Australia’s automation opportunity: Reigniting productivity and inclusive income growth

Powerful new automation technologies such as machine learning, artificial intelligence (AI), and advanced robotics are already transforming the Australian economy, workplace, education system and community. These technologies present an enormous opportunity to restore momentum to the Australian economy and extend the nation’s 30-year economic boom in an inclusive way.

1
Automation is already happening and can’t be stopped, so choosing ‘no automation’ is not an option.

In a new report, Australia’s automation opportunity: Reigniting productivity and inclusive income growth [PDF–6.7MB], McKinsey outlines the impacts of automation across three scenarios, including slow-paced adoption, mid-point adoption and fast-paced adoption. The report sets out why and how Australia must push for the win–win scenario of inclusive growth by pursuing actions that both accelerate automation and adoption and share its benefits (Exhibit 1).

Automation and AI will be disruptive, just as other technology adoptions have been disruptive in the past. While some jobs will be lost and others created, all jobs will change. As automation technologies integrate into the workforce, the mix of skills required in all jobs will shift. McKinsey analyzed the time spent on existing work activities that will be automated by 2030, including down to the local area level (Exhibit 2). This interactive tool gives a more in-depth look at the potential jobs at risk by local area, expanding on Exhibit 2.

The extent of the anticipated change is neither unprecedented nor unmanageable, and the benefits will be lasting. If Australia embraces automation with an eye to national interests, the nation will be able to develop new business opportunities, boost productivity, and create better-paying jobs—keeping employment high and reinvigorating per capita income growth sufficiently to offset the impact of an aging population.

Policy makers, business leaders and educational institutions will need to respond to a range of implications of automation and AI, including rising unemployment and income inequality, growing disparities between cities and rural communities, shifts in the global competitiveness of our export-oriented sectors, and reskilling and redeploying a large number of displaced workers.

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The rate of automation will vary significantly across local government areas.

It’s a vision well worth focusing on. With foresight, proactive leadership from the government, business, and education sectors, and a commitment to act, Australia can capture the opportunity offered by automation, manage the transition, and ensure the gains are broadly shared.

Key findings of the report include the following (at the midpoint and early automation adoption scenario respectively):

  • Estimate that 25–46% of current work activities in Australia could be automated by 2030, helping to drive a renaissance in productivity, personal income and economic growth.
  • While some jobs will be lost and others created, all jobs will change.
    • As automation technologies integrate into the workforce, the mix of skills required in all jobs will shift. For example, people will spend over 60% more time using technological skills.
    • We estimate between 3.5 million and 6.5 million full-time equivalent positions could be displaced, and between 1.8 million to 5.0 million workers may need to change professions to find a new job.
    • The economy will adjust, however, and new jobs will flow from the higher productivity that automation generates, helping to return the economy to close to full employment.
  • If seized, this opportunity could add between $1.1 trillion and $4 trillion to the economy over the next 15 years, providing every Australian with $4,000 to $15,000 in additional income per year by 2030.
  • Without proactive leadership to manage the transition to the new steady state, automation could have disruptive distributional impacts.
    • Without increased employment transition support, increased job churn could see Australia’s unemployment rate temporarily spike by up to 2.5% during the peak of the transition.
    • Without retraining for vulnerable workers and those in vulnerable regions, income inequality could widen by up to 30%.

Download a summary of the report or the full report, Australia’s automation opportunity: Reigniting productivity and inclusive income growth [PDF–6.7MB].

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