RDP 9401: Resource Flows to the Traded Goods Sector 5. Allocation of Employment

To obtain a more comprehensive picture of the allocation of resources to the traded goods sector, the sectoral allocation of investment is augmented by that for total employment.^[33] Of interest is the extent to which the switch towards the traded goods sector, in particular export oriented industries, evident in the allocation of investment is also evident for employment. Using the same method outlined in Section 3, and disaggregated labour force data, employment is allocated to each industry according to whether it is traded or non-traded. Data are for the period 1978/89 to 1992/93.

Figure 9 shows the proportion of total employment in the traded goods sector.^[34] This share is relatively small and reflects, on average, a greater capital intensity of industries in the traded goods sector compared with those of the non-traded goods sector. Furthermore, it has fallen steadily throughout the period, in contrast to the corresponding share of investment. The fall has occurred because virtually all the growth in the level of employment over the past decade has arisen in the non-traded goods sector. Moreover, it reflects the net exit of major employers from the traded goods sector in recent years.

In fact, as shown in Figure 10, the fall in the share of total employment in the traded goods sector has been driven by the declining share of employment in import competing industries; a decline accelerated by the net exit of employers in these industries.^[35] As a result, the share of total employment in exportable industries has increased slightly. A similar although more pronounced result is found for the manufacturing division (see Figure 11). These results corroborate the evidence of a switch in the allocation of investment away from import competing industries.

Footnotes

While investment is a flow, employment is a stock. Nonetheless, flows of human resources can be inferred from changes in the stock. [33]

In this section, only shares of total employment are considered and not levels. In general, an increase in a sector's share of total employment implies an increase in the level of employment in that sector because total employment has grown. [34]

In Figure 11, the sharp decline in the share of employment in import competing industries is driven by changes in the classification of basic iron and steel and printing and allied industries. Between 1989/90 and 1990/91, a significant share of the domestic production of basic iron and steel moved from competing with imports to being exported. Furthermore, between 1989/90 and 1990/91, the printing and allied trades group moved from the import competing subsector to the non-traded sector. [35]