Jobs are changing, and fast. Here's what the VET sector (and employers) need to do to keep up

This essay is part of a series of articles on the future of education.

Technological developments are expected to majorly, and rapidly, disrupt or change the nature of employment. The multiplier effect of these disruptions interacting with each other has led to what has been termed the fourth industrial revolution (i4.0).

The first industrial revolution took us from agrarian to industrial economies and the second used resources like electricity and steel to create mass production. The third refers to technology advancing from analog and mechanical devices to the digital technology available today.

The fourth industrial revolution represents ways technology has become embedded in societies by the fusion of technologies, or what is known as cyber-physical systems. For example, 3D printing needs advanced materials with printers linked to the internet, which are increasingly intelligent and autonomous. Custom printing will always have a place in the job market to boost marketing needs of many businesses.

The consensus among experts is that our training providers and employers aren’t adapting fast enough to meet the skill needs of the fourth industrial revolution. This is reflected in a growing technological and digital skills gap. But there are some things the sector can do to catch up.

Read more: Fewer Australians will have uni or TAFE skills if governments don't reform tertiary education

Doom or opportunity?

Commentators have polarising views on the possible effects of the fourth industrial revolution. Some see technologies offering limitless new opportunities while others see major economic disruptions – the so-called dark side of technological change.

The pessimistic perspective is provided in an often cited 2013 study by labour researchers Carl Benedikt Frey and Michael A. Osborne, who argue 47% of total employment in developed economies is at risk of automation. This figure also underlies eye-catching headline such as:

Could a robot do your job?

Artificial intelligence and automation are coming, so what will we all do for work?.

In Australia, the Productivity Commission estimates 40% of employment is at risk of being digitally disrupted by automation over the next 10-15 years. The Australian Industrial Transformation Institute estimates the level of disruption to be between 5-10%.

But an important point often overlooked in these and related studies based on Frey and Osborne’s modelling, is that they investigate the potential for existing jobs to be automated. They don’t take into account the net effect of automation on jobs and that new jobs may be created as a consequence of automation.

More recent reports address this issue and point to a less pessimistic future. The World Economic Forum recently projected that while 75 million jobs will likely be displaced by robots, 133 million new jobs will be created. This means a net gain of more than 50 million jobs globally.

This suggests by 2022, some established roles such as data analysts and software developers – as well as so-called emerging roles such as machine learning specialists and robotics engineers, together with existing roles based on distinctively human traits such as customer service workers and people and culture specialists – will rise from 16% of the labour force to 27%.

On the flip side, as algorithms replace workers, declining roles such as accountants and telemarketers, currently representing around one third of the labour force, will fall to one in five workers.

In Australia, Deloitte Access Economics estimates more than 80% of jobs will be created between now and 2030 for knowledge workers.

Should we be worried?

The suggested net employment gains are not a foregone conclusion. There is growing consensus developed economies like Australia must take urgent steps to mitigate the negative effects of technological disruption and take advantage of opportunities.

The fourth industrial revolution is predicted to be as, if not more, disruptive than the preceding three, in part as a consequence of the pace of change and magnitude of skill shifts. Australian workers are growing increasingly worried they will be displaced by technology because of irrelevant skills.

More than half expect they will need skills they currently lack within five years and that they will need to upskill, reskill and retrain.

Skills are a Darwinian, survival issue, not only for workers, but for the organisations that employ them. Two-thirds of employers say technology-related skills shortages are impacting them now (not in five years) and have noted their biggest challenge is to re-skill employees.

Read more: What's the point of education? It's no longer just about getting a job

Recent research shows that while disruptive technology has reduced the need for some jobs, the main issue facing Australian employers is the changing the nature of existing jobs.

This is particularly the case for the expanded range of tasks workers are expected to do. Employers seeking external training report difficulties finding VET providers delivering training in disruptive technologies.

Accordingly, larger firms will likely resort to in-house training, while smaller firms with fewer resources look to hire skilled workers.

Employers also often view university graduates with technology-related skills as more valuable than employees with VET qualifications. The result is a decline in confidence in the ability of the VET sector to deliver training that meets the challenges of technological disruption.

What kind of skills will future jobs need?

Much of the recent debate related to digital disruption has focused on the dichotomy between the importance of hard or technical skills (such as industry 4.0 programming, software engineering and data science) and soft or non-technical skills (such as creativity, design and teamwork).

For example, about half of Chief Information Officers favour hard skills while the other half prefer soft skills among future employees.

This divide is driven by modelling based on a technology-centred (automation) scenario. But it ignores two other important scenarios, as reported by German researchers, into the fourth industrial revolution: the hybrid and specialisation scenarios.

Under the hybrid scenario, the distribution of tasks between people and technologies is based on the relative strengths and weaknesses of workers versus machines, and employees will face increased demand to be highly flexible. Control tasks will still need to be performed through technologies that require people for monitoring and directing.

Under the specialisation scenario, people use cyber-physical systems to aid decision-making. Cyber-physical systems are technologies that enable bringing the virtual and material dimensions together to produce a fully networked domain in which intelligent objects interact with each other.

For example, in new smart production systems, there will be less need for employees with administrative, production and monitoring competencies. But there will be a growing need for qualified and ultra-specialised employees with IT competencies, in particular those who can integrate them with production—technical competencies.

Applying this to the Australian context, disruptive technologies are influencing the demand for both hard and soft skills in many occupations, with some skills in decline and others in demand. Industry needs both technical and non-technical skills to “future-proof” Australian workers.

What needs to be done?

The VET sector requires increased collaboration between industry, educators and governments. It also needs responsivess and flexibility in delivering skills, from formal qualifications to micro-credentials or non-formal education to reflect the needs of rapidly changing technologies.

A good example of this is the first nationally recognised qualification in automation, launched in Perth earlier this month. This came out of a collaboration led by Rio Tinto, South Metropolitan TAFE and the WA government.

Read more: The government keeps talking about revamping VET – but is it actually doing it?

Employers should alsotake a lead with experimenting and testing new methods to meet future skill needs. A South Australian electronics firm, REDARC, is preparing employees to become ready for the fourth industrial revolution by engaging experts to run dedicated sessions on the application of an overarching i4.0 lens across the core competencies of mechanical, chemical and electronic engineering.

The VET sector can play a complementary and reinforcing role. Besides catering for current students and apprentices, VET providers need to work with industry to build systems to facilitate continual learning (such as through flexible micro-courses) to ensure the skills of VET graduates or alumni are upgraded responsively.

Federal and state governments need to work to restore the confidence of employers and students in the VET sector. An important first step is to implement the early recommendations of the Joyce Review on VET.

Recent initiatives indicate the VET sector, industry and government have recognised these issues. They will need to pick up the pace to ensure vocational education provides students – and businesses that employ them – with the future-ready skills needed to succeed in the fourth industrial revolution.

Read other essays in this series here.

Pi-Shen Seet receives funding from NCVER.

Janice Jones receives funding from NCVER.

Ann-Louise Hordacre and John Spoehr do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.