Australia’s tech industry has been shocked by the scale of repeated local layoffs this year.
These redundancies have come off the back of USA-based technology giants — Google, Microsoft, Meta, Amazon and X (formerly Twitter) — also shedding thousands of employees, prompting some frenzied calls of the end of the tech boom that has characterised the last decade.
Understandably, the news of a technology downturn has shaken many in the sector, particularly after a long period of sky-high valuations and a seemingly endless supply of cash.
Then, the pandemic hit, followed by the Ukrainian war and significant market turmoil, stopping the rivers of gold propping up the industry. The consequences of this have been heartbreaking: loss of jobs, dreams, and the once-promised jobs in some of the world’s best workplaces have, in many cases, evaporated.
Yet, as revealed recently in Employment Hero’s latest SME Index, Australia’s tech sector is looking to rebalance itself following this period of unsustainable growth. While the human cost remains high, the course correction will hopefully stymie the withdrawal of investment and kick-start round two of a less aggressive but sustainable technology marketplace.
This presents the perfect opportunity for government-private collaboration, leveraging the innovation and expertise of private enterprises already years ahead to benefit the wider industry.
Instead of reinventing the wheel, the federal government can work alongside these existing solutions to foster a more efficient, tech-savvy workforce that is resilient and future-proof.
The data snapshot
According to the Australian Government’s recent white paper on jobs and opportunities, digital and technology jobs will grow by 21 per cent by 2033.
The paper also highlights the role of digital technologies in changing Australia’s access to, and participation in the global economy, finding that tech-based SMEs experienced significant revenue and employment growth between 2015 and 2017.
This is good news and should be understood in the context of correction and ongoing sustainability in the sector. While Employment Hero’s SME Index points to a noticeable decline in the average employee growth for the Science, Information and Communication Technology sector, as well as a -1.8 per cent dip in the median hourly rate, the tech industry still boasts the highest median hourly rate at $57.08.
This suggests that while growth has slowed, it has entered a new sustainable phase as valuations and salaries return to more workable levels.
Technological innovation has not — and arguably, at this stage, cannot — be abandoned, with emerging technologies such as artificial intelligence and advanced robotics continuously changing how people engage with technology at work, improving workplace safety and product quality, and creating new markets.
The road ahead for the tech sector
As the industry self-corrects, now is the time for government and private sectors to re-evaluate their collaboration, which could save costs and foster new innovations.
For instance, let’s look at the government’s $9bn National Skills Passport. While the concept offers a promising avenue to simplify how employees present their skills and qualifications to prospective employers by leveraging micro-credentials, digital badges, portfolios, resumes and references to streamline the hiring process, the technology already exists in the private sector.
Products like SEEK’s Certsy and Employment Hero’s Swag have already demonstrated the viability of such solutions at scale and provide an opportunity for the Federal Government to partner with the private sector, which is years ahead, rather than compete with existing solutions.
Data beyond just tech
The tech sector’s rebalancing is not an isolated phenomenon; it reflects broader shifts in the Australian economy and ever-changing consumer and employee behaviour.
As Australians continue to cut spending to pay their mortgages following 12 interest rate rises, the data continues to paint a sobering picture. Employment Hero’s SME Index shows the average employee growth in the retail, hospitality, and tourism sectors is experiencing a -0.02 per cent monthly decline.
Median hours worked have also declined annually by -1.5 per cent, signifying reduced spending in industries that typically bring joy to Australians.
The jump in the cost of living means everyday workers and families are spending less, and the SME Index indicates this is hitting our younger workforce the hardest.
As we enter the Christmas and holiday season, it will be telling to see if there is an uptick in seasonality hiring or if the current declines continue through this period as businesses seek to recoup losses.
In many ways, this provides an opportunity for the tech sector to help alleviate pain. As the federal government’s white paper shows, technological advances will continue to shape industries and boost productivity, supporting rising living standards and expanding job creation.
While tech companies may be entering recovery mode, it is indisputable that technology will continue to play a central role in aiding this recovery. Artificial intelligence will continue to drive growth and innovation, and technology via remote work setups will help tech companies overcome skill and talent shortages.
As has been the case in previous eras, technological advances are expected to have an uneven impact across industries and occupations. The broad nature of how technology is embedded in our day-to-day lives means many people working outside the technology sector must also have core digital literacy skills.
This is the perfect time for the federal government to reconsider the role of private-government partnerships and to devise strategic plans that draw on already existing and proven technologies at a fraction of the cost.
Rather than reinventing an existing structure, these partnerships can accelerate the adoption of innovative workforce solutions to improve the industry as a whole and help Australians, both on individual and systemic levels, improve their lives.
Ben Thompson is the Founder & CEO of Employment Hero.