Politicians, economists, the media, and think tanks in Australia continue to argue that a supply shortage has caused the housing crisis. They argue that the situation would be resolved if Australia built more homes.
One of the ways put forward to build more homes is to import more migrant labour into the construction sector:
The following chart from independent economist Tarric Brooker challenges the notion that a lack of construction workers is driving Australia’s housing shortage:
Brooker notes that “since 1994 the construction sector has expanded at a much faster rate than the population, with the sector growing by 126.3% compared with 49.6% for the broader population”.
Australia also has one of the largest construction workforces in the world relative to our population:
So what is going on here? Why has Australia’s construction employment expanded so aggressively without a commensurate rise in dwelling construction?
It seems that Australia’s construction sector has been inundated with suits, rather than tradies, which has bloated the workforce and contributed to lower productivity.
“The rapid rise in the number of professional workers that are now required to deliver projects across the country is at odds with the number of workers ‘on the tools’”, RLB’s Oceania director of research, Domenic Schiafone, noted last month.
“In 2003, professional workers accounted for 28% of the construction workforce. By 2023, this had risen to 38%.”
The AFR’s Michael Bleby observed that “the industry as a whole is suffering from an imbalance of too few workers on the ground and too many in the office”.
As a result, productivity across the construction industry has suffered over the past decade:
“The growth in professional employees – professionals with tertiary degrees and building technicians with advanced diplomas – surged, rising 125% over the two decades from 242,900 to 547,300”, Bleby wrote.
“But the annual output per professional worker fell 17.2% to $470,900 from $568,900”.
Therefore, Australia’s construction industry has too many workers in aggregate, thanks to the rise in suits, but not enough front-line workers on the tools.
A similar phenomenon has occurred across many areas of Australia’s economy, including the public service, universities, utilities, etc.
Administrators in suits have taken over from front-line staff that actually deliver the goods or services.
