Economic growth and change in post GFC world: What’s hot and what’s cold in the Australian economy

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Economic growth and change in post GFC world: What’s hot and what’s cold in the Australian economy

Posted 22/11/2012 by Guy Woods


Image source: www.sa.gov.au
Since the Global Financial Crisis (GFC) in 2008, the Australian economy has experienced a period of slower, more uncertain growth than it did in the years leading up to the crisis. During the four years leading up to the GFC, Australia’s economy grew between three and four per cent a year, in inflation adjusted terms, with an annual average growth rate of 3.4 per cent. Since then, growth has been as low as 1.6 per cent in 2007—08, and only topped three per cent in 2011—12. The annual average growth rate for this later period was 2.4 per cent; a full percentage point lower than the earlier period.

However, not all parts of the economy have performed equally over the last four years. Some industries have grown strongly, whilst others have contracted. This has brought about a certain degree of structural change within the economy in terms of the sorts of goods and services the country produces and types of workers it needs to produce them.

Economic output – the growth industries

After adjusting for inflation, net economic output, as measured by industry gross value added (GVA), increased by over $118.1 billion between 2007—08 and 2011—12. Most of this growth was created by Industries in the resources and services sectors of the economy.

Overall the increase in Miningoutput was equal to 17.2 per cent of the net growth in GVA over the period. However, not all miners performed equally well, some experienced a period of growth and others contraction. One of the better performing mining industries was Iron ore mining, which accounted for 20.7 per cent of net growth.

The next three biggest contributors to the net growth in GVA were Professional, scientific and technical services (increase in output equal to 16.8 per cent of net growth); Health care and social services (12.9 per cent of net growth); and Construction(11.4 per cent of net growth).

Economic output – industries in decline

In terms of industries in decline, that is industries that detracted from net growth in GVA over the period 2007—08 to 2011—12, Manufacturing was the hardest hit. Manufacturing’s contribution to net growth in GVA was -5.3 per cent. In particular, the Textiles and clothing industry detracted from net growth in GVA by 3.1 per cent.

Other industries in decline were: Oil and gas extraction (-2.2 per cent contribution to net growth in GVA); Coal mining (-1.7 per cent); Road transport (-1.4 per cent); Administrative and support services(-1.0 per cent).

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Employment – growth industries

Between August 2008 and August 2012 the total number of employed persons grew by 558 600.

By industry division the biggest contributors to this outcome were the Health care and social assistance (46.7 per cent of net growth in employment came from this industry, equal to 260 700 jobs); Professional, scientific and technical services (25.2 per cent of net growth, 140 600 jobs) and Mining (17.4 per cent of net growth, 97 000 jobs).

Employment – industries in decline

Overall Manufacturingexperienced the largest decline in employment. Between August 2008 and August 2012 employment fell by 90 800, equal to -16.3 per cent of the net increase in employment over the same period. Employment in Agricultural, forestry and fishing fell by 28 900 jobs; Construction contracted by 32 000 jobs; Retail by 19 200; Automotive repair services fell by 27 000 jobs and Employment services 24 800 jobs.

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Occupations in demand

The biggest increase in demand for workers by occupation was for Professionals. The number of Professionals increased by 261 200 over the period August 2008 to August 2012. This was equal to 46.8 per cent of the net increase in employment. This included 59 300 Registered nurses; 14 000 Civil engineers and 10 000 Early childhood teachers. Community and personal service workers were the next fastest growing occupation division. In particular the number of Aged care workers grew by 31 700 and Education aides by 28 935. Also the number of Sales assistants increased by 49 704; Accounting clerks by 33 700 and General clerksby 95 000.

Compared with Professionalsand Community services workers, the growth in the number of Technicians and tradesworkers was quite modest. For trades workers there were exceptions to the overall trend. For instance the number of Chefs increased by 23 600; Electricians by 11 400 and Architectural, building and surveying technicians by 13 600.

Occupations in decline

By occupation some of the biggest falls in employment have occurred in those jobs related to the back office, farm, building site, garage and factory. In August 2012, there were 50 900 fewer Keyboard operators than in August 2008. Also, there were 24 200 fewer Secretaries; 23 200 fewer Bookkeepers; 24 600 fewer Corporate service managers; 36 000 fewer Livestock managers; 26 900 fewer Motor mechanics; 11 800 fewer Bricklayers; 12 600 fewer Carpenters and joiners and 20 500 fewer Building and plumbing labourers.

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Summary

The last four years have seen the Australian economy evolve. Whilst mining has expanded its hold on the economy, growth in services based industries has also been important. Together the combined growth of the Professional, scientific and technical services and Health care and social assistance industries GVA was almost double that of the Mining industry. In terms of employment almost half the growth is attributable to the Health care and social assistance industry. At the same time there has been decline in the size of Manufacturingin both output and employment.

These changes have seen a shift in the sorts of skills and occupations needed by the economy. Over half the net growth in jobs has been in the professional occupations; particularly health care related professionals such as nurses. At the same time, contraction in employment in the construction and manufacturing industries probably accounts for the fall off in demand for skilled trades workers and trades related labourers. 

Click chart to enlarge


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