Your new job awaits

posted 26 October 2009

Over the coming decades a combination of the resources boom and the high $AUD are going to radically alter what Australians do for a job. Some industries will thrive, others will wither, but all will be affected. Are you ready?

Our unique position as a resource-rich nation situated in Asia means we are literally the first port of call for China, India and other assorted Asian nations to buy the steel, coal, and assorted minerals to build the layers of infrastructure they need to become developed economies. According to a recent speech by Phil Lowe, the assistant governor of the RBA, Australia’s terms of trade (the difference between our exports and imports) were 50% higher than the average of the 1980s and 90s. In fact the only time terms of trade were better was in the 50s. This extraordinary resource-led growth path has been a big reason behind the rise of the AUD and why it will stay high for a long time yet.

Treasury Secretary Ken Henry recently described Australia’s role in building Asia as introducing “massive structure change” as the big money, and consequently the jobs, begin drifting towards industries and business that benefit from the resources boom and the high AUD. This is bad news, however, if you work in an export-exposed or import-affected business like tourism, production of international goods and services, or local manufacturing competing with cheap imports, as these will contract.

As Ross Gittens pointed out in the Melbourne Age a resource-led economy with a high currency is also in danger of what’s called Dutch Disease. No it’s not something you pick up in Amsterdam. It’s a term first coined by my favourite read The Economist in the late 70s to describe the decline of the Dutch manufacturing sector after they found a massive natural gas field there in 1960. Basically what happened was the oil discovery led to a resources boom, a massive lift in exports and a concurrent appreciation in the national currency. When the oil sales started to slow down it was discovered that large tracts of the Dutch industrial base had been decimated due to its currency being high for so long and so many jobs moved from industry into resources. But fret not, as I don’t see this as a problem because, bar world wars, unforeseen economic catastrophes or visitation by alien life forms intent on our destruction, the resources boom will run for decades, which gives us enough time to build up huge amounts of national wealth and also to see the end coming and prepare ourselves accordingly.

For now, however, you would be wise to take a look around at the growing sectors and avoid the shrinking ones before it’s too late.

In other news… the decline of the USD as global reserve currency has gone up a notch with the announcement that a few of the Arab states along with France, China, Japan and Russia are planning, when dealing with oil, to replace USD with a basket of currencies that include a new, unified currency planned for the Gulf Co-operation Council nations. Stay tuned.