Long term employment trends across industries in Australia and lessons to learn from Australia’s past
By Michael O'Neil and Tania Dey
Trends in employment in Australia have emerged over time across industries. These trends help us understand structural changes in the Australian economy as well as how employment has been impacted by external and internal events over time, which industries are more vulnerable and which ones have recovered. We examine (a) the share of employment across industries, and (b) average annual growth rates in employment levels across industries during five separate time periods from 1991 to 2019.
Table 1: Share of employment: Top five employing industries in 1991 and 2019 (per cent), Australia
|1||Manufacturing (13.8)||Healthcare and social assistance (13.3)|
|2||Retail trade (10.9)||Retail trade (9.9)|
|3||Healthcare and social assistance (8.9)||Construction (9.1)|
|4||Construction (7.1)||Professional, scientific and technical services (8.9)|
|5||Education and training (7.0)||Education and training (8.3 per cent)|
Source: Australian Bureau of Statistics, Labour Force.
Table 1 shows the top five industries of employment by their share of employment in 1991 and 2019. Between 1991 and 2019 manufacturing was replaced by healthcare and social assistance as the top employing industry in Australia. Manufacturing fell to seventh position in terms of share of employment by 2019.
Share of employment in services in 1991 was 15.9 per cent if we consider only the top five employing industries in Australia. This has almost doubled to 30.5 per cent in 2019 reinforcing the structural shift in Australia from more capital intensive sectors to more labour intensive services sectors. In 2019, within the nineteen industries, almost 60 per cent of people were employed in the services industries compared to only 46 per cent in 1991.
Table 2 shows how the average annual growth rates have changed for each of the top five employing industries across various time periods. Table 3 shows the highest and lowest growth rates by industries during and following major economic and environmental events.
Table 2: Average annual growth rates for selected industries, Australia
|Manufacturing||Retail trade||Healthcare and social assistance||Construction||Education and training||Professional, scientific and technical services|
Source: Australian Bureau of Statistics, Labour Force.
Table 3: Most affected, least affected industries in terms of average annual employment growth over time period
|Period||Highest growth rate||Lowest growth rate|
|1991-2001: Recession, drought, structural shift||Administrative and support services (6.3 per cent)||Electricity, gas, water and waste services (-3.1 per cent)|
|2001-2007: Drought, mining boom||Mining (7.9 per cent)||Agriculture, forestry and fishing (-3.0 per cent)|
|2007-2010: Mining boom, Global Financial Crisis (GFC)||Mining (9.2 per cent)||Information and telecommunication services (-3.1 per cent)|
|2010-2016: Recovery from GFC||Mining (4.6 per cent)||Agriculture, forestry and fishing (-1.6 per cent)|
|2016-2019: Low wage growth, low demand and low interest rates||Healthcare and social assistance (3.7 per cent)||Manufacturing (-0.2 per cent) and information and telecommunication services (-0.2 per cent)|
|1991-2019: Long term changes||Professional, scientific and technical services (4.0 per cent)||Wholesale trade (-0.2 per cent)|
Source: Australian Bureau of Statistics, Labour Force.
1991-2001: Recession, drought, structural shift
Total employment increased by 17.3 per cent between 1991 and 2001.
In the early part of this period (1991-1993) Australia was in recession. Industries such as manufacturing, agriculture, forestry and fishing and mining were most affected recording negative annual growth rates in employment. The construction industry experienced peaks and troughs while employment in the manufacturing sector declined as a result of several factors including removal of tariffs, removal of other trade barriers, economy-wide microeconomic reforms, technological change and a lack of comparative advantage. The Australian mining industry suffered from weakness in global commodity markets during the early 2000s which led to job losses in this industry.
This period also saw a decline in employment in electricity, gas, water and waste water services which can be attributed to the establishment of a national electricity market and restructuring of electricity authorities into separate electricity generation, transmission, distribution and retailing components in each state.
While most of the capital intensive industries struggled and some even failed to recover in terms of jobs growth, employment in the labour intensive services sector, including inter alia, administrative and support services, professional, scientific and technical services, accommodation and food services, arts and recreation services recorded strong growth in employment.
The ten year period discussed here also saw an advancement in technology (e.g. computerisation and digitisation) which in turn supported flexible work and part-time work. This (and other social reforms) assisted more women to enter the labour market, predominantly through the services sector.
The period between 1991 and 2001 set the trend for a shift in employment growth from capital intensive industries to labour intensive industries and a preference in the job market for more highly skilled labour. It is interesting to note that most of the jobs in capital intensive industries are dominated by men whereas most of the jobs in the services sector are dominated by women.
2001-2007: drought, mining boom
Total employment increased by 15.9 per cent between 2001 and 2007.
Employment in the mining sector experienced strong growth during this time owing to the mining boom, initially through iron ore exports to China (Pilbara region in WA), the discovery and development of off-shore gas reserves in WA, the Northern Territory and Queensland as well as exports of LPG. In contrast, employment in agricultural continued to contract with the impact of the drought commencing in 1998 and lasting for 10 years. This was a period when reforms to the Murray Darling Basin also impacted agricultural production. Employment in electricity, gas, water and waste water services recovered and continued to grow strongly for the next ten years.
2007-2010: mining boom, GFC
The increase in employment slowed during this period to approximately 5.5 per cent.
Australia’s comparative advantage in coal and iron-ore exports where both volumes and prices (more so) grew strongly as well as a shift from oil towards LNG was registered in employment growth in mining over this period. The share of mining jobs in the Australian economy is less than 2 per cent.
While Australia managed to avoid a recession the period 2007-2010 was marked by a down turn in the global economy through the impact of the Global Financial Crisis (GFC). One of the hardest hit sectors during this period was the information and telecommunications services sector which had little more than a slow recovery since that time.
2010-2016: Recovery from GFC
Total employment increased by 8.9 per cent between 2010 and 2016 indicating a relatively strong recovery from the GFC.
Between 2010 and 2016 the mining sector, followed by healthcare and social assistance, and professional, scientific and technical services showed the strongest annual jobs growth. The post GFC period saw a continued decline in the manufacturing, agriculture and wholesale trade sectors while employment in services continued to grow steadily.
2016-2019: slowing down of the Australian economy, low wages growth, low consumer demand and interest rate cuts by the RBA
Total employment increased by 7.7 per cent between 2016 and 2019, the slowest period of growth after the middle of the decades GFC.
By 2019, healthcare and social assistance was the largest employing sector in Australia followed by retail trade, construction, professional, scientific and technical services and education. Agriculture seems to have recovered from the previous period on the back of significant investment in off-farm water efficiency, on farm investments, improvements in 'product to market infrastructure’, a focus on exports into Asia and changes in land use that reflects input costs and returns. Employment in manufacturing and information, media and telecommunications continued their relative decline.
Lessons to learn from Australia’s past
The growth in employment over the time period covered here has varied from a high of 17.3 per cent to a low of 5.5 per cent. Australia is now in recession for the first time in 29 years due to the Covid-19 pandemic. Recent trade conflicts with China will hopefully be resolved but have significantly increased uncertainty in the short term. Net migration will not contribute to population growth and economic growth as it has in the past as Covid-19 has seen a shut-down of Australia’s migration program. The tourism sector will feel the brunt of closed borders and a real decline in international tourism.
These impacts are already being felt. Seasonally adjusted data from the ABS shows that total employment fell by 2.8 per cent between the August quarters of 2019 and 2020. Thirteen out of nineteen industries showed a drop in employment due to the pandemic with services industries such as accommodation and food services, arts and recreation services, administrative and support, professional, scientific and technical services, education and other services suffering the brunt of the pandemic. Together these industries employ 34 per cent of Australians.
Capital intensive industries such as manufacturing and construction have recorded job losses whereas agriculture, forestry and fishing and mining continued their recent growth path. Manufacturing and construction employ 16 per cent of the Australian workforce, which is less than half that of the service industries combined.
This provides one policy insight amongst others for Government/s; that employment in our health and hospitals, schools and education, disability and employment services, and aged care hold the prospect of mitigating unemployment due to the labour intensive nature of these sectors. This is why support for childcare matters as it underpins the ability of households and obviously women’s ability to re-enter the labour market and boost household incomes.
Covid-19 has also exposed deficits in our economy, our economic structure and industry. We need to turn our ingenuity, skills and investment into strengthening our health services through research and development that in turn supports the manufacture of essential health goods/products. Covid-19 has exposed weaknesses right across the aged care sector in respect of our funding model, styles of accommodation, assistance equipment and staff training. It is arguable that our income support and training systems have been slow to respond to structural changes in the labour market and have left employers and trainees to ‘fend for themselves’. The conflict between government delivery of services versus private sector provision which is deeply rooted in strongly held ideological positions continues to stymy reforms. The starting basis must be a ‘consumer centric approach’.
Equally the electricity sector has been disruptive for over 10 years with real but often hidden costs. High energy input costs have led to business closures and a loss of investment. The renewable sectors offers employment, investment, technically skilled jobs and research and development. That then feeds into manufacturing. It will be important to provide the conditions for investment in manufacturing and assist to create new and sophisticated medical, consumer and defence products where Australia has a competitive advantage.
Covid-19 provides a platform for reform. Re-thinking in a systematic way social, environmental and economic policies is required not simply to re-build an economy but to respond to the call for greater equity and equality, to unleash the skills and motivation of all Australians, to encourage people to invest in themselves which is the hallmark of a strong and thriving democracy. This is not a time for ‘meek and mild’ responses; it is a time for far sighted reforms.