CEET1 International trends and employment in Australia: key findings Phil McKenzie & Gerald Burke CEET National Conference 28 October 2005 Ascot House Melbourne

CEET2 Key issues 1.Trends in the international economy and employment 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 2.Trends in the Australian economy 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

CEET3 Changes in GDP At current growth rates: GDP % change on year ago Years to double GDP GDP in 2025 divided by GDP in 2005 Recent GDP per capita $US China India Russia Brazil US Australia Sweden Britain Japan Netherlands

CEET4 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 12 th largest trading partner) Source: Australia China Business Council (2005)

CEET5 Growth and benefits of world trade World trade increased 16-fold In OECD countries trade flows relative to GDP (“trade openness”) doubled from % 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

CEET6 Australia is a relatively low trade country Trade flows (exports + imports) relative to GDP grew from about 20% in to 45% in in Australia But, Australia was the 3 rd -lowest of 30 OECD countries on this indicator in : 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 Source: OECD (2005) Employment Outlook

CEET7 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 trade- displaced workers Source: OECD (2005) Employment Outlook

CEET8 Australian employment: shares by industry 1997 %2005% Education77 Health/community910 Utilities11 Business srvcs1012 Gov.admin/defence45 Mining11 Construction79 Finance/insurance44 Personal srvcs etc44 Communications22 Cultural/rec srvcs23 Manufacturing1411 Wholesale trade65 Transport/storage55 Hotels etc55 Agriculture etc54 Retail trade15 All industries 100

CEET9 Australian employment shares by industry (cont) 1997 %2005% MONASH forecast 2013 % Education 778 Health/community 910 Utilities 111 Business srvcs Gov.admin/defence 455 Mining 111 Construction 798 Finance/insurance 443 Personal srvcs etc 444 Communications 222 Cultural/rec srvcs 232 Manufacturing 1411 Wholesale trade 655 Transport/storage 555 Hotels etc 555 Agriculture etc 543 Retail trade All industries 100

CEET10 Job growth 2005 to 2013 by occupation and qualification (about 1.1 million extra jobs) Australia ‘000 MONASH COPS Forecast

CEET11 Job openings to new entrants 2005 to 2013 by occupation (nearly 3 million) Australia '000

CEET12 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

CEET13 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