Australian export winners are also leading job creators

Why always talk about exports, exports and exports? Because they mean jobs, job, jobs. Australia has one of the strongest economies in the OECD, in terms of job creation – and our commitment to trade liberalisation has been a key factor in this success.

Being open to trade – both exports and imports – has improved the competiveness and dynamism of the Australian economy and we can now better respond to external shocks in markets beyond our shores. This was really borne out during the GFC and its aftermath. In fact, Australia’s unemployment rate of just over 5.4% is now one of the lowest in the industrialised world.

According to a recent report by the Centre for International Economics, one in five Australian jobs is trade related, and one in seven jobs can be directly related to exports.
And there are good solid microeconomic foundations for our macroeconomic success. The behaviour of exporters as model employers provides important leadership in the Australian labour market when times are tough.

For instance, research by the June 2010 DHL Export Barometer shows that ‘heartland’ or ‘regular’ exporters kept their workers in employment when the GFC hit and instead adjusted shift and working hours. The surveys showed that most exporters believed that despite the poor headlines in the North Atlantic economics, the strength in Asia and the emerging markets of Latin America, the Middle East and Africa would keep them going.

Our exporters were well diversified in terms of markets and had solid employment policies that enabled them to keep people in work until demand rose again. As a result, the ‘V’ shaped recovery in East Asia and the emerging economies that have occurred enabled exporters to now expand again (without having to re-hire all their workers back again).

Exporters knew that the costs associated with ‘firing and re-hiring’ were greater than keeping their employment numbers steady and adjusting hours of work and other arrangements. This kept employment high, unemployment low and thereby helped to maintain confidence in the rest of the economy (in both the traded and non-traded sectors).

In fact, you can see how this all worked out to Australia’s benefit when you look at the export award winners themselves.

Firstly, in terms of employment, exporters are a key positive influence. Our 12 export winners employ 13,627 workers across Australia and the globe. They are represented by employers both large and small, from Xstrata Mount Isa Mines with 3,400 workers on the payroll to a small niche business Epichem which employs just 15 employees but sells drug discovery products to 18 countries from their WA base.

Regional exporters like Kelly Engineering also play a crucial role as employers in regional South Australia. Kelly Engineering has been manufacturing farm equipment in SA for over 20 years, and now exports 98% of its product.

The winners reflect the role that exporters play in providing jobs – that are good jobs at good wages. Austrade research shows that, on average, exporters pay 60% higher wages than non-exporters, and also provide better working conditions in terms of occupational health and safety, access to education and training and equal employment opportunity. On average, exporters invest more in their workers through education and training than other employers, which raises average levels of productivity and profitability and therefore leads to better wages.

Secondly, in terms of geographic diversity, our export winners are spread out well. When you look at the honours list, a company like Sedgman, a Queensland based provider of construction, engineering and mining consultancy services is truly global, spread across markets as far flung as Mozambique and South Africa on the African continent to Mongolia in Asia and Colombia and Chile in Latin America.

Similarly, in the ICT division, software services company Atlassian sells all over the Americas, while WA based Navitas, which developed the university pathway concept, sells to over 14 countries in the Asia Pacific, reflecting the importance of Australia’s $18 billion export education industry.

Thirdly, in terms of industry diversity. Our export winners come from Australia’s traditional areas of “rocks and crops” agriculture and resources – like Swift Australia and Xstrata – to providers and services and equipment to extractive industries – like Kelly Engineering and Sedgeman.

We have large manufacturers like Matrix Composites & Engineering from WA and small- and medium-sized manufacturers like Future Fibre Technologies from Victoria. We have innovative companies that provide important knowledge and services across various industry lines like Pivot Maritime International in Tassie or clever niche players like Laservision doing their bit for the creative industries.

We have players that have been in the game for 20 years like Kelly engineering, or rookies like NSW’s Ansarada, which provides virtual data rooms and has won the emerging exporter of the year as a first time entrant. Large and small, new and seasoned, urban and regional, Australia’s exporter community covers a range of industries both traditional and up and coming.

The Australian exporter community – which is well represented by our 12 winners – kept Australians in jobs when the going got tough. We saw this happen in the Asian financial crisis of 1997-99 and more recently with the GFC.

Now we have many challenges, from business competitiveness issues, to environmental challenges and demographic influences (as the baby boomers retire can generation X become generation export and the generation Y follow as the global generation?).

But one thing’s for sure, whatever the challenges thrown at us, keeping Australians in employment by raising productivity and living standards is a key goal for the whole community, and as shown in recent times, when it comes to creating jobs, exporters really are the leaders of the pack.

Tim Harcourt is Chief Economist with the Australian Trade Commission.