What is happening to employment in Australian manufacturing?

Manufact_Emp

Manufacturing is often thought to be in permanent decline in Australia. In 2016, however, the reality has been very different to this myth and, for some manufacturing businesses and employees, a far more positive story. Indeed, as of August 2016, 22,240 manufacturing jobs have been added to the national economy since November 2015 (trend data).

This jobs growth in 2016 should probably be characterised as a partial recovery rather than outright growth, since it comes after the loss of 190,000 manufacturing jobs between 2008 and 2015 (see chart 1). This decline amounted to the loss of 18% of all manufacturing jobs that existed in 2008, which is a bigger fall than was experienced in the recession of 1990, when 139,000 jobs were lost, or 12% of the 1989 manufacturing workforce (Australia’s last recession). Subsequent history shows that some but by no means all of these manufacturing jobs were rebuilt in the later 1990s.

Chart 1: Australian manufacturing employment and hours worked (trend data)

Chart 1: Australian manufacturing employment and hours worked (trend data)

 

After this latest decline and small recovery, manufacturing now employs 892,000 people or 7.5% of the total workforce. Further detail in the ABS labour force data helps to shed light on where they work, and more importantly, where the recovery in employment in 2016 has occurred.

A look at the manufacturing sub-sectors indicates that the sectors of job recovery in 2016 align closely with the sub-sectors that have been experiencing stronger conditions in Ai Group’s Australian PMI® over the past year (see Chart 2). Jobs have increased in the year to August 2016 as follows:

  • Food processing jobs are up 22,000 to over 200,000 nationally. It is the single largest employing sub-sector, accounting for around 23% of all manufacturing jobs. It is also one of the few sub-sectors employing more people in 2016 (200,000) than it did in 2006 (180,000).
  • Paper products jobs are up 2,000 to 15,000 – half what it was a decade ago (29,000 in Aug 2006). This might be connected to the resurgence in paper packaging in support of the recent growth in food processing.
  • Printing and recorded media jobs are up 9,500 to 37,000, but well down on the 50,000 employed a decade ago.
  • Fabricated metals jobs are up 9,700 to 61,400, but still over 20,000 lower than a decade ago (85,600 in Aug 2016). Recent comments from participants in the Australian PMI® suggest this recovery is connected to metals inputs and supplies for the booming residential construction sector. Some of it might also be connected to the growth in demand for metals packaging for the growing range of food and beverages products (e.g. cans and other metal containers).
  • Machinery and equipment (other than transport) jobs are up 9,900 to 68,400, which is almost half of employment in this sub-sector a decade ago (111,000 in Aug 2006). This has been countered by 9,500 jobs lost from transport manufacturing (mainly automotive) over the same period. Transport equipment now employs around 68,000 people nationally, down from 110,000 a decade ago. Another 30,000 jobs in automotive assembly or supply are expected to be lost over the next two years, as the three big auto players end their assembly operations in Australia.
  • Furniture manufacturing jobs are up 2,000 to 55,500 people. This recovery takes this sub-sector closer to the 63,000 employed in this sub-sector a decade ago. The resurgence seems to be connected to the fall in the Australian dollar (making products more competitive against imports again) and the boom in residential construction and renovations activity.
Chart 2: Australian manufacturing employment by sector (original data)

Chart 2: Australian manufacturing employment by sector (original data)

 

Looking at the states in which manufacturing jobs growth has occurred in 2016 is somewhat surprising in that Victoria (+14,000), South Australia (+6,700) and Tasmania (+1,200) have made gains, despite ongoing job losses from the automotive sub-sector in Victoria and South Australia (see chart 3). These states seem to be benefiting from the growth in food manufacturing and associated packaging sub-sectors.

Chart 3: Australian manufacturing employment by state (original data)

Chart 3: Australian manufacturing employment by state (original data)

 

Last week’s labour force data release indicated that part-time workers have risen to a record high of 32% of the workforce across Australia. This trend is evident within manufacturing also, with the proportion of manufacturing workers who are part-time (that is, working for less than 35 hours per week) rising to around 16% in 2016, compared to 13% a decade ago and 10% two decades ago. Correlated to this, the proportion of women in the manufacturing workforce has risen to 28% in 2016, compared to 25% a decade ago and 26% two decades ago.

As of August 2016, manufacturing employed 586,800 full-time men, down 148,200 from the most recent peak of 735,000 in August 2008 (see Chart 4). It employed 153,000 full-time women in August 2016, down 34,400 from the most recent peak in female manufacturing jobs of 187,400 in 2009. Part-time employment numbers have been relatively steady in manufacturing over the same period, for both men and women.

This rise in the proportion of part-time work might be related to the growth in food manufacturing and shrinkage in other (more traditional ‘heavy’) sectors such as automotive assembly and metals, since food processing tends to employ more part-time workers than other parts of manufacturing.

Chart 4: Australian manufacturing employment by full-time / part-time work status and sex  (original data, 4 quarter moving average)

Chart 4: Australian manufacturing employment by full-time / part-time work status and sex
(original data, 4 quarter moving average)

 

Looking at the outlook for manufacturing employment, the Federal Department of Employment’s industry employment projections (last published in March and updated annually) indicate a further 45,000 jobs are likely to be lost from Australian manufacturing over the five years to 2020 (-5% from 2015 levels). This loss is likely to include:

  • 7,000 jobs out of textiles, clothing and footwear (down to around 26,000 by 2020);
  • 3,000 jobs out of primary metals and 5,400 jobs out of fabricated metals;
  • 27,500 out of motor vehicle manufacturing and assembly (down to around 20,000 by 2020).

Employment in all other manufacturing sub-sectors is projected to remain at current levels or to grow slightly in the five years from 2015 to 2020. The trends evident in 2016 to date indicate there is already good reason for optimism across these growth sectors.

The ABS will release the next quarter of data about manufacturing employment in late December, for the November quarter of 2016.

The following two tabs change content below.
Julie Toth
Julie is Ai Group’s Chief Economist, producing economics research, comment and policy for Ai Group and its members. She has over two decades of experience in Australian public policy and economics research, working across the public and private sectors. Prior to joining Ai Group, Julie held senior economics roles with the ANZ Banking Group, the Productivity Commission and other Federal Government agencies.

Leave a Comment

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>