In 2013-14 the gross value added of Australian services industries was about $950 billion, or 60 per cent of GDP (ABS 2014b).1 This percentage has remained fairly constant over the past two decades as the output from services industries has grown at about the same rate as GDP (ABS 2014b). The gross value added of Australian services industries has doubled (in real terms) over the past two decades (figure 3.1).
Figure 3.1 Real gross value added, real exports and employment
Australian services industries
Sources: ABS (2014b, 2015b, 2015g).
Total employment in services industries has also risen over time, but at a slower rate than real gross value added (figure 3.1). There were 9 million people employed in services industries as of May 2015, up from about 6 million two decades prior (ABS 2015g).
Combined, Australian services industries account for a much higher proportion of total employment (almost 80 per cent) than GDP (about 60 per cent) (ABS 2015g). This reflects the relative labour-intensity of most services industries (figure 3.2) in comparison to non-services industries such as agriculture, mining and manufacturing, which are more capital-intensive.
1 There are different definitions of ‘services industries’. Unless specified, ‘services industries’ is here taken to include the electricity, gas, water and waste services industry (which produces both goods and services), but not the construction industry or ownership of dwellings. Tourism is not included separately (as it is not defined as an industry by the ABS) although most tourism activity is counted as part of other services industries. Some stakeholders (such as DFAT, sub. 31) have suggested different figures for
Gross value added Exports
Employment
0 25 50 75 100 125 150 175 200 225
1993-94 1998-99 2003-04 2008-09 2013-14
Index (1993-94 = 100)
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Employment in services industries increased by about 270 000 from May 2014 to May 2015. The industries that had the largest increases in employment were professional, scientific and technical services (100 000) and health care and social assistance (just under 70 000). Over the same period, employment in non-services industries fell by about 40 000 (including a fall of more than 30 000 in mining employment) (ABS 2015g).
Figure 3.2 Services industries’ gross value added and employment
2013-14, ranked by gross value addeda
a Tourism is ‘direct tourism’ as defined in the ABS’s Tourism Satellite Account. Other services includes: a broad range of personal services; religious, civic, professional, and other interest group services; selected repair and maintenance activities; and private households employing staff. Financial services includes insurance. Education includes training. Ownership of dwellings is not included as part of rental, hiring and real estate services. In general, these industries — as defined in the Australian and New Zealand Standard Industrial Classification (2006) — do not align with the six sectors referred to in the terms of reference to this study (section 3.4).
Sources: ABS (2014a, 2014b, 2015g).
People employed in services industries are more likely to have a bachelor’s degree or higher than those employed in other industries (figure 3.3). In 2011, almost 20 per cent of the services workforce had a bachelor’s degree or higher, compared to less than 8 per cent of employees in other industries (although people working in services industries were less likely to have a certificate-level qualification) (Productivity Commission estimates based on ABS (2011)).
0 2 4 6 8 10 12 14
Financial services Professional, scientific and technical services Health care and social assistance Public administration and safety Transport, postal and warehousing Education Retail trade Wholesale trade Administrative and support services Information, media and telecommunications Electricity, gas, water and waste services Tourism Rental, hiring and real estate services Accommodation and food services Other services Arts and recreation services
Per cent of Australian total Employment Gross value added
The education levels of people employed in the services workforce varies widely across industries. For example, while almost 20 per cent of the total services workforce had a bachelor’s degree or higher (in 2011), the proportion of employed people with a bachelor’s degree or higher ranges from less than 8 per cent in accommodation and food services to one third in education (figure 3.3).
Figure 3.3 Percentage of employed people with a degreea
By services industry, 2011
a A degree is defined as a bachelor’s degree or higher. Non-services industries are mining, manufacturing, construction, and agriculture, forestry and fishing. Averages are weighted for the size of each industry.
Financial services includes insurance. Education includes training.
Source: Productivity Commission estimates based on ABS (2011).
The differences between services industries suggest that there are different ‘types’ of services industries, such as those that are:
• relatively labour-intensive, and have a highly qualified workforce, such as education, health care and social assistance, and professional, scientific and technical services
• relatively labour-intensive, and have a less qualified workforce, such as accommodation and food services, and retail trade
0 5 10 15 20 25 30 35
Education Professional, scientific and technical services Financial services Health care and social assistance Information media and telecommunications Public administration and safety Arts and recreation services Electricity, gas, water and waste services Wholesale trade Administrative and support services Rental, hiring and real estate services Retail trade Transport, postal and warehousing Accommodation and food services Other services
Per cent Average all services
industries Average
non-services industries
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relatively capital-intensive, such as electricity, gas, water and waste services, and financial services.
These between-industry differences are also apparent in productivity estimates (box 3.1).
For example, over the past two decades multifactor productivity in the financial services industry is estimated to have increased by just over 40 per cent, while multifactor productivity in the rental, hiring and real estate services industry is estimated to have decreased by more than 40 per cent.
Box 3.1 Productivity growth has varied between services industries
Productivity is the efficiency with which firms, organisations, industries, and the economy as a whole, convert labour, capital and raw materials into output. Multifactor productivity measures the growth in value added output per unit of labour and capital input used. According to ABS estimates, multifactor productivity growth has varied widely between Australian services industries over the past two decades (see figure below).
The calculation of multifactor productivity typically requires independent measures of inputs and output. For Australia, this can only be done for 16 industries, which the ABS terms the ‘market sector’. For industries such as health care and education where independent measures of output are not available — the value of output is estimated as the sum of the cost of inputs — the ABS does not calculate multifactor productivity (Gordon, Zhao and Gretton 2015).
Estimating productivity for the tourism sector is complex, as tourism includes many different industries that provide tourism goods and services to visitors (PC 2015a). Tourism Research Australia estimated that multifactor productivity for the tourism sector (including only market sector industries) increased by 5 per cent between 1998-99 and 2012-13 (TRA 2014).
Change in multifactor productivity in services industries, 1994-95 to 2013-14 ABS estimates
Note: Gross value added, quality adjusted hours worked basis.
Source: ABS (2014c).
-50 -40 -30 -20 -10 0 10 20 30 40 50 Rental, hiring and real estate services
Electricity, gas, water and waste services
Administrative and support services Other services Arts and recreation services Information, media and telecommunications Professional, scientific and technical services Transport, postal and warehousing Accommodation and food services Retail trade Wholesale trade Financial services
Percentage change
Market sector