Australian Manufacturing How We can Bring Jobs Back Down Under

Time to Bring Manufacturing Back to Australia

The Covid-19 pandemic is still developing and its effects are still being felt across the world. On one hand, it is continuing to infect and take the lives of more and more people each day and on the other hand it is causing catastrophic damage to the global economy.

Australia has been fortunate in the sense that it has been able to keep the spread of virus to a minimum level, this has been possible because of the isolated geography of Australia but credit must also be given to the government for proactive policies. However, the situation on the economic front has not been that good.

The latest estimates are suggesting that each constituency may have by now lost up to 11% jobs.

Read More: The Australian Economy in Times of COVID-19: Ideas and Reflections

Australian Manufacturing How We can Bring Jobs Back Down Under

Figure 1

A story published in the guardian cited this research by the Grattan Institute, which said that each constituency in Australia may have lost up to 11% jobs. The map shows constituencies with the highest level of job loss. It can be seen that the southern and western constituencies have been affected the most severely because this is where most of the industries are located.

The Problem with the Australian Economy
Credit David Peterson

The research also stated that most of the job losses have been in the industries that have been globally the worst-hit industries such as the hospitality and the travelling sector.

The reserve bank has advised the government to continue the job keeper program because stopping the program right now would put the people under severe economic stress. The overall unemployment rate in Australia has jumped to 6% and is expected to climb as the pandemic and the economic crisis continues.

This rise in unemployment may exacerbate the problems for the government as the economy is also on a downward trajectory, however there is an opportunity in every crisis and Australia too can utilize the opportunity that this crisis has presented.

The Problem with the Australian Economy

Although the situation is very grim but a silver lining of this pandemic has been that it has exposed the weakness of the Australian economy. The Australian economy is far too dependent on not just China but international trade in General. In the last two decades, the Australian economy has shown a steady growth and before the pandemic struck, the Australian economy had good fundamentals upon which it could continue its future growth.

READ More: What will be the GDP of Australia in 2020

However, the pandemic has exposed a structural weakness of relying too much on international trade. The Australian economy is an open economy and the focus was on developing the trade along the lines of comparative advantage, which is why Australia focused heavily on the exports of raw material and minerals. The only item in the top ten exports of Australia that is a consumer item is the export of beef and dairy products. Apart from this all top exports of Australia comprise of non value-added raw materials.

On the import side Australia imports consumer goods from all over the world. China is obviously the most significant trade partner but apart from China, Australia also imports raw, semi-processed and consumer goods from the rest of the world and because international trade allowed Australian economy and industries to grow at a rapid pace, the need to shift to local production was never felt.

Till the Covid.19 pandemic struck and the Australian hospitals faced a shortage of ventilators and other related medical equipment such as masks and PPE`s and these then had to be imported from China and other countries. It was this over-reliance on China and international trade that made the government realize that now is the time to shift the Australian policy.

Read More: Thе Economy оf Australia

The Solution

Credit David Peterson

Australia now needs to look inside.  The fact that Australian manufacturing was not even developing masks and basic medical equipment shows that there is room for tremendous development and this is once again a silver lining for the government that is battling with the pandemic and the economic crisis. Thousands of people have lost their jobs but the government can now focus on local manufacturing and instead create thousands of jobs and try to reduce the damage to the economy from the pandemic.

Australia should now look to create a balance between import substitution and export promotion. Import substitution policies will help the domestic industries grow but in order to do this the government will need to devise a strategy to systematically build up local industries. The government is already trying to divert resources to manufacture masks, ventilators, PPEs and other basic medical equipment. In a similar manner, the government should identify sectors that are dependent on trade, which should be developed on a priority basis, for instance, medical, bio-health and pharmaceutical sectors should be prioritized as they are linked with public health and the ongoing pandemic.

After this the government should focus on other sectors of strategic importance, to substitute the imports and rely more on local production to satisfy consumer demand and then as a second step in the future, the local industries should be developed to export locally manufactured goods into the international market.


This is a long term strategy and doing so will not only create local jobs but it will also strengthen the economy, improve the balance of trade which has weakened due to the pandemic and add more depth to the economic base.

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Dave Peterson

Dave Peterson Passion for adventure and sharing his life long journey with as many others as possible. "What lies behind us and what lies before us are tiny matters compared to what lies within us." HENRY S. HASKINS

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