Australian Employment History

There have been times in Australia’s history when there were more workers than available jobs, most notably during economic depressions. The first chart shows the devastating levels of unemployment in the 1890s and 1930s depressions. There are now similar levels of unemployment in Poland and Italy, and Greece and Spain have far worse levels than Australia has ever experienced, each with unemployment in excess of 25%.

However, demographics had little, if anything, to do with our unemployment peaks or Europe’s current dilemma. The reasons were and are fiscal irresponsibility. That said, the very low unemployment period of the quarter century after World War II was essentially due to demographic changes and has been sometimes described as an over-employed period at around 2.0% unemployment.

We hear and read often these days that jobs are disappearing faster than they can be created and that we will run out of workers as well later in this century due to the rapid ageing of the population. Neither are true.

The chart below shows where our workforce was employed in March this year, some 11.5 million men and women.

This mix bears little resemblance to that of 30 years ago, let alone 50 years ago when the Industrial Age was being displaced by the new age of services and ICT – the Infotronics Age – that should take us through to the middle of the 21st century, when yet another new age should take over.

In 2014, agricultural jobs are a mere 2.8% of all jobs, compared with 6.1% in 1984. Manufacturing jobs are now 8.3%, compared with double that share 30 years ago and a share of 30.0% in 1960.

On the other hand, jobs in the professional and technical services sector are now double the share of 1984, at 7.7%. Hospitality jobs (in accommodation, fast food and restaurants) are now at 6.3% of the workforce compared with less than 5.0% 30 years ago. Our health sector is now the nation’s biggest employer at 12.5% of the workforce with 1.43 million employees, compared with just 0.54 million in 1984. Indeed, if we include the other health market jobs in pharmacies, pharmaceutical manufacturing and the education of doctors and other health workers, then we are looking at well over 1.5 million employees.

So yes, we are losing jobs in the traditional industries, but we always have over the past century. Nothing stands still, as they say.

However, we create more jobs in newer industries. This is abundantly clear in the next chart, which shows that we have created over four times as many new jobs as we have lost over the past five years.

So much for the silly opinion: there are not enough new industries and jobs out there!

Yes, this means the need for re-skilling, sometimes moving house to another area and sometimes taking a lower paid job. But more often it involves moving to a higher paid job with far greater prospects than in a dying industry that was kept alive with fiscal morphine (i.e. subsidies) for too long.

There seems to be some sympathy and nostalgia for once-iconic industries closing down, epitomised by the car manufacturing industry. Yet the demand for subsidies to the workers meets with less enthusiasm: why should the less than 50,000 workers in this industry get such privileges when those in other industries don’t?

We are entering a period of reality checks in this regard. It will be beholden on workers, be they white, blue, green or grey collar workers, to take more responsibility for their own multiple career seasons in a working life these days of 50 years or more.

The exhibit below is a reminder of the New Age industries that are creating jobs between 1965 and 2050. There is room for over 10 million new jobs in these categories over the next four decades; yes, nearly double the entire workforce of 2014.

Then there is the misconception that we will run out of workers due to the ageing of the population. Bunkum. The last chart shows the labour force participation rate in society over the past century or more.

The reality is that our participation rate is rising and while it may plateau at some stage in the far future, it may also not do so. After all, most work is cerebral these days, not physical, and the only way to wear the brain out is to stop using it. And for those tradespeople who may be beyond physically hard work in their 60s, there are prospects to use that experience elsewhere (e.g. in hardware stores instead of the construction industry).

Further, we are living much longer and healthier lives. Life expectancy is now over 80 years and for those born in this century, it is closer to 100 years. At the beginning of the 20th century, it was 53 years – not much over half the emerging life expectancy!

Indeed, the problem at the time of Federation in 1901 was not age, but youth: some 36.0% of the population was under 15 years of age and banned from working under the new Constitution. Nowadays, just 19.0% is under 15 years.

Now we worry about the aged! But why should there be an ancient cut-off in the working age? In 1901, only 3.5% of the population was over 65 years of age; now 15.0% is over 65 years (thank God) and this will rise to 22.0% in 2051. Why stop working with 15 to 35 years of life left between now and the end of this century?

No, there are too many well-meaning doomsayers out there.

We are not going to run out of jobs or workers this century.

The biggest threats to employment are our restrictive and regressive IR regulations, an unimaginative view of where the new jobs are emerging and a failure to realise that the definition of ‘old’ is going up by two to three years every decade. Nowadays, 65 is the new 45 of the early 1930s.

Our politicians, employers and employees need to understand that things are getting better, not going downhill or into dangerous unchartered waters. History keeps telling us things are getting better: higher participation rates of the population in the labour force; rising standards of living; less hours of work each decade, if not each year (albeit with more years of work in our much longer lives); less dangerous and physically demanding types of work; less discrimination; and superannuation to provide a more prosperous retirement. Lest we forget these advances, and more.