In the early 1970s, manufacturing was about as important to the Australian economy as the OECD average when measured in both employment and value added terms (see below charts – Australia on far left).
Just prior to the Global Financial Crisis (GFC), manufacturing’s importance to the Australian economy had taken a massive hit such that its share of employment and value added had fallen to the lower end of OECD nations (see below charts – Australia on far left).
While more recent data is not available, it is fair to assume that manufacturing’s share of the Australian economy has taken a further hit over the past eight years, given the massive decline in manufacturing employment over that period(see next chart).
Moreover, the manufacturing sector is set to shrink again once the car industry shutters in full by late 2017.
After spending years lobbying against protection and taxpayer subsidies, some economists are beginning to ask whether the decline of manufacturing and the associated job losses was such a great idea, and are calling for the re-introduction of specific industry policies to boost employment in traditional manufacturing strongholds. From The AFR:
Struggling regions like Melbourne’s west need targeted skills and industry policies to help them avoid becoming dormitory suburbs for workers at fast growing central city firms and industries with few jobs for unskilled locals, economists say.
Similarly disadvantaged city regions include Adelaide’s north-east, western Sydney and post-mining collapse Perth and Brisbane, posing a challenge for “cities policy” that Prime Minister Malcolm Turnbull embraced before the election.
But the Melbourne Economic Forum will hear on Thursday that the problems in that city’s west are acute because it is both losing manufacturing firms and gaining population at the fastest rates in the nation…
Rather than become a dormitory suburb for unemployed people and skilled workers in fast-growing industries in the CBD and inner suburbs, the west needs industries that are labour intensive, low skilled, and can thrive away from the CBD…
“They are probably going to be industries which require space to operate, space which is always going to be most expensive in the CBD. Transport and logistics and construction are obvious candidates, but so would be the caring industries” [Professor Rodney Maddock said]…
History doesn’t repeat but it sure does rhyme!
