Concerned with ways to characterise economic vulnerability in labour market regions (including metropolitan regions) that are susceptible to structural economic change, the authors look at five indicators of economic vulnerability which were developed to rank regions from the most to the least vulnerable. These are: the change in average hours worked; the change in total hours worked; the change in the working-age population; a simple index of industry change; and a measure of labour market turbulence within a region. The authors also looked at a number of government initiatives established to assist industries and individuals in economically vulnerable regions. They found that the manufacturing and retail industries tended to dominate in the most vulnerable regions, although some vulnerable regions did not have clearly dominant industries. In contrast, mining and construction feature in the least vulnerable regions.
About the research
This paper focuses on one aspect of disadvantage in regions, namely, economic vulnerability, using a series of simple indicators of labour market change over a ten-year period, 2002—12. This time period is sufficient to capture change in the labour market. For the purposes of this paper, regions refer to the Australian Bureau of Statistics (ABS) statistical regions.
We are ultimately interested in indicators of vulnerability, as they provide information on where and what type of assistance might be provided. Of relevance to the vocational education and training (VET) sector, this assistance will generally involve some level of training and retraining. As such, the paper also highlights initiatives that have been put in place to assist industries and individuals in the most economically vulnerable regions, noting that there is a dearth of robust information on their impact.
Five indicators were used to determine the economic vulnerability of regions: the change in the average hours worked per region; the change in the total hours worked in each region; the extent of population change in a region; a simple index of structural or industry shift within a region across two time periods; and an index of turbulence within a region; that is, the extent to which people move from employment to unemployment, and from unemployment to employment. To further inform the discussion, the three most dominant industries in a region in 2012 were derived, based on the total number of hours worked in the various industries for any given region. In addition, the change in average hours worked between 2002 and 2012 was calculated for the dominant industries in each region.
- The manufacturing, health care and social assistance, and retail industries tend to dominate in the more economically vulnerable regions. On the other hand, mining and construction feature strongly in the least economically vulnerable regions, even though the cyclical nature of these industries can be seen as a challenge.
- Some vulnerable regions do not have clearly dominant industries but instead a broader mix of industries.
- The impacts of structural economic changes are broad and sustained and tend to affect all employment in the region.
- Training efforts need to be tailored to the needs of the region and, where an industry is in decline, may involve the retraining of workers and/or training and other assistance for the unemployed. These efforts can also assist in increasing labour mobility in these regions.
- The various assistance packages available in many of the more vulnerable regions were focused on improving employment in the region. However, there is very little evaluative data available on these packages by which to assess their success or otherwise, so their impact is not clear.
Managing Director, NCVER