How to protect workers from the future

Our transition towards net zero emissions and the materialisation of climate risks will create new jobs for some and destroy jobs for others.

Technological change will do the same. Advances in technology have historically replaced low-skilled jobs. AI promises to do the opposite: impacting higher skill jobs held by those who had to go to university.

Throw in some trade wars, some geopolitical disputes, lots of industry policy, manufacturing subsidies and trade protections, and the outlook for workers looks turbulent.

So, what do we do about it?

If we are going to support workers, the first step is to understand how these shocks impact labour markets. We need to know who they impact, how they impact them, and why.

Let's start with the climate transition. The climate transition is a big shock in its own right, but it also has a bunch of lessons for how to manage other shocks, too.

We ran a simulation at Mandala where coal mining shut down seven years ago and used micro-datasets to measure how long it would take all those workers to find new jobs.

We collected data on all the workers at a New England coal mine - including how many there are, what their occupations are and what skills they have - and then collected data on almost every single job advertisement that came out in Australia over the last seven years.

These datasets allowed us to see how long it would take these workers to find new jobs if there were no more coal mining jobs available in Australia.

The results were striking.

Turns out, coal mining employs a bunch of people who have the skills and qualifications which are in high demand.

Motor mechanics, metal fabricators, truck drivers and electricians have the easiest time finding new jobs, followed by shotfirers (think: explosives), mechanical engineers and fitters.

Those who struggle the most to find new jobs are those more specialised to coal mining, like drillers, production managers, the coal miners themselves, mine deputies and mining engineers.

How long does it take them to find a new job? It depends on their willingness to relocate.

If workers do not relocate, 28 per cent of workers find a new job within one year, 35 per cent find a new job within two years, 39 per cent find a new job within three years and 43 per cent find a new job within four years.

This means that 57 per cent of workers don't find a new job without relocating even after four years.

If workers are willing to relocate to somewhere else within NSW, 52 per cent find a job in one year, 67 per cent in two years, 85 per cent in three years and 100 per cent in four years.

If workers are willing to relocate to anywhere in Australia, 99 per cent find a job in one year and 100 per cent find a job in two years.

It's a simple simulation, but it has some powerful messages for policymakers.

When the government in Spain closed coal mines, they retired the workers in those mines and agreed to pay them their salaries for the rest of their life. Sounds great, but the above analysis shows that this is a terrible policy.

Australia has substantial skills shortages. We need more electricians, more truck drivers and more mechanics. Using taxpayers' money to retire these workers is completely backwards.

We definitely need to support workers to help them find new jobs, help them relocate and provide them with generous supports while they are doing both. But any policy that takes workers out of the workforce - either intentionally or unintentionally - is a bad idea.

When it comes to workforce transitions - whether it's climate, tech or trade - the key word is "transition". New jobs will be created, old jobs will be lost. The objective of government is to support workers to transition from one to the other.

This implies three objectives for government policy.

First, we need a generous safety net for people who lose their jobs. With all these transitions taking place - many of which are being caused by government policy - it's unacceptable to have a safety net that is below the poverty line. It needs to be increased dramatically.

Second, the safety net needs to encourage people to find new jobs. This helps ease skills shortages and is better for people's physical and mental health and that of their families.

To do this, the welfare system needs relocation supports and to move away from sledge-hammers like the minimum wage and move towards targeted pro-work supports like earned income tax credits where people get a generous living wage that's topped-up the more they work.

Third, we need to replace the current patchwork of federal, state and territory retraining programs with a more generous and more coordinated national program. We need to make it easier for people to get trained for high-demand industries, as opposed to our current system where care workers, for example, are required to do 1000 hours of unpaid work to complete their degree.

The future for workers is turbulent, but there's one thing which we know for certain: labour market shocks can have impacts across generations. We'd best get our policies right now.