We are repeatedly told that if we wish to maintain our current standard of living of about two per cent per capita income growth per year, then we need our productivity growth to around 2.5 per cent per year.
While Australia has seen a slight increase in productivity growth to around 1.8 per cent per year in recent years, mainly due to capital deepening (an increase in the use of labour-saving technologies such as robotics and artificial intelligence), longer-term productivity growth has trended below this target.
Many other developed economies are also struggling to increase their productivity, and it appears that we are still in the ‘investment’ phase of the next technological revolution and that the anticipated productivity benefits of the ‘implementation’ phase will take years to realise.
A recently McKinsey report found that global construction labour-productivity has averaged one per cent growth per year over the past two decades, compared to 3.6 per cent for manufacturing. On average, across a range of countries, less than 25 per cent of construction firms matched the all-industry productivity growth.
While Australia was found to have one of the highest rates of construction labour productivity growth in the world, we should not be complacent because our competitors are investing heavily in new technologies to increase their productivity further.
While it is widely believed that technological skills will be key to our competitiveness as we move toward a more technologically advanced construction industry, many commentators argue that it is our creative abilities and soft skills that will become central to success in the future. Those commentators say we need to be managing more than just inputs and outputs if we are compete in an increasing globalised and competitive world.
We know that new technologies will change the nature of work and employment in the construction industry, but we don’t know how. We do know that many mechanical, manual and repetitive jobs (where you can easily measure productivity) will probably be replaced by technology, although rapid advances in artificial intelligence will also threaten many professional jobs.
Research shows us that humans have absolutely no problems with forming intimate relationships with machines and in trusting them to do many important jobs that would seem on the surface, to be safe from technological advances, such as surgery, legal work, designing, driving and even therapy. According to CEDA more than 5 million Australian jobs have a high chance of being replaced by technology in the next 10 to 15 years, which means that in the future, the value of being a human in the workplace will be our ability to do the creative tasks which machines will not be able to do.
To compete effectively in the near future, we will need a completely different set of skills than we need today and governments and businesses need to start thinking now about what these are and how we are going to measure them. One thing that’s certain is that productivity will only be one metric to measure our success, and that this will largely reflect the jobs the machines will do rather than the messy, unpredictable, unstructured, emotive and creative jobs that humans will do.
It is clear that in the future we will need other measures of business performance based on creativity, emotional intelligence and the types of soft skills (leadership, teamwork, communication, entrepreneurship and the like) which humans excel at and which will remain beyond artificial intelligence, to reflect the leftover jobs which we will undertake.
If we continue to be obsessed with productivity as the sole measure of business and construction industry performance as a whole, then we are heading in the wrong direction. We badly need to become more sophisticated and intelligent in developing new metrics to reflect where our real competitive advantage is likely to be in the future, because everyone is going to have access to the same machines, while good people will attract a premium.