Thodey: Optimistic but realistic

James Riley
Editorial Director

Adding one million new jobs to the NSW economy in the next 20 years is a daunting but achievable challenge, despite the growing intensity of creative disruption sweeping across industries, according to corporate legend David Thodey.

It’s daunting because over that period NSW is likely to lose at least 500,000 jobs to automation, Mr Thodey says, meaning the goal for NSW actually needs to be 1.5 million new jobs.

With Premier Mike Baird, Mr Thodey last week launched the state’s Jobs for the Future report, outlining a framework for how that lofty target might be achieved (and unveiling a four-year $190 million to get it done.)

Among a bunch of different roles – not least being Chairman of the CSIRO – Mr Thodey is also Chair of Jobs for NSW, an interesting government/private sector delivery model for job creation.

It was set up a year or so ago, and has been building out this report, and a program of work for the next four year. In fact he single measure of the success or otherwise is job creation.

A twenty year horizon seems a long, long way off. Especially when the labour market is changing so quickly. But you’ve got to start somewhere.

“I’m an optimist, but I’m a realistic optimist,” Mr Thodey told on Friday. “And look, we have an enormous challenge ahead of us.”

“I am quite sure that there will be enormous changes to the labour market in the next five, 10 and 20 years, all driven by automation. That’s automation in manufacturing of course, but it’s also automation in agriculture and in construction [and elsewhere].”

“So when you’re saying you want net growth of a million jobs, you’re actually talking about a gross number of 1.5 million. We have to face into this,” he said.

“Part of this is that we have got to build a strong digital community and technology community, because we live in a software-driven world. We have to build that capability, and not let it simply be a complete competitive threat.”

“But we also have to look at other ways of generating employment. This report tries to lay that out so that we can act against it.”

“Is this report 100 per cent accurate? Absolutely not. But it is a way to start dealing with this issue aside from just staring at it and saying ‘woe is us’. But we can do this. I am a great believer in the ability of people to solve issues when they put their minds to something.”

“But it is not going to be easy.”

Here is something worth noting (as Jobs for NSW does in its report.) On historical average, the target they have set should be achievable.

From 1996 to 2015, NSW added 925,000 new jobs—286,000 more than our population growth would explain—to reach 3.71 million people in paid work. During that period, the labour market changed dramatically, and the state’s skills base and education priorities changes to match.

The jobs that were created paid more. Wage growth outstripped CPI growth by 20 per cent since 1997. The benefits of those jobs were also widespread – with regional residents, women and older people all participating more.

The four pillars of the financial support programs announced last week were:

  • Help fast-growing SMEs – known as gazelles – to access the funds they need to grow jobs through a $50 million loan guarantee program, and a $3.5 million direct loan pilot program
  • Help startups grow into the gazelles of tomorrow by setting aside $10 million to grow the State’s network of incubators and accelerators, and $3 million in 2016-17 for direct grants to startups
  • Grow regional companies with a dedicated $30 million program
  • Attract large and international companies to base their headquarters in NSW through a $30 million fund

There was a lot of talk about gazelles in this report. These are the class of fast-growing SMEs that have grown at 20 per cent annually for three years. And these are the companies that account for the greatest proportion of job creation, Mr Thodey said.

“The biggest learning for me [from this report] was the fact that if you look at where jobs growth has come from in the past six years, there has been incredible growth in small and medium sized businesses, but the majority of the growth has come from just six per cent of those businesses,” he said.

“These are the so-called gazelles. [But] we are still getting too many examples where people are starting businesses and then falling over in two years.”

“A lot of the issue has been around the lack of capital with these fast growing businesses, where the top line is going fast, the expenses are growing fast, and they can’t raise capital.”

Photo caption, left to right: Jane Cay, Simon Smith, Karen Borg, Blair Comley PSM (back), David Thodey, Helen Zimmerman, Craig Dunn, Dr Chris Roberts

Do you know more? Contact James Riley via Email.

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