Simon Kuestenmacher, a leading expert in demographics, has his finger on the pulse of the trends shaping Australia’s workforce. From the looming skills shortage to the impact of AI, Simon offers invaluable insights on how businesses can prepare for a rapidly changing job market. He also recently presented at The Tax Summit, an event hosted by The Tax Institute.
In this conversation, Simon shares his thoughts on everything from how AI will transform the workplace to practical ways businesses can support staff retention and embrace the future. He also opens up about how he balances his busy schedule and the importance of maintaining a healthy work-life routine.
Simon, as an expert demographer, what are the key trends you’re seeing in the workforce that businesses should be paying close attention to, especially concerning the looming skills shortage?
The skills shortage is certainly the biggest and most persistent demographic issue that businesses will be facing in the coming decade. The large cohort of Baby Boomers (born 1946-63) is retiring, a relatively small Gen Z (born 2000-17) cohort enters the workforce, while the biggest generation, the Millennials (born 1982-99), continues to make babies and therefore leaves the world of work at least temporarily as they go on parental leave. Even under a high migration regime, you will find recruiting much harder than in the past.
Businesses should also be aware that the RBA in their battle against inflation is fighting an uphill battle against demographics. In the coming decade Australia wants to see very high consumption, which of course is inflationary. Millennials live through the highest spending phase of the life cycle (their 40s) while the cash-rich and asset-rich Baby Boomers benefit from high interest rates.
Only in about ten years will Boomers require care at scale – before that they will continue to consume heavily. Much more goes into the calculations concerning the cash rate than consumption figures, however demographics don’t suggest a low-interest rate regime in the coming decade. Prepare your personal finances and your business for a decade of elevated interest rates.
With many Baby Boomers heading into retirement and fewer young people entering the workforce, how do you think businesses can best prepare for this transition?
Considering how difficult hiring will become, the first name of the game must be staff retention. Talk to your staff, find out what they actually care about. Don’t assume to know their preferences.
With Baby Boomers retiring we see the last generation that actually cares about hierarchies leave the world of work. If your organisation still looks like a hierarchical beast in the future, you will find it very hard to retain staff. You better start flattening organisational structures right now. What can you do to allow junior staff more of a say?
You’ve emphasised the importance of embracing AI as a solution to the skills gap. What are some practical ways companies can start integrating AI into their operations to stay ahead of the curve?
When I talk about AI in the aged care sector for example, I am not talking about robots flipping over old people in care facilities. Rather I’m thinking about how you could utilise your existing workforce better. There’s a lot of compliance and a lot of paperwork involved in aged care. Often this work is done by relatively recent migrants with relatively poor English language skills.
They spend a lot of time doing paperwork with relatively poor outcomes. It is already utterly plausible that an aged care worker speaks, in their mother tongue, into an app that translates everything into English, fills out the relevant forms, and then sends it off to the right systems. Such an app would allow the age care worker to spend less time doing paperwork and more time with their patients.
I can only encourage business owners across Australia to look at their workflows and analyse where AI might be utilised to free up workers to do their main tasks rather than boring compliance tasks. This is of course very difficult to do in organisations that are already dramatically understaffed. It takes a forward looking leader with a longitudinal mindset to pull such a transformation off.
Balancing the introduction of new technology with maintaining a strong human workforce can be tricky. How do you suggest businesses strike the right balance between automation and retaining valuable human skills?
I’m not concerned at all about AI making the world of work less human. If anything, AI will make the world of work more humane. Your daily tasks in the office roughly fit into two categories: Technical tasks and interpersonal tasks. Technical tasks will be sped up by technology. Writing a report, programming, or analysing data becomes much faster. Sadly, this doesn’t mean that you will leave the office sooner.
Rather your day will be spent with tasks that AI will not take over as efficiently. These tasks are interpersonal in nature. Ultimately the more AI we throw at the workforce, the more time humans will spend interacting with each other in interpersonal and creative pursuits. In an AI heavy world, I would select my staff not necessarily based on their technical skills but on their social, interpersonal, and complex-thinking skills.
With your busy schedule, especially with speaking engagements and research, how do you manage to keep your work-life balance in check? Are there any daily routines or practices you rely on to stay focused and energised?
To keep work-life balance in check, my firm (The Demographics Group), went fully remote even before the pandemic. We meet once every six weeks or so in a café for half a day. That’s enough in-person contact for us. We can only do this because we are a small organisation where all team members prefer to work fully remotely.
That means I’m either on the road talking about demographics, or I am at home all day long. This allows me to spend my mornings until around 9am and the evenings from around 6pm fully with my family.
Once the kids are in bed, I sneak out to the gym late at night to lift, listen to audiobooks, and tend to my social media. The weakness in my routine is that it takes brutal discipline, which I quite often lack, to get enough sleep. As a data guy, I know how important sleep is.
Looking ahead, what do you think are the most significant changes we’ll see in the job market over the next decade, and how can individuals and businesses start preparing for these shifts now?
A major challenge will be to ensure that your staff is sharing knowledge in a sufficient way. Teams will spend more time working remotely than in the past. This minimises opportunities for knowledge transfer. In the past you could rely on knowledge just magically being handed down from older to younger workers.
Now you need to deliberately create knowledge sharing opportunities. Have technical experts lead knowledge sharing sessions on a regular basis. Organise more off-site events to bring the whole team together and to facilitate the natural exchange of knowledge.
