Labour market responses critical to regional Australia

The last 15-20 years have witnessed a number of acute changes in the Australian economy, sparked by three major trends; booming resource markets; economic structural change; and an increase in natural disasters.  All of which produce shock waves through the labour market.

The Productivity Commission Inquiry on Geographic Labour Mobility has highlighted that the regional Australia is often the coalface of these labour market adjustments and subsequent economic and social change.

With smaller population sizes, narrow economies and industry bounded by geography, responding to changes in the local and broader economy has often seen people flocking to or from regional areas.

Each individual continuing to migrate across the country in search of employment, plays an important role in enhancing the timely allocation of labour resources across the country.

This is the making of an efficient labour market – low cost to both sides of the market and little social disruption.

Full labour market efficiency, however, is rare. The risks and costs of moving are high and jobs are not the only reason people move or stay where they are. The decision to move is bundled within a complex range of choices about lifestyle, education, money, family and preferences and barriers related to those same issues. Research by the Regional Australia Institute (RAI) suggests that life-satisfaction is in fact the largest indicator that someone is likely to move – up to three times more significant than other factors such as services and jobs.

Clearly, each region will appeal to different people. Therefore, the ability of a region to retain and retract people will vary. Multiply these by a fast growing or quickly receding industry and it is easy to see the difficulties in matching labour supply and demand.

Ensuring each sector of the economy operates as efficiently and effectively as possible means having the right resources available at the right time, the right place and at the right price. It also means not just considering labour efficiency as a neat tradeable commodity but rather something that affects the outcomes of regions, communities and individuals across all of Australia.

Regional Australia should be a primary consideration in examining the full costs and benefits of labour mobility and in examining how the best social and economic outcomes are achieved.

The RAI’s full submission to the Productivity Commissions Inquiry can be downloaded here.