Where will Morrison’s ‘1.25 million’ new jobs go exactly?

Yesterday, Scott Morrison committed to “see” 1.25 million jobs created over the next five years. If successful, that will represent one of Australia’s biggest ever foreign aid programs, because tens — perhaps hundreds — of thousands of those jobs will go to foreign workers in service occupations in health and social care. 

How do we know? Well, we know where these jobs are unlikely to come from. The hitherto buoyant business investment environment in Australia, it’s becoming clear, began deflating in the final quarter of 2018 — the victim of the replacement of Malcolm Turnbull with Morrison, the harm of persistent wage stagnation finally becoming apparent, the Sydney and Melbourne housing price moderation, a slowing global economy, Trump’s idiocy and sharemarket gyrations. The closely watched monthly survey of business conditions and confidence from the National Australia Bank this week showed the conditions index falling under its long-term average for the first time in three years.

In particular, the prospect of an interest rate cut has gone from being a marginal one to being an almost even-money bet this year. Next Tuesday’s Reserve Bank board meeting statement from governor Philip Lowe will be carefully scrutinised — as will Lowe’s first major speech of the year the next day, and the bank’s first Statement On Monetary Policy, with new economic forecasts, the following Friday. 

And one of the biggest sources of jobs growth during the most recent jobs boom, under Turnbull and Morrison in 2017, was in construction. Don’t look to construction as a big source of the next jobs boom. The sector actually contracted slightly in 2018 after growing around 8% in 2017. Construction is most likely facing a downturn that will extend for much of the period Morrison is talking about.

Where does that leave us? With government spending — although bear in mind the government plans to go from a mildly stimulatory fiscal policy to a neutral and then fiscally contractionary policy over the next five years, and, if anything, Labor would be even more contractionary if it wins government. But it is government spending in education and health that provided the two largest sources of jobs growth in the most recent jobs boom (and why those sectors had the highest wages growth, and why the government can rightly boast about its strong record on female participation).

Health and social care will almost certainly continue to play the role of the jobs workhorse with the continuing rollout of the NDIS and the expansion of the residential aged care sector. Hospitals haven’t driven the rise in health sector employment — that’s come in “medical and other health care services”, which grew by 4.3% in 2018 alone. That sort of growth will mean an additional 20,000-plus jobs needed, year in and year out.

The smaller residential care services sector had even faster growth — 5% in 2018 alone. That’ll be an extra 12,500 jobs a year, please, and with an aged care royal commission likely to uncover widespread cost-cutting, don’t expect that rate of expansion to drop.

The government also says that all 1.25 million jobs will be full-time. That will be literally impossible — around 40% of “medical and other health care services” jobs are part-time; more than half of residential care jobs are part-time.

And expect between one-third and 40% of such jobs to go to foreign workers. According to a Department of Health study in 2016, the overall level of migrants in the residential care workforce was around a third but in 2016 the number of migrants hired had increased to 40% — usually in the lower-paid, lower-skilled “Personal Care Attendant” category. The Productivity Commission in 2017 warned that migrant workers would be important to meeting workforce needs in the disability sector.

This is all great news for migrant workers in the health and care sectors, even if these are not high-paying jobs. Looking after the needs of aging and disabled Australians will be a major source of employment for migrants, both temporary and permanent, in coming years. Morrison’s plan is a kind of Marshall Plan for service industry workers in developing countries.