2021 NSW Remote Working Insights report and interview with Matt Costa

The NSW Remote Working Insights series, developed by the NSW Productivity Commission and the NSW Innovation and Productivity Council, provides data-driven evidence and insights on the longer-term implications of remote working for New South Wales. Faethm AI has contributed to both the 2020 and 2021 NSW Remote Working Insights reports.

In early 2021, pandemic restrictions were easing in NSW. Community transmission of the virus was minimal and the Delta variant had yet to appear. Working patterns were changing as workers began to return to offices and workplaces for part of their working week. Would this hybrid work model continue and if so, how would it impact the economy?

Dr Michael Kollo, Chief Economist at Faethm AI - Pearson, and Matt Costa, Principal Economist at NSW Treasury, discussed how Faethm’s predictive, AI-powered analytics contributed to the 2020 and 2021 NSW Remote Working Insights reports and to the research undertaken at NSW Treasury.

It was the huge, rapid rise in remote working that occurred with the first state lockdown in early 2020, Matt Costa says, that prompted the first NSW Remote Working Insights report. “The aim of that was we knew something big was happening, but the question was well, okay, is this going to keep happening? What are the implications of this? What does this mean for the economy?”

To understand the capacity of NSW workers to work remotely, Faethm delivered a ground-up analysis of the tasks involved in every single job across the economy, using Australian census data, and aggregated that up to an economy-wide view. Faethm’s workforce economic modelling tool analyses over 1,500 occupations and more than 20,000 tasks. Each occupation comprises a distinct set of tasks, with each task assessed as remotable or not. This data enabled Faethm to infer the proportion of work that can be done remotely by each occupation.

The analysis showed that 44 per cent of all work in the NSW economy is potentially remotable.

When the second lockdown occurred in mid 2021, Mr Costa says around 43 per cent of work in NSW was done remotely. “So, very close to maximum capacity remote working is happening across our economy. That's just a huge change in the way work is done.”

Even after the first lockdown, as restrictions eased, research in early 2021 showed that 30 per cent of all work tasks in the NSW economy continued to be done remotely. Workers embraced a flexible way of working and the result was an increase in worker productivity by 1.9 per cent. That’s AU$6 billion a year added to the NSW economy - or an extra $1,800 a year for the average NSW household. The 2021 NSW Remote Working Insights report found that the capacity of NSW workers to work remotely preserves 832,000 jobs and $3 billion a week in GSP, contributing enormously to the resilience of NSW’s economy.

However, the COVID-19 pandemic has also illustrated just how difficult it is to anticipate external forces that directly affect work. Mr Costa says that such forces are, “ … inherently unpredictable and you have to be able to get across them quickly and respond to them quickly. And remote working is one of those. They often have really big long-term implications which require adjustments to the kind of long-term projections that governments make, projections about where to put infrastructure, where people will be living and working.”

This is where Faethm’s predictive analytics are invaluable to local, state and national government planning. Working with Faethm has given NSW Treasury the ability to marry a granular analysis of how technologies can impact individual jobs - right down to the tasks performed in those jobs - with a macroeconomic picture of the entire NSW economy. NSW Treasury is now using Faethm for future scenario planning to better understand the impacts of emerging AI technologies.

“Some of the scenarios we’re exploring at the moment are around the Future of Work and how technology and automation might impact the New South Wales workforce. We know that technology comes in waves, it doesn't roll out evenly,” Mr Costa says. “So that means there's an element of uncertainty about how big the shocks are going to be, which industries are going to have smooth transitions and more difficult transitions when a new technology comes online.” By using Faethm to identify long-term trends, he continues, “ … we can have a pretty good guess of where things are going.”

In NSW, the rapid transition to remote work was fairly uncomplicated due to NSW’s commitment to technology investment. “And what's amazing about that is that all that technology was largely in place. If it wasn't in place, the transition couldn't have happened so quickly. Certainly we're still getting used to that transition and investments are being made, but it really illustrates [ … ] the need for governments to be nimble and to be able to respond to that and I suppose, facilitate those changes.”

The economic scenario modelling being undertaken at NSW Treasury surfaces the wide range of opportunities that automation can deliver. “So one of the really fun and positive things we get to do here is model the scale of that upside risk," Mr Costa says. "What sort of positive shock could we get from new technologies coming online and really boosting our productivity and creating more goods and services with less resources and effort and continuing that growth in our living standards?”

What the research has shown is that critical future skills are not just technology-related. Mr Costa has found that many Future of Work skills are related to a service-based economy.

“The more that we automate traditional industries like agriculture and manufacturing, the more that the bulk of work in the economy moves to these other areas, to the services, to health, to education,” he says. “So, when we think about the Future of Work, we're often drawn to thinking about high tech, but actually the Future of Work is so much about social skills. We're really thinking about boosting skills, digital skills, being able to access digital services, being able to work with technology [ … ] every day and developing more of those soft skills that are really necessary when you've got a service-based economy.”