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International trends and
employment in Australia: key
findings
Phil McKenzie & Gerald Burke
CEET National Conference 28 October 2005
Ascot House Melbourne
CEET
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Key issues
1.
Trends in the international economy and employment
•
•
•
•
•
•
2.
Economic development, especially in China
Rapid growth in international trade & investment
International trade is relatively small in the Australian economy
The more open countries have grown more quickly
But, high adjustment costs for trade-displaced workers
Trade only one of the drivers of employment change
Trends in the Australian economy
•
•
•
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Recent industrial trends
Related changes in employment by occupations by skill level
Growth of the workforce– effects of ageing and immigration
Education and training provision
CEET
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Changes in GDP
At current growth rates:
GDP % change on
year ago
Years to double
GDP
GDP in 2025
divided by GDP in
2005
China
9.5
7
6.1
5600
India
8.1
9
4.7
3100
Russia
6.1
11
3.3
9800
Brazil
3.9
18
2.1
8100
US
3.6
19
2.0
40100
Australia
2.6
27
1.7
31300
Sweden
2.3
30
1.6
28400
Britain
1.5
47
1.3
29600
Japan
1.4
50
1.3
29400
Netherlands
1.3
54
1.3
29500
CEET
Recent GDP per
capita $US
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Impact of China
• Produces 15% of world output
• Accounts for 7% of world trade
• Contributed 40% of increase in world output in
2004
• Largest recipient of foreign direct investment
• Australia’s 2nd-largest trading partner (Australia
is China’s 12th largest trading partner)
Source: Australia China Business Council (2005)
CEET
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Growth and benefits of world trade
• World trade increased 16-fold 1950-2000
• In OECD countries trade flows relative to GDP
(“trade openness”) doubled from 1970-2000
• 1% increase in trade openness associated with
increase of per capita income of 0.5% to 2%
• Countries that were more open to international
trade and investment grew at twice the rate of less
open countries during the 1990s
Source: OECD (2005) Employment Outlook
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Australia is a relatively low trade
country
• Trade flows (exports + imports) relative to GDP grew from
about 20% in 1970-74 to 45% in 2000-2004 in Australia
• But, Australia was the 3rd-lowest of 30 OECD countries on
this indicator in 2000-2004: country median was about
80%
• The countries with the highest trade flows tend to be
relatively small, close to wealthy markets, and with few
trade barriers e.g. Ireland 200%
• Japan and the USA had the lowest trade flows relative to
GDP of all OECD countries in 2000-04
•
Source: OECD (2005) Employment Outlook
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Potential losers from greater trade
• Rising trade, especially with low-wage countries, is associated
with greater income inequality in developed countries
• Biggest losers -- poorly educated, older workers, especially in
manufacturing
• Trade-displaced workers experience longer unemployment, and
lower earnings in subsequent jobs (earnings loss lower if they
find work in the same industry)
• Adverse impact most marked when trade liberalisation leads to
specialisation (more likely in small countries)
• International trade only one of the factors leading to
employment changes: changes in technology and consumption
patterns are generally more significant
• Equity and efficiency arguments for assistance for tradedisplaced workers
Source: OECD (2005) Employment Outlook
CEET
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Australian employment: shares by industry
Education
Health/community
Utilities
Business srvcs
Gov.admin/defence
Mining
Construction
Finance/insurance
Personal srvcs etc
Communications
Cultural/rec srvcs
Manufacturing
Wholesale trade
Transport/storage
Hotels etc
Agriculture etc
Retail trade
All industries
1997 %
2005%
7
9
1
10
4
1
7
4
4
2
2
14
6
5
5
5
15
7
10
1
12
5
1
9
4
4
2
3
11
5
5
5
4
15
100
100
CEET
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Australian employment shares by industry (cont)
Education
Health/community
Utilities
Business srvcs
Gov.admin/defence
Mining
Construction
Finance/insurance
Personal srvcs etc
Communications
Cultural/rec srvcs
Manufacturing
Wholesale trade
Transport/storage
Hotels etc
Agriculture etc
Retail trade
All industries
1997 %
2005%
MONASH
forecast 2013
%
7
9
1
10
4
1
7
4
4
2
2
14
6
5
5
5
15
100
7
10
1
12
5
1
9
4
4
2
3
11
5
5
5
4
15
100
8
10
1
13
5
1
8
3
4
2
2
11
5
5
5
3
16
100
CEET
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Job growth 2005 to 2013 by occupation and
qualification (about 1.1 million extra jobs)
Australia ‘000 MONASH COPS Forecast
Professionals
Assoc Profess
Interm. Clerical/Sales/Srvce
Managers and Admin
Elemen. Clerical/Sales/Srvce
Interm. Production/Transport
Labourers etc
Tradespersons etc
Advanced Clerical/Service
0
Higher Ed
100
200
Advanced Dip/Dip
Other VET
CEET
300
400
500
600
No non-school
10
Job openings to new entrants 2005 to 2013 by
occupation (nearly 3 million) Australia '000
Professionals
Interm. Clerical/Sales/Srvce
Elemen. Clerical/Sales/Srvce
Associate Professionals
Managers and Administrators
Labourers etc
Tradespersons etc
Interm. Production/Transport
Advanced Clerical/Service
0
Higher Ed
100
200
Advanced Dip/Dip
Other VET
CEET
300
400
500
600
No non-school
11
Employment versus labour supply
• Projected employment growth 1.4% per annum
next 10 years
• Projected labour supply about 1.0% per annum –
but will vary with changes in immigration and
participation rates
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Education and training implications
• Jobs openings tending to more qualified
–
–
–
–
professionals
associate professional
trades – shortages as well as new openings
still large number of low skill jobs
• Need to increase proportion of new workers with
qualifications
• Need to increase proportion of existing workers with
qualifications
• Need to increase qualifications of those
underemployed or not employed including older
persons to increase employability
CEET
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