Four percent decline in transport and warehousing employment since 2009 demonstrates Australia's stagnating productivity, competitveness seminar finds
By Anna Game-Lopata | August 28, 2012
A four percent decline in transport and warehousing employment growth since 2009 is a sign of Australia’s stagnating productivity and innovation, a Sydney seminar has found.
A seminar run last week by the Export Council of Australia and Shipping Australia reveals the World Economic Forum regards Australia as lacking in innovation, business sophistication and infrastructure.
Committee for Economic Development Australia (CEDA) CEO Professor Stephen Martin confirms the burden of government regulation has also contributed to Australia’s declining competitveness.
“Reforms are required in the tax system, elements of workplace relations, regulatory frameworks and public spending,” Martin told about 150 industry participants at the one-day seminar.
Martin says Australia has fallen behind in its competitiveness and become complacent since the 1990s when the nation was regarded as a leader in innovation.
According to the 2008 Milken Innovation Report, Australia was a leader for innovation in university-industry collaboration, research and development expenditure, patents, education and business environment, and above average in venture capital deals and technology exports.
“However, a lack of global competition and a relatively stable economy has created a complacent society and has not provided any incentive for business to innovate contributing to our productivity slowdown,” Martin says.
He says an increased investment in skills, in particular science, research and technical skills, would allow the country to be a leader in high value, high-tech manufacturing and in resource extraction and development.
“In 2012, energy, healthcare and telecommunications would benefit most in terms of job creation and increased profits if governments implemented more efficient innovation policies,” he says.
While the economy appears strongly driven by the mining boom, with a 22 percent growth in employment in the sector over the last three years and a massive investment to match, Martin says mining employs just 7 percent of Australia’s workforce.
Meanwhile the services sector representing retailing and tourism employs 80 percent of the workforce but is experiencing mixed fortunes related in part to the high Australian dollar.
Apart from mining, sectors experiencing employment growth include the professions and science (7 percent), real estate (6 percent) and utilities (5 percent).
Those suffering declining employment growth include transport and warehousing (4 percent), manufacturing (3 percent) agriculture, retail (both 1 percent) and construction (0.5 percent).
In this context, a report from consultancy firm McKinsey notes growth in labour productivity has fallen to 0.3 percent from an average of 3.1 percent between 1993-1999.
This has reducied associated income from $57 billion in the 1990s to $17 billion annually.
The Global Index of Workplace Performance and Flexibility report shows Australia’s cost of labour is higher than that of France, Germany and Canada at US$33.20 per hour and we are ranked 13 on a list of 14 Western countries for workplace flexibility.
“Competitiveness is defined as the set of institutions, policies, and factors that determine the level of productivity of a country,” Martin says.
“There are many determinants driving productivity and competitiveness- including education and training, technological progress, macroeconomic stability, good governance, firm sophistication, and market efficiency.”
Australia’s advantages include financial system and banking sector; low government debt; macro-economy; institutional transparency.”
However, the country ranked 15 out of 59 – a drop of 10 places in two years –
in the IMD World Competitveness Yearbook as a result of labour market competitiveness affected by the Australian dollar, skills shortages and industrial relations.
“We have a high-cost high-skill economy compared with emerging economies such as China and Africa,” Martin says.
Martin adds Australia’s current economic prosperity supported by past policies focused on international competitive advantage, including innovation and educational up-skilling, needs to
be reinvigorated and targeted.
“Increased investment in education and skills
– science, research and technical skills
– is vital,” he says
“We need a long-term skills plan required for Australia with innovation as a key driver to ensure we can capitalise on growth sectors that can and will contribute to Australia’s future prosperity.
“We need global competitiveness and productivity, not simply reliance on the Asian century.”
