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Australia’s transition to a services economy will force businesses to reassess internal management practices as demand for labour surges in the lead up to 2030, according to ANZ’s Acting Chief Economist Richard Yetsenga.
Speaking to BlueNotes on video after the release of a new report into Australia’s transitioning economy, Yetsenga said the combination of increased demand for services skills and an ageing population would have a direct impact on employment.
"[Australia needs to] shift the way it thinks about the economy [from one] that uses stuff to one that uses people as a main input to the process."
Richard Yetsenga, Acting Chief Economist, ANZ“Those two forces together we think will create a quite a large change in the Australian labour market,” he said.
The report, Servicing Australia’s Future, suggests Australia’s services-driven economy of 2030 could see labour in strong demand for the first time in many generations.
Services will grow to comprise over three quarters of the Australian economy by 2030, partly on the back of increased health spending due to an ageing population and growth in Asia. The sectors with the strongest growth prospects - health, education and professional services - are some of the most labour intensive.
Yetsenga said nascent signs of the change occurring can already be seen, not just in Australia but globally, amid modest GDP growth but relatively solid and consistent demand for labour.
“Businesses themselves will need to think differently about their own internal management,” he said. “[Right now in most businesses] the head of the finance department is viewed as the natural 2IC to the CEO. [Through the transition], the head of the {human resources] department might start to generate a bit more clout because of how important talent is to the importance of the firm.”
Yetsenga said increasing demand for skills meant education services in Australia would take on a greater role.
“There are definitely some things Australia can do, both in closer connectivity between the tertiary sector and the business sector, but also using the ideas we generate,” he said.
“I think it’s going to put more onus on the government to shift the way it thinks about the economy [from one] that uses stuff to one that uses people as a main input to the process.”
Yetsenga also touched on the infrastructure requirements needed to support the transition and how the change will affect financial institutions like banks. Watch the video above to find out more.
Andrew Cornell is managing editor at BlueNotes
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
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