Automation, Labor Markets & Refugee Integration

Katie attended the 2017 World Bank and IMF Forum. She is studying a Bachelor of Commerce at the University of Melbourne. 

Abstract

Technology has traditionally been viewed as a complement to human labour, yet this tool has begun to erode opportunities for human workers. Those expected to be hit particularly hard by automation are those in low-skill, blue-collar occupations. Due to labour market barriers, such as a lack of English communication skills, refugees have typically taken up those jobs most at risk of automation.

This policy paper will explore policy proposals that can help shape and alleviate the impact of automation, especially for vulnerable sub-sectors of our population, such as refugees.

It will look broadly at automation and its overall impact on labour markets, before focusing on the specific impacts it will have on refugee employment prospects and major barriers encountered by refugees during their integration. We will also discuss policies implemented by international jurisdictions and consider their feasibility for Australia. 

Proposed recommendations

Broadly, my policy recommendations are as follows:

1.     Invest in programs, such as specialised case management, to help break down the major barriers to refugee employment and integration. The German experience will be explored.

2.     Expediting the process for overseas qualification-recognition. An innovative example from Norway will be discussed.                                                                                                                                                     

3.     Expanding re-training programs for those refugees whose jobs are at risk. A case study of a Danish program will demonstrate various policy lessons for Australia.

Introduction & Context

‘No country has integrated newcomers as well as we have,’ says former Secretary of the Department of Immigration and Ethnic Affairs, John Menadue AO.

Yet, Australia’s record is relatively weak on helping refugees gain employment soon after arrival. On the best available evidence, only 17% of humanitarian migrants are in paid work after entering Australia for 18 months[1]. This is highly troubling. The IMF identifies employment as the major means by which refugees become economically integrated in their host countries[2].

Currently, Australia is experiencing fundamental shifts in its labour market as a result of automation. Because of language and other educational barriers, refugees often fill employment gaps in rural areas within industries such as agriculture. Consider the Hazaras people of central Afghanistan, the country with the largest number of refugee visas granted[3], who are predominantly employed in agriculture in very isolated regions. These low-skill, low-wage occupations are typically most at-risk of automation. Indeed, in a 2015 report by the Committee for Economic Development of Australia (CEDA), researchers found that more than 60% of jobs in rural and regional Australia were at risk[4].

March of the machines

Much has been written on the increasing automation of the workforce. A seminal paper, by Carl Frey and Michael Osborne from the Oxford Martin School, predicts that 47% of jobs will be automated within the next two decades[5]. Closer to home, using the Frey and Osborne methodology, Durrant-Whyte et al. (2015) predict that 40% of jobs in Australia have a high probability of greater than 0.7 of being automated in the next 10 to 15 years[6].

KZPicture1.png

Source: Durrant-Whyte et al., 2015

Different jobs also have vastly different probabilities of being computerised. The above figure gives the distribution of job categories against their probability of computerisation. Notably, labourers, machine operators, and clerical and administrative workers are most vulnerable to large employment losses due to automation within the next 10 to 15 years. This comes as no surprise. Much literature – such as Martin Ford’s Rise of the Robots: Technology and the Threat of a Jobless Future – predict that the jobs that are most at risk are those which “are on some level routine, repetitive and predictable”.

The refugee experience

As a result of several barriers to employment in better-paying jobs, some of which we will explore later, the distribution of refugee employment is very different to that of their native counterparts. The data in the figure below is derived from the Personal Income Tax and Migrants Integrated Dataset (PITMID) for 2013-14.

Screen Shot 2018-05-04 at 11.18.34 AM.png

Source: Australian Bureau of Statistics, 2017[7]

Evidently, refugees are employed in abundance as labourers, with approximately one third of all refugees employed as labourers, compared to less than 10 % of the labour market as a whole[8].  The broad term ‘labourer’ spans across several industries, such as agriculture, construction, and meat processing. It encompasses occupations which typically have routine and repetitive physical tasks. These all tend to be jobs that are easily automated. Indeed, as explored earlier, Durrant-Whyte et al. (2015) identify labourers as the most at-risk of large-scale automation within the next 10 to 15 years.

Barriers

The Centre for Policy Development (CPD) analysed “The Building a New Life in Australia (BNLA)” data, a longitudinal research survey of refugees who arrived in 2013. Two of the major barriers identified through this analysis was language and cultural barriers.

The linguistic barrier has been well-documented. Analysis of the BNLA data reveals that, within 18 months of arrival, humanitarian migrants with suitable English skills are 70 % more likely to have a job than those with poor English. The results exemplify how imperative language skills are to finding employment for those newly arrived.

This cultural barrier referred to by CPD alludes to the lack of cultural understanding of Australian workplace culture and systems. Humanitarian migrants tend to come from societies which have vastly different labour markets to Australia. As a result, many have difficulty familiarising themselves with legal, financial and industrial frameworks.

Rationale

The rationale for improving refugee access to stable and adequately-remunerated employment is two-fold:

Firstly, there is evidence that employment is a cornerstone of successful refugee resettlement. Having employment allows refugees, especially those who have experienced trauma, to return to regular life and increases social cohesion (Overseas Development Institute, 2015). For example, many refugees interviewed have spoken on the importance of work in providing a sense of belonging and meaning in Australia[9]:

“I want to do something. I don't want to just sit down at home and get Centrelink money. I want to do something and help other people as well. I want to help myself and my family and my community.”

– Employee, Sudanese, Cleaning social enterprise (VIC)

However, social benefits are not the only return to society. There has been evidence to suggest that there is an abundance of economic benefits. The IMF predicts that each Euro spent towards supporting refugee resettlement gives a return of more than 1.8 Euros within five years[10]. Similarly, the CPD finds that reducing the participation, income and unemployment gap by 25 % between just one annual quota of refugees and the average person in the labour market will add $175 million to the Australian Government’s budget bottom line over the next decade[11].

Germany

The civil war in Syria and other seismic unrests across Europe has led to the ongoing refugee crisis. The mass exodus has been more severe in Europe owing to its geographical proximity.

Germany bears some of the heaviest burdens as many refugee’s preferences it due to its welcoming humanitarian policies and stable economy. As such, an estimated total of 1.2 million asylum seekers entered Germany in 2015 and 2016[12]. To alleviate the burden of mass resettlement, Germany has taken a number of initiatives to facilitate early labour market entry by breaking down some of the major barriers to refugee employment and integration. One example is the ‘Integration Course’ for asylum seekers, involving 600 hours of language training and 100 hours of civic orientation[13]. Low English proficiency is seen as one of the largest barriers to refugee integration in Australia, with 85 % of humanitarian migrants who speak English well participating well in the labour market compared to just 15 % who do not speak English well[14].

To lower the barriers of integration, investment in specialised case management is crucial. Borland et al. (2016) found that the current approach of providing mainstream support services is inadequate for those with unique and high barriers to successful employment. Bespoke employment support is needed for those with particularly high barriers to employment, such as refugees. In order for any government initiatives to be successful in addressing both linguistic and cultural barriers to employment, they must include the following:

·       Interpretive support for those with a lack of English proficiency

·       Capacity-building, such as mock job interviews

·       Construct a cultural and social understanding of the Australian labour market norms

This level of intensity for job support at a state or even national level would be costly. A more precise cost-benefit analysis merits further consideration. However, as noted earlier, investment on refugee resettlement and employment integration is expected to have a positive rate of return.

There is also a role for community organisations such as AMES Australia, which provide both education and training services to refugees in order to bridge this language and skills gap. Closer collaboration between state governments and the respective refugee resettlement agencies, as well as an expansion of their funding and research, warrants consideration. This is evident as particular agencies already have expertise in the field and are able to assist jobseekers at a more localised level.

Norway

Currently, the process for refugees to have prior qualifications recognised in Australia is long and overly complicated[15]. For example, Dr Bashir Ahmad is a Kurdish Syrian internal medicine specialist. Despite his previously distinguished career, it may take up to five years for his English skills and qualifications to be approved by the Australian Medical Council before he can practise.

Evidently, refugees and migrants who cannot gain rapid entry to the labour market in their field of specialty, may struggle to ever do so and risk their skills becoming obsolete, which would then require retraining or training in other fields altogether.

Norway invests heavily in the early assessment and recognition of refugees’ skills and qualifications. There has been work on developing a tool to assess skills without relying on formal documentation of qualifications of work experience[16]. This is impractical as formal documentation may be difficult for refugees to produce, especially for those fleeing a humanitarian crisis.

The tool consists of roughly 70 different questions, asking about the individual’s linguistic abilities, schooling and education. For those of a poor educational background, the tool covers basic skills, such as the ability to read time or use a mobile device. The tool also maps work experience and interests to evaluate possibilities for integration in the Norwegian labour market.

To leverage best practice from Norway, the Australian Government should consider introducing pilot programs of the tool at the stage of processing our refugees. In order to decrease costs involved with administering the tool, it should only be applied to those who have been accepted as a humanitarian migrant, or are likely to receive similar protection. The mapping tool would assist in identifying where to start the qualification process and to develop measures for the individual.

As before, the Australian government could also consider working alongside refugee resettlement services such as AMES Australia to provide extended language and vocational training following the skills assessment. This would greatly expedite the process of skill and qualification recognition, leading to earlier employment integration of the refugees.

Denmark

As discussed in earlier sections, the threat of automation also looms over those refugees who are currently employed. In order to prevent the eventual unemployment of these refugees, recognition of previously held skills and qualifications are needed for highly-educated and skilled refugees. For those who are lower-skilled and most at risk of long-term unemployment, training programs may be needed.

The Danish approach to retraining workers in declining industries has been highly successful and lauded by many labour economists. Denmark’s approach includes Active Labour Market Programs (ALMPs) to help people gain new skills for new jobs.[17] It is an overtly more supportive employment assistance and active labour market arrangement to assist the unemployed than what is currently available in Australia. Denmark invests heavily in reskilling programs, enabling caseworkers to take a broader approach to working with vulnerable workers, being able to suggest quite dramatic transitions in industries for those who occupy jobs in declining industries[18].

An example of Denmark’s commitment to reskilling displaced workers is given below.

The Lindø shipyard: a case study

In early 2012, the Lindø shipyard was closed by the Maersk company. An estimated 8000 jobs – direct and indirect – were lost. The closure was one of many during the collapse of Denmark’s shipbuilding industry, a labour-intensive industry, similar to those in Australia that refugees typically fill.

The policy response taken by the Danish Government was to work through customised programs to match retrenched Lindø workers to jobs generated in growing sectors of the economy. The government worked with local employment services and the employers, with both public and private funds, to allow the newly unemployed to undertake a program of training even before their loss of employment. The program would then either upgrade the employee’s existing skillset, or allow them to opt into an even longer training program to acquire an entirely new one. Employees’ skillsets were preserved in the local area and redirected into working for the elderly and in the development of largescale renewable energy, both of which were growing in demand in Denmark.

The Lindø case study provides an example of great interest for Australia’s future. The Australian Government should consider identifying sectors which are well-placed to continue growing in the future, such as renewable energy, and to re-skill displaced workers.

The lessons from the Danish experience learned suggests retraining should occur as soon as possible, preferably both before and after industry decline. Australian policymakers would be well-placed to take note of the actions taken by their Danish counterparts.

Implementation

The apparent political difficulty in bringing such policies to fruition is notable. Public sentiment has become increasingly hostile towards both technology and outsiders. ‘Globalisation’ and ‘automation’ have been two buzzwords on everyone’s lips.

In a 2016 Essential poll, when asked: ‘What do you think is the biggest threat to job security in Australia?’, 18% of those surveyed said it was ‘the impact of technological change’, while 31% said ‘free trade deals that allow foreign workers into the Australian labour market’. Aggregating the two, this suggests that approximately half of Australians see either foreigners or technology as a dire threat to their job security.

Further, high quality integration programs are expensive. For example, the German case management and Danish reskilling programs would be very costly to replicate on a large scale in Australia. These are policies that have been successfully implemented, yet it is apparent that Denmark spends nearly eight times the public funds that Australia does on ALMPs[19]. Australia does not have the kind of political precedence for a similar level of government spending on unemployment benefits. Australia has the lowest levels of unemployment benefits in the OECD for a single person recently unemployed, while Denmark has one of the highest[20]. Hence, programs of such a large scale may be infeasible for Australia.

Concluding discussion

The Australian Government has an important role to play in the integration of our refugees, at both a state and federal level. It is a significant issue that must be solved. Despite any political difficulties that may arise, government action must be taken. The introduction of programs informed by German, Norwegian and Danish precedent will pave the way for more successful resettlement of some of our most vulnerable.

References

Australian Bureau of Statistics. (2010). Characteristics of Recent Migrants, Australia. Retrieved from:

http://www.abs.gov.au/ausstats/abs@.nsf/Products/6250.0~Nov+2010~Main+Features~Employment?OpenDocument

Australian Bureau of Statistics. (2016). Labour Force, Australia, Detailed, Quarterly, Aug 2016.

Retrieved from: http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6291.0.55.003 Main+Features1Aug%202016?

Australian Bureau of Statistics. (2017). Personal Income of Migrants, Australia, 2013-14. Retrieved

from: http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/3418.0Main+Features62013-14

Australian Council of Social Service. (2012). Surviving, not living. Retrieved from:

http://www.acoss.org.au/images/uploads/Allowance_Adequacy_Submission_Final.pdf

Borland, J., Considine, M., Kalb, G., & Ribar, D. (2016). What Are Best-Practice Programs for

Jobseekers Facing High Barriers to Employment?. Melbourne Institute Policy Brief, 16(4)

Centre for Policy Development. (2017). Settling better: Reforming refugee employment and

settlement services. Retrieved from: https://cpd.org.au/wpcontent/uploads/2017/02/ Settling-Better-Report-20-February-2017.compressed.pdf

Committee for Economic Development of Australia (CEDA). (2015). The impact of computerisation

and automation on future employment. Retrieved from: http://www.ceda.com.au/CEDA/ media/ResearchCatalogueDocuments/Research%20and%20Policy/PDF/26792-Futureworkforce_June2015.pdf

The Danish National Labour Market Authority. (2008). Danish Employment Policy. Retrieved from:

https://www.oecd.org/employment/leed/40575308.pdf

Department of Social Services (DSS). (2017). Building a New Life in Australia (BNLA): The Longitudinal

Study of Humanitarian Migrants. Retrieved from: https://www.dss.gov.au/our-responsibilities/families-and-children/programmes-services/building-a-new-life-in-australia-bnla-the-longitudinal-study-of-humanitarian-migrants

Durrant-Whyte, H., McCalman, L., O’Callaghan, S., Reid, A., & Steinberg, D. (2015). The impact of

computerisation and automation on future employment. Australia's future workforce?, Committee for Economic Development of Australia.

Ethnic Communities’ Council of Victoria Inc. (ECCV). (2014). Qualified but not Recognised. Retrieved

from: http://www.eccv.org.au/library/ECCV_Discussion_Paper_-_Qualified_but_not_Recognised_2015_Final.pdf

Frey, C. B., & Osborne, M. A. (2017). The future of employment: how susceptible are jobs to

computerisation?. Technological Forecasting and Social Change114, 254-280.

International Monetary Fund (IMF). (2016). The Refugee Surge in Europe: Economic Challenges.

Retrieved from: https://www.imf.org/external/pubs/ft/sdn/2016/sdn1602.pdf

McKinsey Global Institute. (2017). Harnessing automation for a future that works. Retrieved from:

http://www.mckinsey.com/global-themes/digital-disruption/harnessing-automation-for-a-future-that-works

Organisation for Economic Co-operation and Development (OECD). (2013). OECD Employment

Outlook 2013. Retrieved from: http://www.oecd-ilibrary.org/employment/oecd-employment-outlook-2013_empl_outlook-2013-en

Organisation for Economic Co-operation and Development (OECD). (2017). Labour Market

Integration of Refugees in Germany. Retrieved from: https://www.oecd.org/els/mig/Finding-their-Way-Germany.pdf

Overseas Development Institute (ODI). (2015). The migration crisis? Facts, challenges and possible

solutions. Retrieved from: https://www.odi.org/sites/odi.org.uk/files/odi-assets/ publications-opinion-files/9913.pdf

Parliament of Australia (APH). (2016). Refugee resettlement to Australia: what are the facts?.

Retrieved from: http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/ Parliamentary_Library/pubs/rp/rp1617/RefugeeResettlement

Refugee Council of Australia. (2010). What Works: Employment strategies for refugee and

humanitarian entrants. Retrieved from: http://www.refugeecouncil.org.au/r/rpt/2010-Employment.pdf

Scott, A. (2015). Northern Lights. Australia's future workforce?, Committee for Economic

Development of Australia.

[1] Department of Social Services, Australian Government, 2016.

[2] International Monetary Fund (IMF), 2016.

[3] Parliament of Australia, 2016.

[4] Committee for Economic Development of Australia (CEDA), 2015.

[5] Frey, C. B., & Osborne, M. A. (2017).

[6] Durrant-Whyte, H., McCalman, L., O’Callaghan, S., Reid, A., & Steinberg, D. (2015)

[7] Australian Bureau of Statistics (ABS), 2017.

[8] Australian Bureau of Statistics (ABS), 2016.

[9] Refugee Council of Australia, 2010.

[10] International Monetary Fund (IMF), 2016.

[11] Centre for Policy Development, 2017.

[12] Organisation for Economic Co-operation and Development (OECD), 2017.

[13] Organisation for Economic Co-operation and Development (OECD), 2017.

[14] Centre for Policy Development, 2017.

[15] Ethnic Communities’ Council of Victoria Inc. (ECCV), 2014.

[16] Organisation for Economic Co-operation and Development (OECD), 2017.

[17] The Danish National Labour Market Authority, 2008.

[18] Scott, A. (2015).

[19] Organisation for Economic Co-operation and Development (OECD), 2013.

[20] Australian Council of Social Service, 2012.