1 00:00:05,680 --> 00:00:07,920 Speaker 1: Welcome to the Fear and Greed Business Interview. I'm sure 2 00:00:07,960 --> 00:00:11,680 Speaker 1: and a Australian business leaders are increasingly optimistic about the 3 00:00:11,680 --> 00:00:15,160 Speaker 1: economic outlook, with a growing number planning to increase headcount 4 00:00:15,280 --> 00:00:18,239 Speaker 1: over the next twelve months. Nearly nine to ten CEOs 5 00:00:18,360 --> 00:00:22,360 Speaker 1: also see AI as important to their company strategy, and globally, 6 00:00:22,440 --> 00:00:25,880 Speaker 1: business leaders reporting an increase in revenue and workplace efficiency 7 00:00:26,160 --> 00:00:28,360 Speaker 1: because of the technology. They are some of the key 8 00:00:28,360 --> 00:00:32,760 Speaker 1: findings from PWC's twenty eighth annual Global CEO Survey, which 9 00:00:32,800 --> 00:00:35,879 Speaker 1: interviewed more than four thy seven hundred CEOs across one 10 00:00:35,960 --> 00:00:39,760 Speaker 1: hundred countries and territories. Amy Lomas is Chief Economist at 11 00:00:39,760 --> 00:00:42,560 Speaker 1: PwC Australia. Amy, welcome to Fear and Greed. 12 00:00:43,080 --> 00:00:45,080 Speaker 2: Thank you, Sean. I'm very pleased to be here. 13 00:00:45,840 --> 00:00:48,320 Speaker 1: So looking at it, it kind of looks to me 14 00:00:48,600 --> 00:00:52,360 Speaker 1: we're an optimistic bunch, but perhaps not an adventurous bunch, 15 00:00:52,560 --> 00:00:54,920 Speaker 1: at least the CEOs of Australia. 16 00:00:56,120 --> 00:00:57,640 Speaker 2: Wow, that's a good place to start. 17 00:00:58,320 --> 00:01:01,360 Speaker 3: So there are a few results in the survey that 18 00:01:01,440 --> 00:01:04,959 Speaker 3: were a surprise to us, and I think you could 19 00:01:05,400 --> 00:01:08,640 Speaker 3: draw the conclusion that perhaps there is a level of 20 00:01:09,080 --> 00:01:12,119 Speaker 3: I mean, we use the term complacency, but you could 21 00:01:12,160 --> 00:01:15,840 Speaker 3: say that we're not an adventurous bunch. There was one 22 00:01:15,880 --> 00:01:18,240 Speaker 3: area where it was a contradiction to that, but actually 23 00:01:18,240 --> 00:01:22,000 Speaker 3: there are two areas where that sense of adventure might 24 00:01:22,040 --> 00:01:25,080 Speaker 3: not be there. The first is in relation to AI. 25 00:01:26,080 --> 00:01:29,920 Speaker 3: So probably the first thing to say about AI is 26 00:01:29,959 --> 00:01:32,399 Speaker 3: it's only really been with us, and it's only really 27 00:01:32,400 --> 00:01:35,280 Speaker 3: been on the radar of CEOs for the last couple 28 00:01:35,360 --> 00:01:38,440 Speaker 3: of years. So in the survey we did ask all 29 00:01:38,480 --> 00:01:41,680 Speaker 3: the CEOs, so that's four thousand and seven hundred CEOs 30 00:01:41,720 --> 00:01:44,800 Speaker 3: across the globe around where they're at with AI. We 31 00:01:44,920 --> 00:01:50,000 Speaker 3: asked them to what extent they're observing efficiency improvements, to 32 00:01:50,040 --> 00:01:54,040 Speaker 3: what extent AI is part of their business strategy going forward, 33 00:01:54,600 --> 00:01:57,880 Speaker 3: and to what extent they're starting to see benefits in 34 00:01:58,000 --> 00:02:02,600 Speaker 3: terms of improvements to profit and improvements to revenue. What 35 00:02:02,800 --> 00:02:07,560 Speaker 3: came through was that while Australian CEOs and global CEOs 36 00:02:07,680 --> 00:02:10,280 Speaker 3: all unanimously and I think that in the majority of 37 00:02:10,360 --> 00:02:14,960 Speaker 3: cases CEI as an important part of their business strategies 38 00:02:15,000 --> 00:02:20,600 Speaker 3: going forward, when it comes to current realization of benefits, 39 00:02:20,960 --> 00:02:24,920 Speaker 3: Australian CEOs are behind Global CEOs. So I think we 40 00:02:25,000 --> 00:02:29,960 Speaker 3: had about thirty odd percent of global CEOs reporting realized 41 00:02:30,040 --> 00:02:33,760 Speaker 3: benefits in terms of profit and revenue, compared to something 42 00:02:33,960 --> 00:02:39,120 Speaker 3: kind of half of that for Australian CEOs. And the 43 00:02:39,240 --> 00:02:43,960 Speaker 3: other area that stood out beyond AI was around what 44 00:02:44,000 --> 00:02:47,920 Speaker 3: we would call climate friendly investments. So similarly, there is 45 00:02:48,120 --> 00:02:54,560 Speaker 3: a distinct difference between reportable tangible business benefits from Australian 46 00:02:54,639 --> 00:02:58,640 Speaker 3: CEOs in relation to their climate friendly investments compared to 47 00:02:58,680 --> 00:03:00,200 Speaker 3: global CEOs. 48 00:03:00,080 --> 00:03:03,880 Speaker 1: On the AI. I think what I found interesting. I 49 00:03:03,880 --> 00:03:06,280 Speaker 1: think that one hundred and sixteen Australian CEOs in the 50 00:03:06,320 --> 00:03:09,639 Speaker 1: overall surveys have there's good sample size, they're just they 51 00:03:09,680 --> 00:03:12,799 Speaker 1: seem me a little less complacent or maybe I see 52 00:03:12,880 --> 00:03:16,960 Speaker 1: more wary around security and the benefits of AI. It's 53 00:03:17,000 --> 00:03:21,080 Speaker 1: almost like there's still teething problems with AI for local CEOs. 54 00:03:21,639 --> 00:03:25,359 Speaker 3: Yes, so that that actually came through globally as well 55 00:03:25,400 --> 00:03:29,280 Speaker 3: as locally, but particularly strong locally is that there is 56 00:03:30,600 --> 00:03:36,240 Speaker 3: still a nervousness around trusting AI, and I think it's 57 00:03:36,440 --> 00:03:41,440 Speaker 3: largely around it ties in with the debate around the 58 00:03:41,560 --> 00:03:45,480 Speaker 3: use of personal data, the use of commercial data, and 59 00:03:45,520 --> 00:03:49,000 Speaker 3: that we don't yet fully understand how these systems work. 60 00:03:49,880 --> 00:03:53,920 Speaker 3: The layperson, and you know, we're all upskilling in how 61 00:03:54,000 --> 00:03:57,440 Speaker 3: AI works, and so no one wants to be in 62 00:03:57,440 --> 00:04:02,400 Speaker 3: a situation where information been provided to you in the 63 00:04:02,440 --> 00:04:03,840 Speaker 3: course of your business, or that you. 64 00:04:03,880 --> 00:04:06,960 Speaker 2: Generate within your business ends up somewhere in an. 65 00:04:06,880 --> 00:04:12,880 Speaker 3: Algorithm or caught up in a large language model that 66 00:04:12,960 --> 00:04:15,560 Speaker 3: you didn't want to find its way there. So I 67 00:04:15,560 --> 00:04:19,800 Speaker 3: think that lack of trust is probably more a reflection 68 00:04:20,160 --> 00:04:23,680 Speaker 3: of our emerging understanding of how these systems work and 69 00:04:23,720 --> 00:04:27,240 Speaker 3: what specific controls you need to put in place to 70 00:04:27,400 --> 00:04:30,919 Speaker 3: ensure that you can adopt and imbed AI in a 71 00:04:30,960 --> 00:04:33,440 Speaker 3: way where you're really confident that it's doing the things 72 00:04:33,440 --> 00:04:35,599 Speaker 3: that you want it to do and not doing the 73 00:04:35,640 --> 00:04:38,240 Speaker 3: things that you don't want it to do. But there 74 00:04:38,320 --> 00:04:40,279 Speaker 3: is just one other point that I think is really 75 00:04:40,320 --> 00:04:45,640 Speaker 3: relevant from an AI perspective is the Australian CEOs reported 76 00:04:46,279 --> 00:04:51,159 Speaker 3: they feel less exposed to technological disruption than global CEOs do, 77 00:04:52,160 --> 00:04:57,040 Speaker 3: and so I think that imperative, that sense of challenge 78 00:04:57,080 --> 00:05:00,560 Speaker 3: to your existing business model and to your existence business 79 00:05:00,600 --> 00:05:04,480 Speaker 3: practices that come from technological change and is not being 80 00:05:04,560 --> 00:05:08,040 Speaker 3: felt as keenly by Australian CEOs, and so there probably 81 00:05:08,160 --> 00:05:12,480 Speaker 3: isn't the impetus to really embed it and generate the benefits. 82 00:05:12,720 --> 00:05:15,839 Speaker 3: You need the benefits, the commercial benefits to succeed in 83 00:05:15,880 --> 00:05:19,600 Speaker 3: the world ahead. That's clearly being felt more keenly by 84 00:05:19,800 --> 00:05:22,920 Speaker 3: our global CEOs than our local CEOs. 85 00:05:23,360 --> 00:05:25,679 Speaker 1: Okay, stay with me, Amy will be back in a moment. 86 00:05:32,760 --> 00:05:36,839 Speaker 1: I'm speaking with Amy Lomas, PwC, Australia's chief economist. You 87 00:05:36,880 --> 00:05:39,080 Speaker 1: are an economist, and actually by a background, I'm an 88 00:05:39,080 --> 00:05:42,960 Speaker 1: economist as well. I've got to ask forty seven of 89 00:05:43,120 --> 00:05:46,719 Speaker 1: CEOs are optimistic about the global economic outlook. Why do 90 00:05:46,760 --> 00:05:48,680 Speaker 1: you think they are? I mean, I think that's a 91 00:05:48,680 --> 00:05:49,680 Speaker 1: pretty upbeat outlook. 92 00:05:49,720 --> 00:05:54,360 Speaker 3: Really I have to differ with you on that point, 93 00:05:54,360 --> 00:05:59,360 Speaker 3: but come to that in a minute. So the optimism 94 00:05:59,520 --> 00:06:02,719 Speaker 3: thearies that absolutely an optimism in the survey. There's an 95 00:06:02,760 --> 00:06:08,440 Speaker 3: optimism around global GDP growth, and then locally there's optimism, 96 00:06:08,720 --> 00:06:12,440 Speaker 3: more optimism than what we've seen in previous surveys around 97 00:06:12,560 --> 00:06:17,800 Speaker 3: Australian GDP growth. I think in terms of the specific survey, 98 00:06:17,880 --> 00:06:20,479 Speaker 3: and we've been undertaking this survey for the last twenty 99 00:06:20,520 --> 00:06:22,760 Speaker 3: eight years, so it's fabulous in terms of giving us 100 00:06:22,800 --> 00:06:24,680 Speaker 3: a time series. But if you look back over the 101 00:06:24,760 --> 00:06:27,520 Speaker 3: last few years. The real low point in terms of 102 00:06:27,560 --> 00:06:32,000 Speaker 3: optimism around growth was around twenty twenty two twenty twenty three, 103 00:06:32,880 --> 00:06:36,279 Speaker 3: and we've seen us each survey since that time has 104 00:06:36,279 --> 00:06:40,680 Speaker 3: shown an improvement both globally and locally, and it's pretty 105 00:06:40,680 --> 00:06:44,320 Speaker 3: clear what the reasons why are. In my view, it's 106 00:06:44,360 --> 00:06:47,520 Speaker 3: not so much that when you look ahead that we've 107 00:06:47,560 --> 00:06:53,680 Speaker 3: got great forecasts globally and in Australia for GDP. It's 108 00:06:53,760 --> 00:06:58,000 Speaker 3: more that the tail end of COVID is finally starting 109 00:06:59,040 --> 00:07:03,039 Speaker 3: to really come off, and in particular when you look 110 00:07:03,080 --> 00:07:06,520 Speaker 3: at the threats that CEOs are monitoring. So that was 111 00:07:06,560 --> 00:07:08,520 Speaker 3: one of the questions that we ask in the survey. 112 00:07:08,839 --> 00:07:13,320 Speaker 2: The number one threat is inflation, and we've had global inflation. 113 00:07:14,360 --> 00:07:16,960 Speaker 2: Unfortunately Australia is a little bit behind the rest of 114 00:07:17,000 --> 00:07:20,160 Speaker 2: the developing world in terms of getting inflation back between 115 00:07:20,400 --> 00:07:25,520 Speaker 2: the reserve banks targets. But the unwinding of that inflationary pressure, 116 00:07:25,640 --> 00:07:26,560 Speaker 2: and I guess a. 117 00:07:26,560 --> 00:07:30,800 Speaker 3: Return to what I would call more normal economic conditions 118 00:07:30,840 --> 00:07:34,200 Speaker 3: without a supply SI side shock like we had with COVID, 119 00:07:35,480 --> 00:07:38,200 Speaker 3: puts everyone more on a kind of an even keel 120 00:07:38,200 --> 00:07:41,800 Speaker 3: in terms of understanding the economic dynamics that they're contending with, 121 00:07:42,440 --> 00:07:46,520 Speaker 3: because when you actually look at the forecasts for global GDP, 122 00:07:47,080 --> 00:07:51,080 Speaker 3: particularly for developing countries, it's still sitting at around one 123 00:07:51,360 --> 00:07:56,520 Speaker 3: point eight percent thereabouts, compared to four four point two 124 00:07:56,520 --> 00:08:01,360 Speaker 3: percent for emerging and developing countries. So you know, we're 125 00:08:01,400 --> 00:08:03,600 Speaker 3: half the growth rates that you might see in some 126 00:08:03,680 --> 00:08:06,720 Speaker 3: of those developing countries across the board, with the exception 127 00:08:06,800 --> 00:08:09,400 Speaker 3: of the US, which is obviously the standout from an 128 00:08:09,400 --> 00:08:12,600 Speaker 3: economic growth perspective at the moment. So I think that's 129 00:08:12,600 --> 00:08:14,880 Speaker 3: the explanation, or at least that's the one that I've 130 00:08:14,920 --> 00:08:15,480 Speaker 3: come up with. 131 00:08:16,280 --> 00:08:17,720 Speaker 1: I like it, Amy, I like it. What about the 132 00:08:17,800 --> 00:08:21,200 Speaker 1: labor markets? About forty one percent of CEOs planning to 133 00:08:21,240 --> 00:08:24,280 Speaker 1: increase headcount in twenty twenty five, how I mean, I 134 00:08:24,320 --> 00:08:27,840 Speaker 1: spose a question is how does that compare to previous years? 135 00:08:28,560 --> 00:08:32,000 Speaker 1: And the labor markets an interesting one in Australia because 136 00:08:32,400 --> 00:08:35,040 Speaker 1: it is so strong, I mean, it just keeps giving 137 00:08:35,800 --> 00:08:38,240 Speaker 1: to CEO thinks that's going to continue. 138 00:08:38,720 --> 00:08:41,400 Speaker 3: Yes, So in a similar way that we've seen optimism 139 00:08:41,480 --> 00:08:46,360 Speaker 3: around growth, we've also seen from survey to survey a 140 00:08:46,520 --> 00:08:51,800 Speaker 3: marked uptick globally and in Australia around I guess it's 141 00:08:51,800 --> 00:08:56,200 Speaker 3: a form of optimism from CEOs around increasing headcount. So 142 00:08:56,920 --> 00:08:59,480 Speaker 3: it's really noticeable in the Australian results this year. So 143 00:08:59,559 --> 00:09:01,959 Speaker 3: I think you quoted the stat forty one percent. That's 144 00:09:02,000 --> 00:09:06,400 Speaker 3: about double what was quoted last year. So I think 145 00:09:06,440 --> 00:09:10,600 Speaker 3: that again fits into that sort of broader improvement in 146 00:09:10,679 --> 00:09:15,120 Speaker 3: the sort of baseline macroeconomic conditions, the inflation coming off, 147 00:09:15,120 --> 00:09:20,680 Speaker 3: et cetera, and less resources being spent within an organization. 148 00:09:20,840 --> 00:09:23,440 Speaker 3: I guess fighting off some of the threats and starting 149 00:09:23,480 --> 00:09:27,960 Speaker 3: to think more, focusing more on future growth opportunities and 150 00:09:28,120 --> 00:09:32,120 Speaker 3: CEOs knowing that they need they need human resources to 151 00:09:32,200 --> 00:09:37,120 Speaker 3: achieve those growth opportunities. But to your point, Australia in 152 00:09:37,160 --> 00:09:40,600 Speaker 3: particular has a very tight labor market a very high 153 00:09:40,600 --> 00:09:45,000 Speaker 3: participation rate. As an economist, I couldn't never have imagined 154 00:09:45,040 --> 00:09:47,319 Speaker 3: that we would be in this situation. I remember when 155 00:09:47,320 --> 00:09:52,120 Speaker 3: I was studying economics, long term unemployment was like a 156 00:09:52,160 --> 00:09:56,480 Speaker 3: really protracted issue. We're in a completely different situation now, 157 00:09:56,520 --> 00:09:59,959 Speaker 3: and so I guess there's a question around hiring intention 158 00:10:00,240 --> 00:10:02,840 Speaker 3: from the perspective of the type of people that we need. 159 00:10:02,920 --> 00:10:05,000 Speaker 3: Because one of the threats that comes through in the 160 00:10:05,080 --> 00:10:10,560 Speaker 3: survey is access to the right skilled workers. So hiring 161 00:10:10,600 --> 00:10:14,880 Speaker 3: intentions I think goes to hiring the right type of 162 00:10:14,920 --> 00:10:17,280 Speaker 3: people for the future growth that you need, which might 163 00:10:17,320 --> 00:10:20,160 Speaker 3: be different from the composition of the workforce you have 164 00:10:20,240 --> 00:10:23,679 Speaker 3: in place now. And then there's that second question around 165 00:10:23,920 --> 00:10:26,160 Speaker 3: is there the labor market that you need to draw 166 00:10:26,240 --> 00:10:29,640 Speaker 3: from to meet those hiring intentions, Which brings me to 167 00:10:29,840 --> 00:10:33,800 Speaker 3: a really important point which is also critical for Australia 168 00:10:33,880 --> 00:10:37,240 Speaker 3: right now, is that labor productivity. Is it an all 169 00:10:37,280 --> 00:10:41,559 Speaker 3: time low? Our average labor productivity that we've experienced over 170 00:10:41,600 --> 00:10:44,880 Speaker 3: the last ten years is half that sorry, last twenty 171 00:10:44,960 --> 00:10:47,160 Speaker 3: years is half that of the twenty years prior. 172 00:10:48,200 --> 00:10:50,320 Speaker 2: And this is why we're so interested in. 173 00:10:50,280 --> 00:10:53,200 Speaker 3: AI because it's things like AI that can really help 174 00:10:53,240 --> 00:10:57,720 Speaker 3: to drive labor force productivity and strike that balance between 175 00:10:57,800 --> 00:11:01,200 Speaker 3: those hiring intentions the type of skills that you need, 176 00:11:01,280 --> 00:11:03,960 Speaker 3: but also how can you get more from the workforce 177 00:11:04,000 --> 00:11:04,400 Speaker 3: that you have. 178 00:11:05,440 --> 00:11:07,120 Speaker 1: Amy, thank you for talking to Fear and Greed. 179 00:11:07,400 --> 00:11:07,800 Speaker 2: Thank you. 180 00:11:08,320 --> 00:11:11,600 Speaker 1: That was Amy Lomas, chief Economist at PwC Australia. This 181 00:11:11,720 --> 00:11:13,720 Speaker 1: is the Fear and Greed Business Interview. You join us 182 00:11:13,720 --> 00:11:16,080 Speaker 1: every morning for the full episode of Fear and Greed 183 00:11:16,120 --> 00:11:18,360 Speaker 1: daily business news for people who make their own decisions. 184 00:11:18,520 --> 00:11:20,319 Speaker 1: I'm Sean Elmont. Enjoy your day.