Outsourcing Jobs: Rethinking Australia

Alright, I'll throw a cat amongst the pigeons.

Outsourcing, jobs going offshore - Its happenings all around the world and Australia is not immune. Australia has relatively high wages and the quality of products being produced by emerging industrials are making their services look increasingly attractive.

Putting aside protectionist notions of closing our eyes and hum loudly, what should Australia be moving towards in this globalised market? Holden's teeters on the brink, saying (another) bailout is need to keep the cars flowing, meanwhile cutting more jobs and transitioning (once again) to a single shift, with decreased production expectations.

In a sense mining has been our bandaid for the time being, pushing more into our economy whilst providing a relatively small number of jobs, but what happens then?

I struggle to think of how Australia can maintain and increase its standard of living in the coming decades under this global market. The only way I can see Australia succeeding is through innovation and R&D, designing products and services which are then produced offshore. This is happening now, but we still will be shedding a vast number of jobs over the next few decades.

Perhaps we will have to endure the painful experience for 30 or so years until the likes of India and China mature to a level where there wages make domestic production and services competitive. China is already transitioning jobs outside its borders due to escalating wages, with it eyeing South East Asia and Africa.

Or maybe I'm thinking about this wrong? Germany too has a high standard of living, whilst being a major industrial. This is arguable mainly from the high levels of innovation within the country.

So what have you Somersoft? I've had my spiel, now lets hear yours.

Where do we go from here?
 
We need to focus on what we're good at and what we've got the resources for.

Mining is an obvious one, but that can't last forever.

Australia is the least sparcely populated country on the earth. We're good at agriculture. This should be one area where we focus. With some dedicated effort, Australia could be one of the major food suppliers for the planet.

Inovation and education is another area where we've excelled in the past.

Medicine. We've got one of the best health systems in the world (although it's still far from ideal). This can be capitalised on.
 
Australia is sparsely populated because the continent is arid or semi-arid over most of its area, has old infertile soils and a salt load in those soils. It's not just a case of turning the rivers inland and irrigating the mighty interior, if you did that you'd deplete the remaining nutrients in a few short years and raise salt scalds. I've heard this 'Australia as the food bowl of Asia' story spruiked before and it doesn't stack up.

I do agree though that our future loks bleak at present as mining isn't going to keep us going and we do need to come up with a plan for the future. I too have thought it over often and can't come up with any viable answers.
 
I asked this exact same question during a full day forum, about exporting, with a university Import/Export lecturer who does significant government outsourcing in (mainly) China.

I was concerned that Australia - once the boom was over - would become nothing more than a tourist mecca and country-wide hospital for medical proceedures ... both bought about because of lower wages and dollar because we are no longer a "powerhouse" in economic terms.

His reply was exactly this:

The only way I can see Australia succeeding is through innovation and R&D, designing products and services which are then produced offshore.

Almost word for word. We have to become like Germany. A country of innovators and entreprenural inventors ... but we also have to be very careful to keep "possession" of those innovations.

Right now there is no incentive to keep ownership of innovations within Australia - we just sell to the highest international bidder. Which is the right of the owner - why should they not make a buck? - but our mindset must change or we will end up another Thailand.

We also need to look at innovations that are not labour intensive. A plastics manufacturing firm I was shown around last week are competitive with Asia because most of their production was machined ... and where they did require labour, the quality of their specialise products were far superior to what is coming out of China, so price wasn't as relevant.

I guess that means - where do the average people work? In service, as they currently do, I guess.
 
Last edited:
Lizzy

Excellent piece. Do you mind if I send this to someone who is currently looking at the outsourcing/insourcing issue at a government level. This sums things up perfectly.
 
I agree with the comments above. Agriculture: No, land not suited.

We need to focus on our strengths, resources, fuel and energy. Innovation and R&D into technologies that would replace fossil fuels. There is plenty of room for research in renewable energy technology. And we have lots of land and sun to develop solar and other sources of energy. Work is already been done but we still aren't world leaders in this. Australia should increase funding in research in these area and patent the new technology.

Medical research is another area where we can excel, combined with the higher education and research in that area.

Another area which holds great potential and room for improvement going into future is communications and IT.

Australia needs to start investing in technologies and resources of the future now if we want to end up with a suitable replacement when we run out of mining resources.
 
IMO,
Australia is going to be in very bad shape...I'll give it 10 years max
Wages are too high.

It will be another recession..not sure if it will be as bad as USA
 
wages are high compared to what?

Sorry, I refer to minimum wages.
I compare to North America.

Everything here seems to be double the minimum wage..or more of North America.

Only my opinion.
When regular waged tourists come here from North America, they do find prices extremely high.
 
At least we don't have to rely on tips, no medical assistance and living in a box trailer ... all while fully employed.

True.
But most here on SS probably make more than minimum wage.(I assume)


Canada has the same medical coverage as Australia.
Someone earning minimum wage couldn't afford to rent and live by themself in a trailer.
They would be renting a apartment.
 
Sorry, I refer to minimum wages.
I compare to North America.

Everything here seems to be double the minimum wage..or more of North America.

Only my opinion.
When regular waged tourists come here from North America, they do find prices extremely high.

but our transport costs are higher.

and our real estate.

and our taxes.

and our cost to borrow.

and our food.

and we have a GST.

and....
 
but our transport costs are higher.

and our real estate.

and our taxes.

and our cost to borrow.

and our food.

and we have a GST.

and....

Transport is higher partly because of higher wages.
Our fuel costs basically the same as Australia.

Prices vary in real estate. We have similar prices too, in some pockets of the country.


Taxes. We pay property taxes every year, not so much upfront.On one house that is assessed at $141k, we pay $2400 each year...and it goes up every year.
Income taxes run about the same.


Costs may be higher to borrow, but you earn more when saving.It would work out the same. We also don't have NG.

Your food is similar in price to a lot of ours. Milk is cheaper here.
Sales are available everywhere, if you look.

We have HST..which means 15% is added onto almost everything.

We have to spend a lot to heat homes in winter.Not too many places here have the temperature go down to -20cel for weeks on end...at $1.00 litre for heating oil.
 
a collapse in wages would equal an asset-deflationary environment.

considering the amount of printing going on worldwide, i cant see that happening.

what i see is stagflation - wages not going anywhere and prices rising.

eventually we will have third-world purchasing power, or lack thereof.
 
Back
Top