Tuesday, January 31, 2012

Rock, Paper, Scissors in Queensland: Manufacturing Beats Mining

The ABS has recently put out 1312.3 Queensland at a Glance, which provides a wealth of information on Queensland for the year ending 2009-10. While there are many newer stats on the various topics available this publication brings them all together.

What interested me, apart from the fact that the significant migration to Queensland that occurred for most of the 2000s has significantly slowed, is the percentage contributions of industry sectors to employment and total sales and service income. See here.

What might be an interesting exercise before you look at the figures is to imagine what you think they might be roughly. Most Queenslanders, I imagine, would think agriculture would be bigger than it is; most would assume that mining would be bigger than manufacturing and retail trade. Contrary to these perceptions, agriculture is now a small sector of the economy and manufacturing is still larger than mining, especially when it comes to employment. Both mining and agriculture are of course more important when it comes to exports.

The ABS doesn't provide percentages so I added the data to excel, converted to percentages and sorted by size to provide a more meaningful assessment of relative contributions.

See here for some data on relative contributions of various industry sectors for Australia as a whole.

As you can see below, retail trade is the biggest employer, followed by construction, accommodation and manufacturing at 9%. Compare this to mining, which employs 1.9%. Now obviously some of the construction sector and retail jobs are dependent on mining, but so are these service sectors dependent on manufacturing, albeit not to the same degree at the moment because of the colossal amount of investment in infrastructure going on in the mining sector.

For a long-term and more up-to-date account of Queensland employment see here.

When it comes to contributions to sales and service income, mining is vastly more important, but still only the fifth largest industry contributor. Wholesale and retail trade account for 31% of income, with manufacturing contributing almost double mining's share.

As with the Australian economy as a whole, the real structural change that has been going on for the past half century is the shift to services. But let's not forget that manufacturing is still vastly important to the Queensland and Australian economies, not just in terms of employment, but in terms of contributing to a more diverse economy.

While we should avoid protectionism, governments at all levels, local, state and federal, need to think of ways to assist industry sectors without feather-bedding them. Assisting innovation, cutting red-tape, facilitating industry linkages (between industries and between industry and research institutions) and providing support for education, training and research would seem to be a good start. At a human level working on ways to keep employment high and long-term unemployment low is also vital.

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