Labour shortage drives productivity-lifting automation

A recent report from the National Agricultural Labour Advisory Committee admitted that Australian farmers’ extreme reliance on cheap migrant labour is having detrimental productivity impacts by preventing farms from adopting new methods and investing in automation:

In many ways, Australia is at a crossroads. Either its enterprises go all out to modernise by learning and adopting new methods, or they fall behind the others, occupying increasingly uncomfortable niches, relying on inadequately trained, low productivity workers, using the same old approaches that worked yesterday, and then finding themselves in a situation where business as usual has suddenly turned into business in decline…

The report was delivered against the backdrop of farmers complaining of labour shortages and wanting governments to facilitate the entry of low-paid foreign workers.

MB has argued repeatedly that giving farmers easy access to migrant workers is a mistake. Not only does it encourage exploitation and push down wages, but it also stifles Australia’s long-run productivity growth by discouraging farms from adopting labour-saving technologies and automation.

Put another way, without such easy access to cheap migrant labour, Australian farms would be forced to lift wages and conditions to attract local workers. These higher wages would, in turn, incentivise farms to invest in labour-saving technologies and automation, lifting  the economy’s productivity.

A recent report from the ABC highlights my argument, with a shortage of migrant apple pickers in Tasmania forcing an apple grower to invest in conveyor belt technology, at a cost of $130,000 each, as well as lift employee pay:

The machines have six conveyor belts and can pick at six different heights…

Use of the technology is expected to accelerate in the next 24 months because of COVID restrictions and labour shortages… Andrew Smith has since ordered two more machines…

There are also benefits for the quality of the fruit… “Bruising basically disappears”…

Orchard workers will now [also] be paid an hourly rate rather than based on volume…

“The orchard will effectively start to get built around machines like this, so it is absolutely a game-changer,” Mr Smith said…

“You’re going to see robots in the orchard here within 24 to 36 months in Tasmania, probably at this place or next door. It’s going to happen really, really quickly,” Mr Smith said.

Another report has emerged of farms in South Australia turning to robots to overcome labour shortages:

The shortage is beginning to gain traction with technology experts who are working with local producers to fast-track automation plans that aim to increase the use of robotic harvesting technologies…

The current labour shortage had created a surge of interest in automated harvesting solutions.

“Every farm that we went to said labour is a critical risk… and they are all looking for automated harvesting solutions and robotics,” Macolino said…

The above article are proof that paying higher wages increases productivity by driving investment – exactly what MB has argued over many years.

There is a reason why advanced nations offer the highest pay, are most productive, and enjoy the highest living standards. All three issues are inter-related.

Allowing farms and other industries to import thousands of temporary migrants to work for slave wages was always deleterious for wages, productivity and living standards.

The key ingredient for Australian industry and the economy to flourish is productivity-enhancing capital investment, not endless cheap migrant labour.

Unconventional Economist

Comments

  1. So how is it that the Chinese came up with a number of productivity improving inventions centuries before the Europeans but the Industrial Revolution occurred in Europe, not China. One theory is that even with regular floods and plagues there were always more Chinese workers than jobs. In contrast, about a third of Europe’s population was killed by the Black Death which not only caused the breakdown of the feudal system in much of Europe – which allowed skilled workers to move to where the pay was best – but forced the application and continual improvement of machines and processes.

  2. haroldusMEMBER

    Yeah but

    In the meantime, the cost of the technology will likely push up the price of apples.

    “It means a lot more investment in this sort of equipment, which is high-value capital equipment,” Mr Price said.

    Ultimately we are now going to test and market and see whether the market is willing to pay more for produce,” Mr Smith said.

    Also it’s a bit misleading to say they are ‘picking machines’, they are more like mobile conveyer belts, there still needs to be pickers at the ground level and the canopy to put the fruit on the conveyer belts.

    • working class hamMEMBER

      I think the total automation of certain tasks would still be a while off yet. The main point is that the first steps are being taken, once the benefits are witnessed first hand, the evolution of the technology will accelerate exponentially. On the upside, farmers aren’t going to be getting wage slaves to operate and maintain their equipment, full time jobs will be created, higher skilled and paid.