One advantage of getting old is meant to be a greater sense of
perspective. You've seen a lot of change over your lifetime and seeing a
bit more doesn't convince you the world is coming to an end.
Unfortunately, getting old can also leave you convinced every change is
for the worst as the world goes to the dogs.
A lot of people have been
disturbed by the news that Toyota's closure as a car maker in 2017 will
bring an end to the manufacture of cars in Australia, with the loss of
many jobs also in the parts industry.
But my guess is the most
disturbed observers will be the old, not the young. I doubt if many
young people had been hoping for a career in the car industry. And I
know that few people - young or old - buy Australian-made cars.
That's
not a cause for guilt, but for being sensible. To regret the passing of
an industry whose products few of us wanted is just sentimentality,
making no economic sense.
A lot of the dire predictions we're hearing
won't come to pass. However many jobs the vested interests are claiming
will be lost, they're almost certainly exaggerating.
That's
particularly true of the alleged flow-on effects, which are often
calculated on the assumption that any money which would have been spent
buying the product in question will now not be spent on anything.
I've
never believed car making was of special strategic significance to
advanced technology. Every industry claims to be special. And I've heard
the claim that this spells "the end of manufacturing in Australia" too
many times in the past to believe it.
You think 35,000 is a huge
number of jobs to be lost? It isn't. It's 0.3 per cent of all jobs,
equivalent to about two months' net job creation in a normal year. You
think this could put the economy into recession? We're overdue for
another recession but this isn't nearly big enough to be the main cause
of one. Even if it was, it wouldn't happen until 2017.
It's true
some of the workers who lose their jobs won't be able to find
alternative jobs, and some that do won't find jobs as well paid. But far
more will find jobs than many of us imagine. Naturally, it's important
for governments to give affected workers a lot of help to retrain and
relocate.
Some people assume an imported car creates no jobs. Far
from it. Are you able to buy an imported car for anything like the price
at which it crosses our docks? Of course not. Most of the gap between
the landed price and the retail price goes on creating jobs for
Australian workers in our extensive car-distribution industry.
The
fact is the sale, fuelling, servicing and repair of cars has always
involved far more jobs than the making of cars and car parts has.
I've
been responding to people's fears about the decline in manufacturing
for almost as long as I've been a journalist because manufacturing's
share of total employment began declining well before I joined Fairfax
in 1974.
The truth is the industrial structure of our economy has
been changing slowly but continuously since the First Fleet. A lot of
angst has been generated over that time but the fact remains we're
infinitely more prosperous today than we were then - with a much higher
proportion of the population in the paid workforce.
The changing
mix of industries is actually a primary cause of our greater affluence.
Countries that try to prevent their industry structure changing are the
ones that stop getting richer.
To put the latest developments into
context, let me show you the bigger picture of Australia's economic
history, drawing on a Reserve Bank article. Throughout much of the 19th
century, agriculture accounted for about a third of the nation's total
production, with mining bigger than manufacturing.
By Federation,
agriculture provided about 25 per cent of total employment, with
manufacturing providing 15 per cent and mining about 8 per cent. By the
1950s, however, manufacturing had grown to 25 per cent, agriculture was
falling towards 10 per cent and mining was down to 1 per cent.
So
as the shares of agriculture and mining declined, manufacturing's rose.
But from the 1960s, manufacturing's share of total employment started
falling from its peak of about 25 per cent to be down to about 8 per
cent today.
Remember, however, that an industry's declining share
of the total doesn't necessarily mean it's getting smaller in absolute
size. Although today agriculture accounts for only about 3 per cent of
the total, the quantity of rural goods we produce has never been higher.
And manufacturing's output began falling only in recent years.
So
an industry's share falls mainly because other industries are growing
faster. And, with the exception of mining, the sector that has provided
virtually all the growth is services. It accounted for half our jobs
even in the 19th century, but from the 1950s its share took off, rising
sharply to about 85 per cent today. Most of the growth has been in
health, education and a multitude of "business services".
Many
older people find the relative decline of manufacturing disturbing but I
can't see why. Services sector jobs tend to be cleaner, safer, more
skilled, more value-adding, more satisfying and better paid.
