Here come the robots!
My first job for a year after I left school involved inserting pieces of wood and MDF through a moulding machine in a somewhat repetitive fashion – i.e. for up to 12 hours per day – and a bloke called Hughie at the other end taking them out again.
The cynical older fellas in the Essex factory used to say that one day my job would be replaced by robots, with improving technology meaning that some time in the future a single operative would be able to oversee a dozen such machines.
They were probably about half right.
Like many such manufacturing companies in developed countries, the business struggled to remain competitive and eventually closed (the warehouse was later used as an illegal cannabis plantation – creative destruction at work, one might say! – but that’s another story).
These days similar such work is probably done either by more technologically advanced factories in Germany, or by operatives being paid comparatively lower salaries in Asia (the timber and MDF mouldings, I mean, not the illicit cultivation of skunk plants under sophisticated hydroponic equipment).
The older guys in the factory have now long since retired.
The younger ones?
Mainly working in services industries or in more specialised factory roles that didn’t exist back then.
Such is the nature of capitalism.
People sometimes worry that there will be no work in the future due to mechanisation and automation, but an optimist would tell you that capitalism has always been this way, going on to create new opportunities as old ones fade away.
Although I’m still (just) in my thirties, it’s actually quite amazing to think what has changed since I left school.
Technically the internet did exist back then, but hardly anyone used it.
Email was just about beginning to be used on Uni campuses, but most people hadn’t heard of it.
There were no online newspapers, so everyone read The Sun.
Small business accountants wrote in pencil in leather-bound nominal ledgers instead of using spreadsheets.
There was no Facebook, and no Twitter…and better still, no bloggers.
Imagine how productive people must have been!
In the future there will be new roles, new products, new types of employment, and new industries.
And many of these will be industries and roles that most of us can’t yet imagine, or have not yet even been imagined.
However, the creation of such new roles often requires business investment, and we’re not seeing so much of that in Australia right now.
The quarterly Detailed Labour Force figures showed that annual employment growth slowed a little to +229,300 in the year to May 2016.
Annual employment growth remains some way higher than its long run average, but then so too does population growth in absolute terms.
The industry level figures suggest that although Australia has continued to generate a decent number of jobs, it would benefit from more investment and innovation.
One piece of good news is that the lower dollar has helped the manufacturing industry to arrest its long sweeping downtrend in employment over the past six months, even recording a bit of a rebound.
The greatest employment gains were again seen in healthcare and social assistance, wherein total employment has really boomed over the past couple of decades.
The light blue line at the bottom of the chart above shows that the number of persons employed in mining has declined by about 18 per cent or about 50,000 to 225,000 since peaking in November 2013.
Although mining is not one of the biggest employers in terms of headcount, analysts believe that this figure has some way to fall yet, and this will have continuing repercussions for resources regions.
Annual change in employment
Looking at the annual change in employment by industry, after healthcare and social assistance (+85,600) comes construction as a leading sector in creating +48,300 jobs over the year to May.
Construction jobs created reflect the transition from mining construction in the regions to residential property construction, mainly in the capital cities.
Financial, insurance and real estate services has been another big winner, adding +47,400 net employment.
Overall, this was not a bad result in annual terms, with the economy adding well over a quarter of a million new jobs year-on-year on a net basis, albeit with many of the new positions being part time in nature.
However, the industry level data presents challenges, given that mining employment is expected to keep falling for some time yet, and given that eventually the residential construction boom will pass its peak too (resulting in a likely decline in construction employment).
Unfortunately the most up-to-date capex figures were lacklustre, and do not indicate a surge in investment.
In fact after the turmoil of the recent Brexit vote, analysts are lining up their bets for interest rates to be cut in August, after the next round of inflation data is released.
The inflation figures for the first quarter caught analysts on the hop, being much weaker than market estimates.