Which industries are ripest for technological disruption? Australia labour productivity and value-add by industry.
Digging holes in the ground is hard for people, but easy for machines.
Finessing finicky guests, on the other hand, is often thought to require one or more sets of the human touch.
This is reflected in Industry Value Add per employee.
| ANZSIC Div | Industry | 2009-10 | 2019-20 | Change |
|---|---|---|---|---|
| B | Mining | $618,608 | $1,097,800 | 77% |
| D | Electricity, Gas, Water And Waste Services | $300,019 | $433,100 | 44% |
| J | Information Media And Telecommunications | $199,661 | $234,400 | 17% |
| L | Rental, Hiring And Real Estate Services | $143,784 | $212,000 | 47% |
| F | Wholesale Trade | $102,327 | $131,400 | 28% |
| C | Manufacturing | $102,769 | $129,400 | 26% |
| M | Professional, Scientific And Technical Services | $93,098 | $121,600 | 31% |
| I | Transport, Postal And Warehousing | $98,082 | $119,800 | 22% |
| E | Construction | $92,945 | $114,400 | 23% |
| N | Administrative And Support Services | $56,510 | $78,200 | 38% |
| O | Public Administration And Safety (Private) | $57,424 | $76,400 | 33% |
| P | Education And Training (Private) | $52,988 | $75,600 | 43% |
| Q | Health Care And Social Assistance (Private) | $57,286 | $75,000 | 31% |
| S | Other Services | $51,586 | $66,500 | 29% |
| R | Arts And Recreation Services | $54,000 | $66,100 | 22% |
| A | Agriculture, Forestry And Fishing | $46,271 | $61,800 | 34% |
| G | Retail Trade | $49,239 | $59,900 | 22% |
| H | Accommodation And Food Services | $11,919 | $39,200 | 229% |
A miner driving an ore hauler accompanies a whopping 25 times the value of a hotelier and 13 times that of a (private) health worker.
That their salaries are not commensurately disparate, despite anecdotes of six-figure-salaried apprentices in the Pilbara, is explained by Baumol's Cost Disease. Employers must wage-match no matter the productivity of their workers or face a dearth or deluge of candidates, and make up the surplus or shortfall in other ways.
Because doing things better has often meant doing things cheaper and with less labour, there are consequences for the lagging industries forced to pass increased costs onto customers.
Where demand can shrink, it does. The cost to attend a string quartet recital has increased because the labour required to perform them has remained the same, and so we cram into concert halls far less frequently.
Where demand is inflexible, Governments may prop up worker-heavy industries like health care.
Another potential outcome is disruption, commonly by technology. The fruit hang lowest where workers add the least, through no fault of their own it must be stressed. It makes sense then to aim innovation at retailers rather than miners.
Though shopping has been transformed by the internet and self-checkouts, there appears to be room for more upheaval.
As for the hero-worship showered upon health workers during COVID-19, the fact that they accompany nowhere near the most value indicates that a more efficient system could have saved more lives or gotten by with fewer workers.
It also makes sense to target industries that have changed the least in recent history. Despite the media sector being already lean, the rapid advance of streaming services should come as no surprise.
All but one sector are covered in the Industry Value Add figures. Notably absent are Financial Services.
We look to labour productivity (quality adjusted hours worked) to see that finance workers are among those most rapidly improving in efficiency.
| Productivity Change by Industry | 1994-95 to 2019-20 |
|---|---|
| J Information, media and telecommunications | 143% |
| A Agriculture, forestry and fishing | 95% |
| K Financial and insurance services | 72% |
| G Retail trade | 57% |
| R Arts and recreation services | 52% |
| I Transport, postal and warehousing | 45% |
| F Wholesale trade | 42% |
| C Manufacturing | 41% |
| S Other services | 39% |
| H Accommodation and food services | 26% |
| B Mining | 25% |
| M Professional, scientific and technical services | 11% |
| E Construction | 9% |
| L Rental, hiring and real estate services | 4% |
| D Electricity, gas, water and waste services | -2% |
| N Administrative and support services | -24% |
The figures notably omit Public Administration, Healthcare, and Education. Furthermore, they do not allow for comparisons between industries.
Perhaps for the best, as we would be tempted to conclude that certain sectors are filled with slackers or pampered by disincentives to innovate. In reality however, adding value depends on factors other than labour, like materials, equipment, and finance.
Indeed, it may be that some industries where labour is intrinsic may have hit limits to productivity. Further rationalisation would mean categorical change. A string quartet streamlined is no longer a quartet, but a trio.
Nevertheless, looking to Industry Value Add and Productivity prompts us to challenge where labour is essential. It also indicates which industries will most likely experience - or continue experiencing - disruption.
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