A/NZ employers looking to AI for productivity boost

Published on the 23/04/2024 | Written by Heather Wright

A/NZ employers looking to AI for productivity boost

But there’s a sting in the tail…

Kiwi employers are looking to AI, particularly generative AI, to increase productivity by 49 percent, with Australian employers not far behind in their expectations, believing they could see a 46 percent boost in productivity.

That boost will come from automating routine tasks such as data entry and appointment scheduling – and workers are on the same page, with Australian respondents in AWS’ Accelerating AI Skills report indicating AI will help them complete tasks 45 percent more efficiently, and Kiwi respondents weighing in at 46 percent.

“Huge productivity gains will be available, but only if industry and government work together.”

Both New Zealand and Australia have a long track record of woeful productivity. Last year the (recently disestablished) New Zealand Productivity Commission said the country’s productivity record ‘leaves a lot to be desired’, with New Zealand ranking among the worst in the OECD. Australia too, has little to celebrate on the productivity front. In February, the Australian Productivity Commission figures showed productivity fell 3.7 percent in 2022-23. Around the same time the Reserve Bank of Australia also noted the impact of ‘very weak productivity outcomes’ on business, with a sharp increase in labour costs per unit of output over the previous year.

A recent paper for the Bank of International Settlements says a key channel through which AI affects economic growth is through improvements in productivity. It cites numerous studies showing that generative AI ‘can make workers tremendously more productivity’, boost firm growth and innovation and, at a macro-economic level, raise annual productivity growth by around one percentage point per annum over the next decade.

“Compared to information technology, whose impact took years to be reflected in aggregate productivity numbers, AI is considerably easier to use and implement in processes as it is a general-purpose technology that does not require the deployment of new hardware, deep user know-how or a substantial reconfiguration of business practices. As a consequence, the impact of AI on productivity will likely be felt in the coming years already,” The Impact of Artificial Intelligence on Output and Inflation working paper says.

That’s in line with local reports too.

A January research paper from the Australian Productivity Commission, Making the Most of the AI Opportunity, flagged AI’s potential in increasing productivity across the economy, though it says it will take ‘some time’ before the effects are observable in aggregate productivity data’.

“Investment in complementary inputs such as managerial changes, training and business process are needed for productivity gains,” the Productivity Commission says. Those investments can be ‘many times’ the magnitude of the initial technology investment and deliver benefits several years later.

It noted the potential of AI to address some of Australia’s most prominent and enduring productivity challenges, including skill and labour gaps; productivity in services, which account for 80 percent of GDP and 90 percent of the workforce; and accelerating innovation and future productivity growth, including R&D.

AI could also provide the incentive for companies to employ more technology and equipment relative to labour, the report says.

“At this stage of development and AI uptake, it is impossible to know to what extent AI will deliver on its potential. Achieving productivity gains will depend on how the technology and complementary technologies continue to develop, and how successfully these are adopted and applied. It will also depend on how government policy around AI regulation and data develops,” the report cautioned.

But if the Productivity Commission has some reticence, businesses in Australia – and New Zealand – don’t appear to share those qualms.

The AWS reports – one for New Zealand and one for Australia – show high positivity around AI, which businesses and workers expect to significantly change how business is done.

Across both countries, 90 percent of organisations say they plan to use AI-related offerings such as chatbots and speech recognition, within their organisation by 2028, with the IT department expected to be the biggest winner in deriving value from AI applications. Sales and marketing, and finance were Kiwi organisations’ other tips for big AI wins, while in Australia, sales and marketing, business operations and research and development departments were in focus.

As to what AI will be doing for us, it remains in the fairly simple category for the most part: Automating repetitive tasks, improving workflow and outcomes and enhancing communications, were top areas where employers believe AI can enhance work processes.

Expectations around generative AI are running high in both countries among both employers and employees. In New Zealand 92 percent of employers surveyed and 86 percent of workers expect to be using genAI tools on the job within five years, with 60 percent of employers highlighting increasing innovation and creativity as the top benefit, followed by automating repetitive tasks and improving outcomes.

Across in Australia, the figures are similar with 84 percent of both employers and employees expecting to be using genAI within five years, and both groups expecting innovation and creativity benefits, along with automating repetitive tasks, improving outcomes and supporting learning.

The reports by Access Partnership for AWS surveyed more than 1,600 workers and 500 employers in each country.

It’s not just the employers expecting big gains from AI, either.

While workers may be looking at offloading some of the more tedious workloads, they’re also eyeing salary increases – and employers aren’t baulking at the prospect of increased wages for those who upskill for AI either. Across both countries employers estimated that workers who acquire AI expertise could see their pay jump by around 30 percent or more, depending on their departments.

Again, IT workers are expected to be the biggest benefactors (37 percent in Australia and 41 percent in New Zealand), followed by business operations in Australia (35 percent) and R&D in New Zealand (38 percent).

But, as with so many earlier reports on the topic, there is a sting in the tail: While enthusiasm for AI and its potential benefits are high, there’s a big skills gap to be bridged in order to unlock the full benefits.

Hiring AI-skilled talent is a priority for 63 percent of Kiwi and Australian employers, according to the AWS report, yet 70 percent of Kiwi and 75 percent of Australian employers can’t find the talent they need. Adding to the issue is a ‘training awareness gap’ with the majority of employers indicating they don’t know how to run AI training. Workers, for their part, say they’re not sure about relevant career paths where AI skills are useful.

The numbers are similar in Australia

Graeme Muller, CEO of tech industry body NZTech, says the data further reinforces the importance for AI for New Zealand’s future – and the need to invest in upskilling, not just for business, but for the country.

“Huge productivity gains will be available, which will have a positive effect on our economy and GDP, but only if industry and government work together to prepare Kiwis with AI skills.”

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