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RBA suggests investing in people’s skills

The Reserve Bank has warned that the resources boom will not continue indefinitely and that it was still important for the nation to invest in training and education for its workforce.

RBA deputy governor Dr Philip Lowe said it was important to invest in areas such as manufacturing, higher education and tourism to keep them competitive and to add value in a whole range of industries.

That needed to be done whether the mining boom continued or not, Dr Lowe said in a speech in Melbourne.

Dr Lowe also said that if the mining boom continued, as he believed it would, then Australia would have a high exchange rate and other industries would shrink.

If the boom ended, then the nation would need other industries to prosper, he said.

“The world is hungry for our energy and iron ore. I don’t see that fundamentally changing, but there is a risk it could,” Dr Lowe said.

“I just don’t know what the future holds and we need to be able to respond to that as a country.

“High value-added human capital (the skills and abilities of workers) is incredibly important because if I am wrong about China and India’s growth, then the exchange rate has to adjust and we are better off with good human capital to do that adjusting.”

He also said the boom in mining investment was not benefiting the rest of the economy as much as the RBA expected, with much of the mining industry’s needs being met through imports.

“The strong growth in aggregate demand that we have seen has, at least to date, not boosted domestic production in the same way that might have occurred in the past,” he said.

A current threat to the boom was the reported risk that debt-laden Greece will leave the euro zone, which Dr Lowe said could trigger falls in confidence.

If the RBA’s expectations for growth in the mining sector were realised, a large proportion of new jobs created in the next few years would be in sectors related to the booming mining industry, Dr Lowe said.

“It would not be surprising if, over the next few years, growth in mining-related employment, broadly defined, was as high as half of the total growth in the Australian workforce,” Dr Lowe said.

He said calculations based on Australian Bureau of Statistics data showed that the resources sector accounted for about 16 to 17 per cent of Australia’s gross domestic product (GDP).

The figure includes mining as well flow-on effects to other industries, such as construction and manufacturing.

Mining-related employment accounted for about 8 per cent of the total Australia workforce, with two additional jobs in related sectors for every one person directly employed in mining and resource processing.

Dr Lowe said the mining sector output was growing about 12 per cent a year.

Reinvent Your Career would like to thank Yahoo! Finance where this article first appeared.

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