We have suggested several times on our research blog that, as a nation, Australia needs to see more geographic diversity in the labour market. A wider geographic distribution of full time employment opportunities would imply a lessening in demand pressures in capital city housing markets and an improvement in regional demand levels where housing affordability is generally less of an issue.
An analysis of the latest detailed release of labour force data from the Australian Bureau of Statistics shows there has been virtually no change in how the geographic distribution of full time jobs has been divided between the capital city and regional locations of each state. Since 1978 (when the ABS series commences) the proportion of full time employment located in the capital cities has been between 65% and 67%.
Across the states, Victoria shows the highest concentration of full time labour within the capital city (75.5% of full time jobs are located in Melbourne). Western Australia and South Australia aren’t far behind, with 73.4% of full time jobs located within Perth and Adelaide respectively.
Queensland and Tasmania have a much higher level of geographic dispersion in the labour market with 47% of full time jobs in Queensland being located within Brisbane and 43% of Tasmania’s full time work force located in Hobart.
The percentage of jobs within the capital cities are roughly equivalent to the proportion of population residing within the capitals (as would be expected… the population is going to be most concentrated where the jobs are and vise versa).
While the capital cities are always going to the economic and financial centres of the country, a focus on jobs creation outside of the capitals needs to be long term strategy. There are a lot of challenges that need to be overcome in order for jobs to spread outside the capitals; arguably a high speed transport network (or the lack thereof) is the most obvious one, but there needs to be a lot of other infrastructure such as health care and educational facilities.
As we pointed out in a previous blog, most of Australia’s largest companies insist on being headquartered in a capital city. In contrast, in the USA many of the most significant US based corporations are located in some of the smaller cities. A good example is Omaha, Nebraska which accounts for just 0.3% of US population and is home to 5 of the top 500 companies in the US.
We need to see more leadership from the Federal and State governments in establishing regional labour markets by locating Government departments outside the capital cities and creating the infrastructure framework required to lure private business away from the traditional business centres.