising inequality, unemployment and insecurity which young people are likely to bear the brunt of." From a quick look there's some data in the report suggesting inequality has got worse, but it's not new data and it's not reported with the drama of the article above. 

This user is a New Matilda supporter. MattQ
Posted Tuesday, August 25, 2015 - 19:28

Thanks Thom. Only some people deserve the benefits of human knowledge. The rest are lucky to be alive.

This user is a New Matilda supporter. hannahs dad
Posted Tuesday, August 25, 2015 - 21:55

The grossly unequal distribution of increase in wealth between the bottom 90% of Australians who received a measly 40% increase in  wealth  from 1995 to 2015 as compared to the top .1% getting an increase of 112% is worthy of 'drama' and indignation and the lack of such in the report reflects on the writers of that report and not on the due emphasis given by Thom in the article.

That it is not new news is also a worry and that it is not generating constant headlines in the MSM even more so,

This user is a New Matilda supporter. swarmi
Posted Tuesday, August 25, 2015 - 23:05

So! the rich are getting richer and the poor are still getting nothing.

I'm assuming the rich don't have a problem with this. And the poor, they say, will always be with us.

So what is this education solution to do (never heard that one before)? Is it simply there to make us more productive competitors in the market place so the rich keep getting richer?

It might just be an uneducated guess of mine but, Thom, you are not reporting on anything new - rehashed and laboured maybe?

This user is a New Matilda supporter. boganbludging
Posted Wednesday, August 26, 2015 - 15:47

I often ponder the situation of the utopian fantasy future of mankind, serviced by computers and robots, to take it to its logical conclusion when coupled with socioeconomic and political factors, I think there will always be those who need control, mostly through manipulation and/or financial means and need to control people, technology and finally the means of production, which is often discovered and created, by their egalitarian opposites, a Marxist senario.

This is an never ending struggle, i think we can see the extremes of today, on our own political stage.

I think the real solution is empowerment of individuals, through analysing their drives when young, Myers/Briggs for example and aknowledging and owning, then treating sociopathy, humanely through the use of modern technology, to treat the destructive aspects.
Ultimately I think we will see people playing a lot more sport and pastimes in the future, shorter working weeks are already occurring in Scandinavia, will little reduction in pay, neoconservative policy is ultimately counterproductive in its extreme, it will enevitably see a breakdown.

DrGideonPolya
Posted Wednesday, August 26, 2015 - 11:42

Excellent article by Thom Mitchell. Some key points:

(1) One Percenter-Young wealth and income disparity  increasing. French Economist Professor Thomas Piketty made similar  observations about the increasing One Percenter share of annual income in “Anglosphere” countries in his seminal book “Capitalism in the Twenty-First Century” (for detailed review see Gideon Polya “Key book review: “Capitalism in the Twenty-First Century” by Thomas Piketty” , Countercurrents, 1 July 2014: http://www.countercurrents.org/polya010714.htm ). Thus Piketty’s book  demonstrates that the share in total income  of the top 1% in France, Germany, Sweden and Japan declined from about 20% in 1910 to about 8% in 1950 and thence  remained low (Figure 9.3, p317) – but in marked contrast, in the US, Canada, the UK, and Australia a similar decline occurred from about 20% in 1910 to 6-9% in 1970 but after 1980 the One Percenter share of total income variously increased to 10-18%. A similar pattern obtains with the top 10% in these countries, a phenomenon that Piketty describes as “the rise of the supermanager: an Anglo-Saxon phenomenon” (Figures 9.2-9.8, pp315-324). A similar post-1980 rising income share by the One Percenters is apparent in the emerging economies of India, China, South Africa, Argentina and Colombia (Figure 9.9, p327). The top One Percent already own half the world’s wealth.

(2) Huge Carbon Debt for Young increasing. Green Left Pope Francis in his Encyclical “Laudato si’” demands   “fully borne”  Carbon Price on pollution (see Gideon Polya, “Western Mainstream Media Censor Green Left Pope Francis' “Laudato Si'” Message For Urgent Action On Climate Change”, Countercurrents, 20 August, 2015: http://www.countercurrents.org/polya200815.htm ).  Dr Chris Hope from 90-Nobel-Laureate University of  Cambridge estimates a damage-related Carbon Price of $150-$250 per tonne CO2-equivalent whereas in  coal- and gas-rich Australia the Labor  Opposition proposes a derisory, ETS-based  Carbon Price of $7 per tonne CO2-equivalent and the “No Carbon Tax” Coalition Government insists on $0 per tonne CO2-equivalent, with both supporting unlimited coal, gas and iron ore exports that will see world-leading per capita GHG polluter Australia exceed the whole World’s Terminal Carbon Budget by a factor of 3. Applying a Carbon Price of US $200 per tonne CO2-equivalent, the World has an historical Carbon Debt of $540 trillion that is increasing at $20 trillion each year, and Australia has a Carbon Debt of $11 trillion that is increasing at $600 billion per year (increasing at about $60,000 each year per head for under-30 year old Australians) (see “Carbon Debt Carbon Credit”: https://sites.google.com/site/carbondebtcarboncredit/ ).

Young people everywhere must revolt against this One Percenter-imposed double whammy of (1) mounting income and wealth disparity and (2) mounting and inescapable Carbon Debt.

Young Australians who vote for the climate criminal, neoliberal Lib-Labs (COALition and Labor Right) are “bloody idiots” (to use the words of the TAC re drink drivers).

Science-informed  young Australians and older Australians  who care for the young and future  generations must utterly reject the anti-science, terracidally greedy, neoliberal  Lib-Labs (COALition and Labor Right), vote 1 Green and put the COALition last.

bigtreeman
Posted Friday, August 28, 2015 - 08:50

Callooh callay, I'm now self employed as an artesian and thoroughly enjoying myself.

My trade became redundant in the 80s 90s when manufacturing moved to China. In early July I was still earning what I earned in the 80's, having devolved to casual work.

Stuff the employment trap. I'm a happy guy now, dog is sleeping on my lap as I type. She comes out and helps in the workshop or we might go for a surf.

As far as automation goes, I use my skills as a technician to automate CAD/CAM and relieve me of the boring tasks, it has become my advantage over my competition.

Don't know how the younger generation could learn what I know. I learned most of it from Dad and old Stan and Dave and Paul and a host of brilliant people.

My partner is in education and extols the virtues of a good education to provide upward mobility. Not just work related or further education, but holistic education to make a persons life richer and more complete.

Money helps but it doesn't make you happy.

https://en.wikipedia.org/wiki/Diseases_of_affluence

 

Imagine
Posted Thursday, September 3, 2015 - 08:22

It's all well and good to espouse the need to train our students in high level maths, science, coding, entrepreneurial skills, project management, problem solving, etc.  But that requires teaching staff capable of instructing at that same level.  

We are asking a LOT of our teachers at a time when higher education is being made less affordable and less accessible for vast swathes of our society.  We also seem intent on importing foreign trained workers rather than providing training for our own people.

A cynic would suggest the government strategy is to create an underclass of unskilled serfs to perform menial tasks for minimal wages, plus a high level of unemployment to constrain overall wages growth.