Australia has been hit by a wave of globalisation that is driving wages down, with many workers seeing their wages fall as a result.
But a new report has highlighted a problem that may not have been on the radar until now: the lack of a strong labour market.
While the OECD has estimated that more than 30 per cent of workers are vulnerable to international competition, it has been unable to find a clear answer to the question: why is there no strong labour force?
There is, in fact, a strong international labour market, but it’s not one for Australians.
It’s one of the few areas of Australian economy that isn’t subject to market forces, says Professor Michael A. Smith, director of the Centre for Labor Market and Employment at the University of Queensland.
Australia has more than 600,000 workers in its agriculture and forestry sectors.
In the hospitality and retail industries, there are around 1.3 million workers, and there are about 3.2 million workers in agriculture.
What’s more, Australia is also the only developed economy that doesn’t have a national labour force.
The OECD figures on employment, the number of people in each of the industries, the total amount of income they generate, and the average hourly wage all have to be taken into account.
That’s because they are all subject to labour market adjustments, which can alter the total numbers and the total amounts of income.
Professor Smith says that’s why Australia is a very good example of an economy that has no strong workforce, even though it has a high level of per capita income.
“If you take out the income of people who live in the top 5 per cent, the share of income coming in from the labour market is very low, compared to the OECD average,” he said.
For the first time, Professor Smith says, the OECD figures have also shown a clear decline in employment in the last decade.
“If you look at employment trends in the past 10 years, they have gone from around 2.5 million to less than 1 million.
That is a pretty significant decline in a very short period of time,” he told ABC Radio Melbourne’s PM program.
Why Australia is in the lurchProfessor Smith has found that Australia has a lot of work to do to reverse the trend, and he’s been calling on the government to look at creating more jobs.
At the end of last year, Labor’s national policy coordinator, Mark Broughton, released a report titled ‘How can we do more?’ which included a call to expand public investment in education, skills and training, and increase the amount of time and money Australians can spend on their families.
He also recommended that the government invest in more childcare, which has fallen from almost 3 per cent in 2012 to just under 2 per cent this year.
His report also recommended a number of policy changes, including boosting childcare support, supporting more apprenticeships, and introducing tax credits for family-owned businesses.
As the country has been in the grip of a low wage recovery, many businesses have struggled to cope.
Last week, the Australian Manufacturing Workers Union (AMWU) called for a national minimum wage increase to $15 an hour by 2021, saying it would help workers.
Labor’s shadow chief of staff, James Ashby, says the country’s growing population is putting pressure on the workforce.
And while Australia has some of the highest levels of female employment, it’s still very much in the doldrums for female employment.
We have the lowest female employment of any major advanced economy in the world, he told the ABC.
However, Professor Brown says the answer is not to simply raise the minimum wage, but to invest in training.
Education is another area where we need to do more, he said, and suggested Australia could use its $5 billion investment in the National Curriculum to create vocational training and other opportunities for young people.
If we want to see this economy grow and we want it to stay healthy, we have to invest, he added.