This article is prefaced with the backdrop of a question. Is Australia or New Zealand that different from the employment trends of the USA? The salaries displayed are US based salaries.
The data below has been sourced from the Visual Capitalist, highlights the changes occurring in employment data, and projects what this could look like 10 years into the future. Above the line are the growing jobs sectors. Below the line are the job sectors that a shrinking.
The employment landscape is constantly shifting. The shift from agricultural jobs that played a big role in the 19th century, to a large portion of jobs now being administration, sales, or transportation. Will that remain the case in the future? We would argue that Australia is not too dissimilar from a historical perspective to the current day. Accordingly, the likelihood that the next 10 years is aligned between Australia and US is high. If anything, the USA will likely front run Australia, rather than lag.
Notably alternative energy is expected to continue to grow, which is not unexpected. As the world’s government and corporates move to a net zero carbon footprint both solar and wind are likely to be significant pieces in the puzzle.
Data and automation will continue to grow strongly, which in turn supports the need for information and data security. Any job sectors that manualise the growing process of automation, including data and word processing, call centres and telephony services, and a significant structural change in the banking and finance sector with tellers, all predicted to decline.
Courtesy of COVID-19 health, nursing, medical services, and therapists will remain in demand. The ageing population has been a key driver of the medical and pharmaceutical industries’ growth and development, living longer than we did when Otto von Bismarck introduced the world’s first old age social insurance program (pension system) in 1889.
Some job sectors will grow, some will decline, some don’t exist yet, and some are already no longer around. As the infographic says the USA expects jobs growth to be 7.7% over the period 2020 to 2030. The focus of those jobs will change as technology improves and removes the requirements for some current tasks.
How does this inform us when reviewing a managed fund? This provides one insight into what fund managers consider when making investment decisions. Typically fund managers make decisions based on the next 3-5 years. Looking at where employment will trend provides some insights into where capital may flow, which can highlight value traps. After all, jobs growth is linked to the need for capital investment to support revenue growth. The change in jobs growth can also highlight where efficiencies or structural changes are occurring and can improve profit growth. In the case of tellers, the move to online banking sees a reduced need for people to man branches. This brings service efficiencies and reduced labour costs.
Importantly, this is one factor in a world of many factors that can be used to understand where capital is potentially going to flow, which can lead to investment performance. This shouldn’t be used in isolation as there are no guarantees investment capital will flow and lead to sustainable performance.
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Photo credit: The Fastest Growing Jobs Over the Next Decade (visualcapitalist.com), CNBC / Getty images
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