This thesis examines the composition of employment and unemployment in Australia over the last 25 years and the factors that have influenced them. The published work in this area has dealt mainly with the skilled segment of the workforce. In contrast, the analysis here looks primarily at the position of blue collar workers, who are generally considered to be in the less skilled category. Strong relative growth in the income and employment shares of higher skilled occupations has been documented across many countries over recent decades. The pervasive nature of this trend has seen it take on an air of inevitability, yet a number of questions remain. Do the compositional changes simply reflect the increasing value of education and training through time as economic activity becomes more complex, or is it that information, as opposed to manual and service skills, is becoming more important? Are the shifts stable and are they permanent? Do workers adjust to them fairly easily? What role has labour market and industry policy, as opposed to market forces, played in the process? And finally, is there a link between the occupational composition of employment and economic performance?
The literature provides a diverse range of theoretical perspectives on the drivers of structural change in the labour market -growth in services, the increasing importance of information activity, skill biased technological change, reduced trade barriers and globalisation. The present work integrates the ideas from these studies in an analysis at the economy-wide level, and extends the coverage to include the program of microeconomic reform that was undertaken over the 1980s and 1990s.
Within the constraint of standard occupational unit structure, an evaluation of alternative methods of grouping the labour force is undertaken. From both a theoretical and empirical perspective, compositional change in Australia at least, is more effectively explained in terms of shocks to blue collar workers rather than to the lower skilled in general. Skill level, in other words, is a less useful analytical approach than skill type for examining employment trends over the last two decades.
The empirical work focuses on two areas: (a) market mechanisms which embody technological change, and (b) policy driven reform characterised by a progressive narrowing of public sector activity, reduced barriers to entry and greater labour market flexibility. Data limitations prevented trade, a third potential cause of compositional change, from being investigated in any detail.
The issue of technological change is approached through patterns of capital investment at the industry level. From a theoretical perspective, capital substitution is likely to be restricted to jobs where routine functions are predominant. It was found that job losses were confined to blue collar and lower level clerical occupations rather than those in the service, or high skilled white collar areas.
In the context of microeconomic reform, there is a link between the nature of perceived impediments to labour market performance and the distribution of workforce downsizing. The sources of inefficiency that led to downsizing are identified as being in areas of the economy that were publicly owned, heavily regulated or highly unionised – factors that were more prevalent amongst blue collar sections of the workforce. It is found that the targeted industries experienced both reductions in blue collar labour, and higher productivity growth, in contrast to those which were not targeted by reforms and arguably, were already open to competitive forces.
By working at the occupational level, a relative shock to the blue collar workforce is identified which, in turn, provides an explanation of several labour market phenomena: slower employment growth for males relative to females, higher levels of unemployment over the 1980s and 1990s followed by widespread reports of skill shortages, and a temporary productivity increase which has slowed over the last six years.
As such, it is the only economy-wide study that looks explicitly at the impact of deregulation and privatisation policy on the distribution of employment across occupations. On a conceptual level, the ‘thesis’ here is that, through the analysis of the various labour components, otherwise hidden effects of technology and institutional barriers to efficiency become identifiable.