Andrew Leigh

E&OE TRANSCRIPT
RADIO INTERVIEW
ABC SYDNEY MORNINGS WITH GERALDINE DOOGUE
SATURDAY, 10 JUNE 2023

SUBJECTS: Digital distraction in workplaces and its impact on productivity

GERALDINE DOOGUE (HOST): Now to one of the main economic themes of the week, which you just heard canvassed as well this week: productivity in Australia. I mean, it rarely goes away for long, this topic. It was certainly relaunched big time into the public conversation by Reserve Bank chief Philip Lowe after his higher interest rate announcement. Unless productivity rises, he said, wage rises would virtually inevitably yield higher rates. Now that's heralded a battle royal about what's behind our flagging labour productivity growth which is down to a 60 year low, according to the respected CEDA think tank. Then the OECD weighed in this week with research showing that corporate profits had been driving inflation. But is that merely exceptional iron ore export profits? Came the counter. Look, this is a conversation not to be finalised in one week and we will continue to follow the debate. Dr Andrew Leigh, the Assistant Minister for Employment, has named an intriguing culprit, though, particularly for services sector workers, that the social media and the constant flow of workplace emails that interrupt us on average every six minutes and constitute at least part of the problem. I spoke to him earlier yesterday as he sat in a busy airport lounge.

LEIGH: Thanks, Geraldine, great to be with you.

DOOGUE: Why have you singled out social media and emails in this sort of clearly very broad scale problem?

LEIGH: Geraldine my thinking has been shaped very much by productivity scholars like Cal Newport and people who've looked at social trends like Jonathan Haidt, and they've noted that over the last couple of decades, with the rise of the smartphone social media and the flood of email that comes into each of our inboxes every day, countries around the world, not just Australia but other advanced countries, too, have tended to become less productive and less connected than they were before. And one of the theories behind this is that typical workers have turned into email answering machines, almost packet switchers, engaging in this ‘hyperactive hive mind’ of constantly bouncing emails forwards and backwards and not engaging in the kind of deep work that you need to come up with a new idea or to write a fresh report. At the same time, many of us are stressed out by the overwhelming press of social media and finding that that's sometimes crowding out face to face interactions.

DOOGUE: And I know that this also dovetails with work he's done, which argues that some workplaces are set up as part of the problem with, in effect, providing more autonomy, which is what social media in theory does, and which was part of the whole sort of efficiency attitudes but that actually it's gone too far now. I think that's quite interesting. Can you develop that, please?

LEIGH. So, Cal’s theory is that Peter Drucker came to management in the 1960s and said we need to give workers more autonomy. And that worked pretty well for the workplaces of the day. But then when email began to trickle into workplaces in the 1990s and flood into workplaces in recent decades, an autonomous way of working has meant that workers are expected to respond to their co-workers’ emails. It chunks up work into bits that are too small, because we know when we're distracted by another task, it takes us about 20 minutes to get back on track. So if you check email every six minutes, you can spend the day in a permanent state of distraction.

Now, some firms are trying to deal with this. There's an approach called agile programming, and another an offshoot of it called extreme programming, in which programmers are told they don't need to check email or Slack, they just need to work hard for up to 6 hours a day. And firms find if they can get 6 hours of true productivity out of a worker, that's way more than the typical employee would produce in a regular day while being deluged by email.

DOOGUE: And is essentially the argument, if you think it through, is that, in effect, people are being asked to be managers of themselves. They don't realise it, but they're actually answering all sorts of intricate details that once would have been, if you follow his logic, through, answered by their line manager. Is that it's a form of multitasking?

LEIGH: I suppose that's right, yes. Everyone's become a multitasker. Jobs have become broken up and firms need to rethink work for an age of email. It's not good enough to simply say, go in there, respond to all of your co-workers’ constant demands and questions and try and get your own work done at the same time. One thought about this is that perhaps the change to produce a more productive workplace might be as big as the change wrought by Henry Ford when he said, let's build cars, not by bringing the parts to the car, but by having the car travel down the assembly line to the workers. Not that we want assembly line office work, but that the change could be that profound in order to get productivity going again.

DOOGUE: And I mean, I suppose we should mention here that it's not just workplaces that are swamped by a lot of unnecessary emails. It's schools with constant updates on what kids are doing. It's super funds, it's councils, it's the ATO. Every organisation you have a connection with, or sometimes you don't have a connection with, is trying to send you something to invite you to keep up. It's this concept of keeping up which I presume this is all part of your thinking.

LEIGH: Absolutely. Once the marginal cost of communicating with people dropped to zero, then you could expect that there would be more communication coming from all sources. And all of us now feel ourselves being barraged. I think this is particularly tough for teens who aren't just being barraged by email, but also by social media, some of which carries negative messages. Now, there's a bit of a debate over the impact of social media on teen health. One way of looking at it is that there are a lot of teens who directly pinpoint social media for their increased feelings of anxiety and depression. We know those statistics are well up compared to previous decades.

DOOGUE: Now, are you accounting and is Cal Newport accounting for productivity within this, though? Because one assumes there's also been extraordinary rates of autonomous productivity here.

LEIGH: Look, I think there's great productivity among the firms that are creating these social media platforms and smart devices. They're getting some of the best computer programmers and psychologists in the world together to create addiction machines and their profits are going up markedly, as is their productivity measured by their total returns to the firm. But I'm not sure that's true right across the corporate sector. And the firms that mark themselves out by being able to help their employees deal effectively with addictive technologies will be the productivity leaders of the future.

DOOGUE: But look, why are we in particular falling behind, it would seem, the rest of the world in terms of productivity. CEDA this week reports that the gap between Australia and global firms on this score is growing. So, all of those conditions you're describing are happening elsewhere and they don't appear to be taking the same toll as on us.

LEIGH: That's right. And I certainly wouldn't suggest that digital distraction is the sole cause of Australia falling off the productivity frontier. But I do think that there's, for example, factors such as a lack of competition in the Australian market, which have been a big issue, and I've spoken a lot about that. The failure to provide smart kids the opportunities to get the education they need to succeed in the labour market has also been a drag, as has pork barrelling infrastructure rather than building the infrastructure that we need. So, there's a range of drivers of productivity.

DOOGUE: I mean, the CEDA report also pointed out a lack of dynamism and particularly this problem of lack of business investment, which is really acute and predated COVID across almost all our businesses. You're in government now, what are you going to do about that?

LEIGH: We're doing a lot about the challenge of dynamism. We’ve raised penalties for anti-competitive conduct and banned unfair contract terms and we're now consulting on the digital platform services inquiries and whether we'll have platform specific regulations. We're looking at things like a ban on unfair trading practices and I've been engaging with competition regulators around the world, including in the United States, where there's a lot of change thinking around competition law, epitomised by Lina Khan, who’s now heading the Federal Trade Commission. So, that's a big and a serious challenge. We're focussed heavily on it.

DOOGUE: I think it's fair to say that a lot of workers hear this story about productivity and as Alan Kohler, the respected commentator, drew the conclusion a couple of weeks back, he thinks that workers have just given up a bit. They don't believe it's possible to get more productivity out of them and they've just sort of put their hands up, really. So, I wonder how you're going to intervene here, given Labor's core constituencies are workers, how you encourage workers?

LEIGH: In the long run, living standards and wages are driven by growth and productivity. But productivity isn't simply about working longer or forcing people to sweat more. In fact, approaches like agile programming that I spoke about before are a way of freeing workers to do the work that is most pleasurable. We know that engaging in deep work is enormously satisfying in itself, as well as being economically productive for the firm.

DOOGUE: Deep work?

LEIGH: Yeah, where you concentrate on a single task and so you lose track of time, you have the enjoyment of focussing on that one big task. That's the kind of activity that we're keen to encourage in firms. I'd like to see more firms allowing their employees to really immerse themselves in the most productive activities.

DOOGUE: Now, the Productivity Commission brought out a report in March containing 71 recommendations challenging your government and state governments to lift living standards by adopting technology to particularly make the services sector, the care sector and government services more efficient and to do a range of things, expand the carbon price and so on and so forth. But they did also seem to point to encouraging the take up of new technology. AI is being offered as one of the possibilities of a massive gain in productivity. Now is this the sort of thing that is this part of the allusion to Henry Ford, the modern equivalent of Henry Ford?

LEIGH: I mean, the shift to AI is going to challenge workers right across the spectrum. I think for many knowledge workers, technology was something that took other people's jobs until they saw what ChatGPT 4 could do. It is pretty remarkable to see the way it's able to draw documents together and to creatively build connections between disparate bodies of knowledge. At the moment, it is a fantastic tool. We're seeing it being used quite effectively in a whole range of roles, but as it grows more powerful, it's going to threaten employment. And that's why Ed Husic has put out the Safe and Responsible AI working paper so we can engage constructively on those issues.

DOOGUE: Look, final question what, in your view, are the sectors of the economy that are growing in terms of productivity growth, showing productivity growth, that we can learn something from?

LEIGH: Yeah, it's a great question, Geraldine, and we don't have a whole lot of shining lights when it comes to particular industries that are growing more effectively. One thing we do know is that startup businesses have that potential to grow and thrive. But if you look at the top of the Australian stock market and you look at the biggest five companies well, four of them were in the top five in 1985, so there's been very little turnover at the top of the business sector. We’ve seen an increase in market concentration, an increase in price markups and a fall in the rate of startups that are employing new workers. So, they're all troubling trends for us and we're deeply engaged in the questions around economic dynamism and how to get it going.

DOOGUE: John Hewson says there should be a full national bipartisan programme to think about lifting productivity and make it a whole of government, a whole of government approach. So, maybe that's what is needed. Thank you very much indeed for joining us.

LEIGH: It was an absolute pleasure, Geraldine. Thanks for the conversation.

DOOGUE: Andrew Leigh off to compete in an ultramarathon in South Africa this weekend, sitting in an airport. It’s news time now. We'll be back after eight.