Economist Jason Murphy has penned an article on the rise in Australia’s services economy, which is now fuelling the lion’s share of jobs growth:
Australia has turned into a services economy.
Our country is rapidly changing, and one of the biggest ways is that almost everyone who has got a new job recently has ended up in the services sector.
We’re a nation of hairdressers and consultants now. As the next graph shows, we’ve added over a million jobs in household services and business services while losing jobs in manufacturing and mining.
Are services sector jobs any good? We better hope so, because they’re what we are all going to be doing soon.
The shocking answer to the question is yes, they are good, mostly…
Safe, well-paid jobs that you can do until late in life. But they are also good because it is much harder for international trade to undermine them. Chinese manufacturing may have caused the demise of a lot of Australian factories, but Chinese hospitals don’t do much to affect Australian hospitals. (That said, some people do travel to Thailand for cheap cosmetic surgery. There is some trade in medical services!)…
The basic reason is simple: People are spending less on goods than on services. Goods industries fell from 34 per cent of the economy in 1985-86 to around 21 per cent in 2015-16. Services have taken up the slack.
Spending more on services is a good thing. It’s a sign we’re well-off as a nation…
The below chart from the ABS, which tracks jobs growth by industry since the Global Financial Crisis, tells the story:
The epic boom in ‘caring’ jobs (health care & social services and education) relates to a large extent to the ageing of the population and the rollout of programs like the NDIS and the increasing demand for childcare, as well as the expansion of Australia’s university system brought about by the explosion of domestic students from the demand-driven system and the explosion of foreign students.
The types of services jobs that have been created are more about shifting wealth around the economy, rather than creating new wealth. These jobs typically rely on never-ending population growth, exhibit low productivity, are non-tradable, and are paid for to a large extent via taxation, asset sales and debt accumulation.
By contrast, those trade-exposed sectors that truly create wealth in the economy are under the most pressure. The end result is that private sector wages growth is stuck in the doldrums and significant under-employment.
While Jason Murphy claims that the services jobs boom relates to people “spending less on goods than on services” and is “a sign we’re well-off as a nation”, the truth is that it is a sign of economic imbalance – a sign that the Australian economy has become so uncompetitive that its manufacturing sector has largely shuttered, in contrast to other advanced economies (e.g. USA, Germany, Japan or even the UK).
Put simply, the Australian economy’s growth levers are not operating properly, and it has become overly reliant on government spending, ponzi growth, and ‘bullshit’ services jobs.
Australia is effectively running an infernal perpetual motion machine that force feeds a fat population high-caloric donuts while pushing it to run on an out of control treadmill.
Wages stall, purchasing power falls, houses are unaffordable, debt keeps rising, public services are crush-loaded, brand new infrastructure is clogged soon after it opens, but the machine itself keeps on chugging so that a few elites can cream the government cash.
Everyone else just stuffs in the empty calories until seized by an economic infarction.
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