Why does employment structure change

As a country begins to develop an industrial base there is an increase in the secondary sector. An increase in machinery on farms means fewer people are needed. People tend to migrate to urban areas to get jobs in factories. When a country becomes more economically developed there is a greater demand for services such as education, healthcare and tourism.

Therefore the tertiary sector undergoes growth. By this time computers, machinery and robots replace people in the secondary sector hence the decrease in secondary jobs. It has a low proportion of people working in the primary industry. This is partly because of mechanisation. Machinery has taken over jobs in the primary sector. Also, as primary resources have become exhausted e.

The number of people employed in the secondary sector is falling. This is because fewer people are needed to work in factories as robots are taking over jobs.

The tertiary sector is the main growth area. Most people work in hospitals, schools, offices and financial services. Also, as people have more free time and become wealthier there is a greater demand for leisure services. Therefore more jobs become available in the tertiary sector. Brazil is a MIC medium income country. The administrative and support services industry had the second largest increase, with an average annual increase of 7.

The 13 industries in Hong Kong can also be divided into the inflow and outflow sectors. The inflow sector comprises eight industries: retail, accommodation, catering, information and communication, finance, construction, professional science and technology services and administrative and support services. The outflow sector comprises five industries: manufacturing, import and export trade, wholesale, transportation, storage and courier services and real estate.

The Deap2. Figure 3. Employment structure in Hong Kong from to The results for Shenzhen show that the average TFP growth rate of the outflow sector was 7. This means that in terms of the change in the employment structure of Shenzhen, labour tended to flow from the high growth industries to the low growth industries.

For several specific industries, such as information transmission, computer services and software, the TFP growth rate and the growth in the proportion of employment show an increasing trend, which also reflects a healthy change in the employment structure in Shenzhen. Except for the real estate industry, all industries had negative TFP growth rates.

Table 1. Average TFP growth rate and growth of the proportion of employment of the various industries in Shenzhen from to Table 2. Average TFP growth rate and growth of the proportion of employment of the various industries in Hong Kong from to Compared with Shenzhen, Hong Kong also shows a trend of labour flowing from the low growth sector to a lower growth sector. Furthermore, the Pearson correlation coefficient was calculated to determine the correlation between the TFP growth rate and growth of the proportion of employment.

The results show a negative correlation between the TFP growth rate and employment growth for both Shenzhen and Hong Kong. At the time, Shenzhen was in the process of changing its employment structure from the primary and secondary industries to the tertiary industry.

As the primary and secondary industries usually have a high TFP growth rate, the negative correlation was more significant. In contrast, as the tertiary industry was the pillar industry in Hong Kong, the TFP growth rates of most industries were low, and there was not much room for TFP growth to decline. Thus, the difference in the correlation coefficients of the two regions is reasonable.

The results for the changes in the labour costs in the inflow and outflow sectors are shown in Table 3. In terms of the average wage, in and , the average wage in the inflow sector was higher than that in the outflow sector, but the annual growth rate of the average wage was slightly lower than that of the outflow sector. However, the situation was different in Hong Kong, with the annual increase in total wages and the average wage in the inflow sector being higher than the corresponding figures in the outflow sector.

Table 3. Wage changes in Shenzhen and Hong Kong. The changes in the wage levels in the two regions reflect their different development stages. The total wage growth and average wage growth in Shenzhen were higher than the corresponding figures for Hong Kong, whereas the average wage growth in the inflow and outflow sectors was similar in the two areas. Moreover, the average wage growth in the outflow sectors was slightly higher, which suggests that Shenzhen was still in a normal phase of development, with the outflow sector not being weakened due to the outflow of labour.

Comparing the two areas, it can be found that the total wages of the inflow sectors in Shenzhen and Hong Kong exceeded the total wages of the outflow sectors, which suggests that the labour costs of the inflow sectors were rising as a result of the increasing number of employees. Specifically, the industry costs increased with the increasing proportion of employment, and the situation in Hong Kong appears to have been more serious.

For example, although the results showed that labour flowed from the low-cost sector to the high-cost sector, it was impossible to determine whether the labour flow led to the higher costs or whether the increased wages led to the labour flow.

Thus, we need to further study the causality. The Granger causality test is used to explain the influence relationship between different variables and determine the interaction relationship according to the order of variables Fu, Based on the previous analysis, we used the average TFP growth rate of the outflow sector, the growth of the proportion of employment in the inflow sector, the total wages growth rate of the inflow sector and the regional GDP growth rate as indicators, and tested the causal relationships between them in order.

First, all of the indicators passed the stability of indicators test. The analyses of the employment growth rate and labour costs growth rate and the labour costs growth rate and economic growth rate showed that lag period 1 was the best choice. The results are shown in Table 4. That is, the changes in the employment structure contributed to the changes in the labour costs of the inflow sector, which ultimately affected regional economic growth.

Table 4. Causality test. Based on the causal relationship between these two variables, the impulse response function of the VAR model can be used to analyse how the result variables respond to the impact of the unit cause variables, and determine the direction and degree of impact between the variables Zheng et al.

Specifically, the model includes the response of the change in the employment structure of the inflow sector to the TFP growth rate in the outflow sector in Shenzhen, the response of the change in the labour costs in the inflow sector to the change in the employment structure of the inflow sector in Hong Kong and the response of economic growth to the change in the labour costs in the inflow sector in Hong Kong.

However, before conducting the VAR analysis, the stability of each index needs to be tested. The results show that the reciprocals of all of the characteristic root modules are in the unit circle, which means the indexes passed the stability test. The results of the VAR model are shown in Figure 4. Among them, the vertical coordinate in the figure represents the degree of the response, the horizontal coordinate represents the number of lag periods, the dotted line represents the confidence interval and the central black curve represents the direction and degree of the impact.

After two periods, it reaches a peak value of 0. This means that the total factor growth rate of the outflow sector had a positive effect on the employment growth rate of the outflow sector, and the first three periods were the most significant. The results also show that the TFP growth rate in the outflow sector increased, which reduced the labour force and made more labour flow to the low growth sector. Compared with Hong Kong, the difference in the growth rates of the industries in Shenzhen is more obvious.

These findings show that the employment growth in the inflow sector had a sustained and far-reaching impact on the. Figure 4. Impulse response function. Essentially, the increase in the proportion of employment in the inflow sector in the previous period led to an increase in the labour costs of this sector in the later period. Specifically, the first two periods show a positive interaction and peak at 0. On the whole, the intensity of the negative impact is higher than that of the positive impact, which indicates that the increased labour costs of the inflow sector hindered economic growth.

A credible explanation is that most of the industries in the inflow sector had low TFP growth rates and the increased labour force initially had a scale effect. However, as the scale effect decreased, the increased labour costs gradually led to a decrease in the output growth rate, and finally slowed the regional economic growth.

The results of the variance decomposition are shown in Figure 5. First, Figure 5 a shows the variance decomposition of the employment structure. Subsequently, almost the same proportion is maintained in each stage, which shows that the improvements in the growth rates of all factors were an important factor in driving the flow of labour. Figure 5 b shows the variance decomposition of the growth in labour costs. Figure 5. Variance decomposition. Figure 5 c shows the decomposition of the variance in economic growth.

This shows that while the increased costs of some industries had a strong impact on economic growth and were an important driving force, they were not a decisive factor. The results are as follows.

Specifically, the labour force flowed from the sector with a high TFP growth rate to the sector with a low TFP growth rate, and the labour costs of the inflow sector increased more than those of the outflow sector.

That is, some industries in Shenzhen, such as the industrial sector, had high TFP growth rates for all factors, a reduced dependence on labour and labour flowing to industries with a low TFP growth rate. In contrast, the labour force in Hong Kong continuously flowed into industries with a low TFP growth rate and increased the labour costs of these industries.

Changes in the employment structure are inevitable during periods of socio-economic development and industrial upgrading. Because China is still transitioning from the industrial stage to the post-industrial stage, the change in the employment structure means that the proportion of primary and secondary industries is declining while the tertiary industry is expanding. The difference in the TFP growth rates between industries promotes the flow of labour to low growth industries and thus increases their labour costs.

Firstly there are limited resources left in the 21 st Century such as coal and iron ore. This is becoming uneconomic to mine for especially in places such as South Wales where decline occurred after the war had ended in This is due to the increase in technology as we have more efficient use of the resources that are already above the ground.

Other sources were used in their place such as eco-friendly ones, i. Within the South of Wales the people employed by the mines decreased from , to a mere over the period of 50 years.

Mechanisation in the s has meant fewer jobs for people as machines can do the same job that many men could. This is especially the case on farms where today, the farm can be run and maintained by a work force of around ten people. Finally another reason for the decrease of employment in primary industry is linked to the absolute change in population.

The UK has a high percentage of people aged and these will more likely work in tertiary industries such as retailing than in primary industries such as farming, as the pay will be the same, but the work load a lot less. Secondary industries have also seen a decline in the amount of people employed within them.

Mechanisation of factories alike mechanisation of farming has lead to fewer jobs within that industry. Machines can do the work of many men and companies only need pay the operator, saving them money and providing more profits. Secondary industries within the UK have a low job status, as the UK is an MEDC and so generally receive lower pay than a tertiary industry such as education or health.

There is also less demand in some secondary industries such as ship building. Around the war time there was great demand for ships to go to war in but now they are rarely built or used as they have little purpose other than fishing.

The government also influences these types of industry by having strict policies on environmental concerns such as pollution and waste from factories. This is one reason why secondary industries within LEDCs have more employment as their governments are concerned with other matters than to care for their environment. This is true for places such as China and Cairo where pollution levels are so bad, people wear masks when they travel to and from work.

As primary industries are shrinking in size, this affects secondary industries as they provide them with raw materials to work with. Pre s, the UK had many products to offer the world but as technology developed in places such as Japan, the UK slowly had less to offer and so many countries do not buy our products.

This means less demand and so companies would likely be created in quaternary industries than secondary. Unlike the other two main employment industries, employment within the tertiary sector is increasing. Larger profits are to be made within this sector without the risk. In farming, a bad year can cause the crop to die and so no profit will be made where as within retailing such as superstores, they make maximum profit year in, year out.

Industries such as tourism and leisure have developed significantly since as people have higher disposable incomes and therefore spend more money within this sector.

As these industries develop, more people will be employed within them to make a profit themselves. Tertiary industries, unlike primary and secondary are useful for part time workers as they do not require full concentration on their job and can bring up children with the spare time they have, this is especially valid for women. There are many part time workers within the UK and in employment terms, two part time works make one full time worker so the tertiary sector is boosted by this part time factor.

The National Health Service is the third biggest employer in the world and as this belongs to the tertiary industry makes up a fair few percentages in the employment structure. Looking towards the future in the UK, quaternary industries will soon develop in strength as the work is very well paid but only a few percentage of employed people possess the required skills.