This paper marks the launch of a new series, Productivity in the service sector, looking at individual service industries. The series aims to explore the characteristics that differentiate service industries, how particular industries are performing, and factors playing a role in their productivity performance. There are several reasons the Commission has chosen to report on the factors that affect productivity improvement in the service sector, and to do so industry by industry.
- The service sector constitutes the bulk of Australia’s economy, contributing 79 per cent of value added and 88 per cent of employment.
- The rise of the service sector over the past 70 years, and the associated displacement of manufacturing as a share of economic activity, has raised fears of worsening labour market conditions, slower wage growth and slower productivity growth. Such fears are misplaced.
- However, some parts of the service sector (particularly labour-intensive and face-to-face services) have experienced persistently low growth in productivity and capital investment.