Last Thursday’s ‘mixed bag’ labour market numbers make interesting reading in light of the latest exporter confidence numbers from the DHL Export Barometer. Unemployment is not rising as fast as market economists expected, even when employment numbers fell slightly. The missing picture in the puzzle could be exporters and the unique role they play in the Australian labour market as employers.
According to the DHL Export Barometer, exporters are hanging on to their workers in the global financial crisis. Why? Because exporters, on average, pay higher wages and invest in education and training (invest in ‘human capital’) more than non-exporters, and they don’t want to fire their workers now only to have to re-hire them back during recovery, when a tight labour market means a ‘war on talent’. So exporters retain their workers instead of laying them off. In fact, according to the survey, 55 percent of exporters are maintaining employment levels, and 34 percent said they would employ more workers in the coming 12 months.
This is a classic case of what the famous America economist Walter Oi meant when he spoke of labour as a “quasi-fixed factor of production”. Because of the investment that exporters, as employers, have made in their staff, they hang onto them, provide more training, and look at ways to increase productivity and improve customer service (often in new markets). This enables exporters to have highly-skilled people on board, when the ‘green shoots’ (or in the case of China, ‘bamboo shoots’) initiate economic recovery. And as the Barometer shows, many new exporters are seeking niche markets in emerging economies in Asia, the Middle East and Latin America, and, therefore, need top-class people to win deals and forge stronger trade and investment ties.
Thursday’s data shows that in the worst global economic crisis in 70 years, exporters are ‘the rock’ of the Australian labour market providing an important foundation against rising unemployment and leading the way forward to economic recovery.
Tim Harcourt is Chief Economist of the Australian Trade Commission (Austrade) and the author of THE AIRPORT ECONOMIST www.theairporteconomist.com