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Dec 19, 2012

Stop singing those blue-collar blues: manufacturing jobs rise

ABS data shows the dynamics of the Australian workforce are changing -- good news at last for manufacturing, but bad news for public servants and construction workers.

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Mining employment may have peaked while manufacturing is in surprisingly good health, some recent employment data suggests. Last week’s release of the ABS’s detailed employment data gives us a chance to see how the Australian workforce has changed over the last year, and over a longer period. It also helps bust a few myths peddled by the self-interested.

Compared to the November quarter in 2011, the economy added 112,000 jobs in trend terms (all of these numbers derive from trend data) over the four quarters to November 2012, almost exactly the same as in the comparable period in 2011, and well down on the 300,000 plus in 2010.

There were two big losers in terms of industries. Construction was one — construction employment declined 37,000 over the year to November, although it managed to add 3,000 jobs in the final quarter.

But the big loser was public administration: by the end of November, there were nearly 51,000 fewer public servants across the country than 12 months previously, compared to a growth of 40,000 the previous year. The biggest cuts were in NSW, which saw 27,000 fewer public servants, and Queensland, where 10,000 public servants lost their jobs. NSW looks to have completed its cuts: public servant numbers actually grew in the November quarter, whereas the Newman government in Queensland looks like it’s only just getting started.

The growth industries were mining, up over 28,000, although total numbers actually fell in trend terms in the November quarter, for the first time since 2009, mainly in coal and iron ore. Accommodation and food services added 26,000, professional services (one of our fastest-growing sectors) added 41,000. Australia’s biggest employer, health care and social assistance, had a comparatively quiet year, adding only 30,000 jobs, due to no growth at all in NSW and 5000 jobs being slashed from the health sector in Queensland.

And don’t be too concerned about retailing: the sector added nearly 8000 jobs, which isn’t much but in 2011 it actually lost jobs in net terms. And retailing’s problem is NSW — that’s the only state where retail employment fell significantly. Retail employment actually grew by 7% in Victoria across the year.

Most interesting is the case of manufacturing, which we are repeatedly told is in terrible strife, getting pounded by the strong dollar and in desperate need of assistance. During the year, that sector added 14,000 jobs and actually very slightly increased its share of the overall workforce, after decades of decline — it’s now around 8.4% of the Australian workforce. It’s too soon to declare the long-term decline of manufacturing over, but there’s far more to the story than what unions and manufacturing companies tell us.

Where is it growing? More traditional heavy manufacturing is in decline, yes — primary metal manufacturing shed 18,000 jobs, and fabricated metal manufacturing another 9,000. But food manufacturing — a sector that regularly demands assistance from the government on the basis of “food security” – put on 17,000 during the year.

Manufacturing is changing, rather than declining: the sector shed jobs in the traditional powerhouse of Victoria (and was flat in SA) but grew strongly in NSW, which now looks set to eclipse Victoria as the largest manufacturing state in employment terms, with 317,000 manufacturing workers to 283,000 south of the border.

But Victoria is powering ahead on professional services, with that sector growing by a remarkable 9.5% across the year, suggesting its manufacturing decline is being offset by the transition to services.

The overall trends in Australian employment, by the way, match those in the US. Healthcare and social assistance (bearing in mind there’s not a perfect correlation between US and Australian occupational categories) is nearly the largest employer in the US and is predicted to soon become the largest, despite the US having a much larger services sector that is also growing rapidly, while manufacturing is expected to continue its decline from its once-dominant role as an employer of American workers.

Let’s take a longer-term perspective and examine how the workforce looks at the end of 2012 compared to when the ABS first began compiling industry-level data, in the November 1984 quarter. This is how key sectors have changed as a proportion of the entire workforce over the last 28 years:

US trends suggests that by 2020, health care and professional services will continue to grow strongly as proportions of the workforce. But what if that huge collapse in manufacturing employment over the last three decades is finally over — if Australian manufacturing, in the teeth of currency-induced headwinds, has begun to turn things around?

Next year will provide us with some more evidence about its long-term prospects.

Bernard Keane — Politics Editor

Bernard Keane

Politics Editor

Bernard Keane is Crikey’s political editor. Before that he was Crikey’s Canberra press gallery correspondent, covering politics, national security and economics.

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26 thoughts on “Stop singing those blue-collar blues: manufacturing jobs rise

  1. Apollo

    Good to see the economy is transitioning not too badly. But we cannot be complacent about how things are right now though.

    Don’t forget that this year we have 230,000 people requested affordable housing. 44% of them were homeless (that’s over 100,000 people), many of these homeless people are victims of domestic violence, not all of them are mentally illed which the Greens often use to answer when people question about housing availability for asylum seekers but it’s best to leave that topic for another time.

    The rest of the 56% were under stressed, when losing their jobs and could not afford private housing rental. Here is where I think negative gearing has contributed to the problem, unlike those who argued that it made rent cheaper I think that it pushed prices up, and it needs to be reformed.

    One other problem is public housing run by the states are very inefficient and costly. They outsource auditors to audit the conditions of the properties, these people try to put in many things to be fixed and they can for whoever they are gaining profit from, hence many unecessary quotes and cost of fixing. Another issue is they often use cheap materials, and the tenants often have to call up to get things fixed. It’ll be best if half of the workloads are assigned to their own tradies and the other half outsourced, so you can measure competitive productivity and gage durability of the materials used.

    The politicians need to stop being complacent and spare some thoughts for the homeless this Christmas.

  2. Simon Mansfield

    PO – you missed my central point.

    I said it was the social transformation being driven by a new economic system based on large scale automation – both hardware and software – and the end of human labour being central to our social contract that was the most critical issue we face.

    It will take a major effort by future society to manage that change. And compared to climate change it will be a much bigger and more difficult issue to navigate our way through.

    Climate Change is not an overly difficult problem for human technology to deal with. Chances are the same types of people who say the Y2K issue was a fraud will say the same about climate change – 50 years from now – if we make the changes needed to avoid the problem becoming overly serious.

    But that very technology will radically change our current economic systems and those issues are being ignored by virtually every government and think tank on the planet.

    However, I do actually agree with Scott that we will deal with it and the 22nd century will be an amazing time to be alive. Getting there though will be quite rough for a good section of humanity.

    Most science fiction is actually quite dark in its ideas about future history. Only a small section is pop science for the Jetsons.

    Sadly though, the orgy of fantasy fiction that came out of Dungeons and Dragons has suffocated the classics of the 1950s and 1960s that did a fine job at describing the world of today and the near term future.

  3. Person Ordinary

    “Climate Change is not an overly difficult problem for human technology to deal with.”

    I agree that we already know what to do.

    But all the evidence, and the trends underway, suggest it is already too late to act to mitigate the first few waves of impact from knocking our delicate economic system off its balance.

    Then it is only a matter of waiting for the next shock, which may not have been fatal without climate effects, to compound into immediate collapse. It may be a spike in food prices, from drought to bad biofuels policy, a series of storms, a banking crisis, a bubble bursting in Chinese real estate, a conflict somewhere, an oil trade embargo, … a million possibilities …

    To presume both that 1) climate impacts can not and will not knock the world economy off its precarious perch, and 2) that none of these other triggers will occur, is surely fantasy. No?

    To presume that a collapse in the global economic system, and so the trade in energy and food in particular, will not necessarily lead to collapse of political and social systems is just as fanciful. There is so much evidence in history.

    The “social transformation” you imagine requires a stable continuation of the old system as its foundation, but that old system is increasingly unsustainable.

    Nothing is certain of course, and this rather bleak view could be overstating the risks, but it is needed to counter the overly optimistic or ignorant presumptions that seem to permeate the debate.

  4. Person Ordinary

    Nope, Scott, still frightened by the self-assuring tone, dare I say self-deluding? Let’s see …

    “we have different views on what is best for the world and it’s people.” – how about in the medium term, protecting humanity from the horrors that would play out as our system collapses, and in the longer term, ensuring the sustainability of life on Earth? You choose different values?

    “You would prefer to spend money now” – money, pfft. Is that your unstated concern? It doesn’t need money to change policy, just political will. And all the studies show it is cheaper to act sooner rather than later, if you really want to look at life, the universe and everything in such crass and narrow terms.

    “a perceived threat to the future that … has a fair degree of uncertainty to it” – maybe uncertainty in the actual sequence of events, but not in the catastrophic nature. Don’t you read the science?

    “our access to cheap, plentiful energy (like coal) ” – it is only cheap because we do not put a value on what economics classify as “common goods” like the atmosphere. The economic theory that underpins your presumption is one of the main causes of our dilemma.

    “research and technological advancement” is dictated by financial incentives. At present, the incentives dictate a continued reliance on fossil fuels. Don’t kid yourself that technology can or will advance without a major change in political will.

    “so the next generations will be in the best position possible to make the decisions … (we) will be long gone” – wouldn’t that be comforting? Read previous posts – any of the triggering events could happen tomorrow. (And the idea that none of them would occur in say the next 5 years is absurd.)

    I am not trying to shake you up – you are free to be warm and cosy in any belief you choose. I am just trying to suggest to others that your contribution may be exactly that – self-serving belief. Cheers.

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