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DUOBusiness | Observation

Founding Chairman

Warwick Powell Sister City Partners

Routine Roster Is Out Regional prosperity in the 21st century will look nothing like the drivers of wealth of the past. Long-run patterns of changes in the structure of our national and regional workforces are accelerating, courtesy of the rapid developments in automationenabling technologies.

THE GREAT TRANSITION There’s a bit of chatter about the region’s economy being “in transition”. Most of this usually revolves around the idea that it is transitioning from one that is dependant on natural resources to one that isn’t. Unfortunately, this is probably not a very useful way of understanding the dynamics at work. For starters, as I discussed in last month’s column, mining’s contribution to the Townsville economy is actually pretty small in comparison to other sectors. At its peak (around 2012/13) mining employment was in the order of 5,000. That it has come back to levels more typical of the pre-commodities


DUOMagazine April 2017

boom period doesn’t actually point to a transition from ‘mining’ to something else. There are also deeper, longer patterns at work, which can be understood by reframing how we think about work. To do this, I’ve taken the lead of researchers at the Reserve Bank of Australia, who’ve recently dissected employment on the basis of skill types. Four main categories are introduced. These are: 1.Routine manual work includes the ABS occupation groups of ‘machinery operators and drivers’, ‘labourers’, and ‘technicians and trades workers’; 2. routine cognitive work covers ‘clerical and administrative workers’ and sales workers’; 3. non-routine cognitive covers ‘managers’ and ‘professionals’; and 4. non-routine manual covers ‘community and personal service workers’. Across the country, over the past 30 years, we have been witness to a progressive but inexorable decline in ‘routine’ employment, whether these are ‘routine manual’ jobs – which have declined from over 40% of the workforce to 30% in that time – or ‘routine cognitive’ roles. Routine cognitive roles have declined from around 26% to 23.5%. On the flipside, ‘non-routine cognitive’ roles have increased their share of employment from around 27% to 36% or so, and ‘non-routine manual’ roles from 6% to 11% or thereabouts. A TRADIES’ BUBBLE Townsville data (from 1999, as opposed to the national data which starts in 1986) suggests that we’ve bucked the national trend, and experienced something of a ‘tradies’ bubble’ between 2003 and 2014. In 1999, 38% of Townsville’s workforce was found in ‘routine manual’ roles. This peaked at 43% in 2007 and fluctuated since

then to present levels of … 37%. In raw number terms, the tradies’ bubble is even more apparent. In 1999, 32,500 workers filled routine manual roles. After slumping to <25,000 in mid-2002, the number of routine manual roles skyrocketed to a peak of 47,300 in 2010. This more or less marked the heights of the Rudd Government’s post-GFC fiscal largesse. A modest decline to 41,000 then took place to mid-2012 before the China Boom kicked in to spike routine manual employment back to 47,200 in late 2012/early 2013. It has fallen now precipitously to 35,400 (September 2016). This explosion in routine manual employment tells the story of Townsville’s recent decade of prosperity. It also speaks to the underlying structural reasons for its rapid collapse since late 2012 (and indeed, a little before then). An economy that experienced prosperity on the back of an historically unprecedented credit boom (2003-2008), followed by unprecedented levels of domestic pump priming (2008-2010) coupled with being carried on the cushion of China’s own $600 billion stimulus and America’s quantitative easing that injected billions into the global capital markets, finally reaching a crescendo on the back of China’s unprecedented demand for coal and iron ore, was bound to come crashing back to earth. And that’s exactly what’s been happening. The tradies’ bubble saw Townsville’s employment structure diverge from the national patterns for more than a decade. This was never sustainable. In statistical terms, a reversion to the mean was always inevitable. In some respects, the nature of the roaring noughties in Townsville masked the underlying changes taking place. It was easy to become complacent.

DUO Magazine April 2017  

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