Construction is Australia’s Largest Importing Industry

What products are imported by Construction?

 

 

The previous post on products used in Construction was based on the ABS supply-use table, which do not include imported products. However, the ABS input-output tables that the supply-use tables are based on have data on imports of product groups by industry groups, in the same matrix of 115 product groups by 64 industry groups. 

 

This post looks at the latest release of the input-output tables for 2022-23 for the four Construction industry groups of Residential building, Non-residential building, Heavy and civil engineering, and Construction services (the trades). The four industry groups are combined to get shares of total use of products by Construction.

 

The post first looks at imports by the Construction industry groups, and compares their shares of total imports to some other industry groups. The major products imported by Construction in 2022-23 are identified and the Construction share of those imports discussed. 

 

Comparing the share of imports over time is difficult, but there are a couple of measures that can be used. The ABS calculates Primary input content per $100 of final use by industry. Primary inputs are Imports, Compensation of employees, taxes and subsidies, and Gross operating surplus. This estimate includes the initial increase plus the direct and indirect effects. Another estimate from the share of imports in Total intermediate use of products uses the value of imports as a percent of the value of products produced in Australia and used in Construction.  

 

Construction accounts for 80 to 90% of imports of timber and wood products. A 2022 research report for the industry association Forest and Wood Products Australia analysed the demand for sawn softwood timber to 2050 and meeting that demand. The report’s data on imports is discussed.

 

Product Imports by Construction

 

When the four Construction industry groups are combined, their share of total imports in 2022-23 was 17.2%. This makes Construction by far the largest importing industry in Australia.

 

 

Table 1. Imports by Construction industry groups 2022-23

 

In 2022-23 the industry group that had the largest share of total imports was Construction services, at 9.6% it had more than twice the share of the next largest industry group of Road transport’s 3.7%, and three times the share of total imports of many other product groups. 

 

 

 

Table 2. Imports by industry groups 2022-23

 

 

 

Construction has very large shares of some product imports. In particular, for Sawmill and Other wood products the shares are 80 and 90% respectively. For Ceramic products, the Construction share  is 91%. There are several other product groups where Construction is 40 to 50% of imports, such as Iron and steel, Structural and Fabricated metal products, and Electrical equipment. There is a very high import share of 73% for Domestic appliances.

 

Table 3. Major products imported by Construction 2022-23

 

 

Comparison of 2022-23 Import Shares with 2012-13

 

Comparing the share of imports over time is difficult because the input-output tables are in current dollars and not adjusted for inflation. An accurate estimate requires not just local prices each year for each product, but also global prices for traded products and their cost in Australia including customs, insurance and freight. This data is not readily available. There are, however, a couple of measures that can be used

 

Each year the ABS calculates a figure for Primary input content per $100 of final use by industry. Primary inputs are Imports, Compensation of employees, taxes and subsidies, and Gross operating surplus. Final use is the total demand for a product. This estimate includes the initial increase plus the direct and indirect effects of an increase in an industry’s output as demand increases. Because it includes these second and third round multiplier effects it is not a measure of industry output.

 

It does, however, allow a comparison between years of the role of imports in Construction for the four industry groups, and since 2012-13 there has been an increase for all groups. Table 4 shows Non-residential building has had the largest increase of 4.5% since 2012-13. As an aside, in 2022-23, the average of the four Construction industry groups in Table 4 is 18.2%, close to Construction’s 17.2% share of total imports in Table 1.

 

Table 4. Import content of final use in Construction

 

 

Another approach is to use the share of imports in Total intermediate use of products, which is the value of imports as a percent of the value of products produced in Australia and used in Construction.  This is in Table 5, which shows the same trend as table 4, with increases in the import share for the four Construction industry groups, although in this case the largest increase is in Residential building. For Total construction the increase of 2% is equivalent to a 20% increase in imports.

 

Table 5. Imports percent of Australia products used in Construction

 

 

Figure 1. Imports Used in Construction

 

 

 

The increases in imports by the Construction industry groups in Tables 4 and 5 are reflected in the increases in the Construction share of imports of most of the major product groups, in Table 6. This generally reflects the decline of Australian manufacturing, as with Electrical equipment and Domestic appliances, but the increased imports of Sawmill and Wood products is due to demand outstripping local supply. Since 2012-13 there have been some declines, in Petroleum and coal products and Structural metal products for example, but for the majority of products there were increases.

 

Table 6. Major products, percent imported by Construction

 

 

 

Sawn Softwood Imports

 

A 2022 report for Forest and Wood Products Australia, an industry association, was on the Future Market Dynamics and Potential Impacts on Australian Timber Imports.  The report focused on the demand for sawn softwood timber and the challenges in meeting that demand. There is some data on imports and forecasts out to 2050 for demand, local supply and imported timber products. Demand for sawn softwood is primarily driven by the Australian housing industry. In 2002, the proportion of locally produced sawn softwood used for framing and structural purposes in Australian houses was 66.2%, but in 2021 the proportion had fallen to 50.4%. Sawn softwood production peaked at 3.746 million m3 in 2017-18, before the 2019 bushfires affected output.

 

The report argues global sawn softwood production has increased at 1.06% per year over the last 25 years and per capita production of sawn softwood has been falling. There is international competition for timber resources, limiting availability for Australian imports. In 2020-21, local production was 3.619 million m³ while demand was 4.566 million m³, and the gap between sawn softwood demand and local production is expected to widen because local sawn softwood annual production is static at 3.6 to 3.8 million m³. ​

 

Figure 2. Timber imports 2005-2021

 

 

The existing softwood plantation estate has not expanded significantly since the early 1990s, and was 1.028 million hectares in 2020. Projected average annual demand for sawn softwood from 2046 to 2050 is 6.5 million m³, with local production limited to 3.6 to 3.8 million m³ the projected gap is 2.6 million m³ by 2050, or 40.5% of total demand. 

 

The report finds Australia's timber imports would need to triple to meet the implied gap. However, global production and imports have been declining, making it unlikely they can fully meet Australian demand in the future, because there will be a significant increase by 2050 due to population growth. Up to 468,000 more hectares of softwood plantations would be needed to meet that demand.

 

 

Figure 3. Sawn Softwood Demand, Local Production and Implied Gap 2021–2050

 

Conclusion

 

It is not widely recognised that, of all Australian industries, Construction is by far the largest importer of products. Combining the four Construction industry groups of Residential building (3.3%), Non-residential building (2.3%), Heavy and civil engineering (2.1%) and Construction services (9.6%), Total Construction imports were 17.2% of total imports by value in 2022-23. The industry group with the largest share of products imported into Australia is Construction services, at 9.6% of total imports it is more than twice the second largest Road transport, with 3.7%.

 

Construction has very large shares of some product imports. For Sawmill and Other wood products the shares are 80 and 90% respectively, for Ceramic products, the share  is 91%, and for Domestic appliances imports are 73% of the value of products used.

 

The ABS calculates the import share for Construction of Primary inputs per $100 of final use by industry group. For Residential building this was 19.7%, for Non-residential building 20.2%, for Heavy and civil engineering 14.4% and for Construction services 18.5%. Since 2012-13 the import share of final inputs has increased by 4.5% for Non-residential building and by 1 to 2% for the other groups.

 

Another estimate is the share of imports in Total intermediate use of products, which is the value of imports as a percent of the value of products produced in Australia and used in Construction.  This has the same trend since 2012-13 as Primary inputs per $100, with increases in the import share for the four Construction industry groups, although in this case the largest increase was 3% in Residential building. For Total construction the increase of 2% is equivalent to a 20% increase in imports.

 

The significant role of imported products in Australian construction is not widely recognised, and has not been included in any of the recent reports on the industry. There could be two reasons for this lack of attention. The first is simple acceptance that manufacturing in Australia is too expensive, and lower cost imports have won market share. Closely allied to that is the idea of lack of scale, because the domestic market is too small to support globally competitive factories. There are other contributing factors like energy costs, which could be among the lowest in the world if most of our natural gas was available to local industry instead of being exported by foreign multinationals, or if sufficient solar energy had been built over the last decade. 

 

A second reason could be reluctance to highlight the lack of investment in capacity by Australian business and fund managers. This is most obvious in softwood plantations, where despite growing demand, the area planted in 2020 was the same as in 2000, while imports of sawn softwood used for framing and structural purposes have increased to over 50% of demand. A report for Forest and Wood Products Australia finds Australia's imports of sawn softwood would need to triple to 2.062 million m³ a year to meet projected demand. However, global production has been declining, making it unlikely imports can meet that demand.

 

The decline in Australian manufacturing is reflected in the increase in imported products used in Construction. While there are many reasons for this decline, fundamentally it is because of the strength of the Australian dollar from the high value of mining and resource exports. This is known as ‘Dutch disease’, after the hollowing out of Dutch manufacturing and agriculture after the 1959 discovery of the North Sea oil and gas fields led to an increase in gas exports that boosted the currency and made other exports uncompetitive. This has been the experience of Australia over the last couple of decades, as the boom in iron ore, coal and gas exports has reduced the competitiveness of other exports and import-competing industries.

 

 

 

 

Sources of Products Used in Australian Construction

Changes in product shares suggest an increase in prefabrication

 

The Australian Bureau of Statistics publishes a set of supply-use tables every year. These are the ‘building blocks’ of gross domestic product, measured as gross value added for all industries [1]. National accounts estimates are benchmarked to the supply-use tables to maintain consistency within the system from year to year. Although the data goes back to 1994-95, the first publication of supply-use tables by the ABS was for 2016-17. 

The ABS explains the supply table shows the total supply of products from domestic and foreign producers, and the use table the amount of a product purchased by each industry as an intermediate input into the industry’s production process. These products are valued at purchasers’ prices, meaning that taxes, transport costs, and wholesale and retail trade margins are included in the total. A row in the table represents a product group and a column represents an industry group. 

There are 68 industry groups. Construction is divided into four industry groups: Residential building, Non-residential building, Heavy and civil engineering, and Construction services (the trades). There are 115 product groups, however, many have little or no use by construction. Because many product are used, no single group has a significant share of the total, with the exception of Construction services. Examples of product groups with zero use are Aircraft manufacturing, Water and Gas supply, Education, Library, and Social care services. Examples of very low use (under 1% of the total) are Dairy products, Wholesale and Retail trade, Sports, and Personal services. 

 The data in this post is from the use table. It first breaks down the shares of each of the Construction industry groups in total Construction and then their share of use of Construction services. This within industry supply is explained. The post next identifies the seven major product groups currently used in construction, using the most recent data for 2022-23, and details the major product groups in manufacturing and services. In these tables the four industry groups have been combined to get shares of total use of products by Construction. 

The post then looks at changes in the use of products, comparing the 2016-17, 2019-20 and 2022-23 data. Use table values are in current dollars, and the historical data is not adjusted for inflation. Therefore, the analysis uses the percentage shares of the industry and product groups in total construction, rather than the dollar values.

Structure of the Construction Industry

Table 1 shows the total use of products by the four industry groups, with Construction services accounting for 51% of the total value of products used. These shares are broadly in line with the shares of work done in 2022-23. 

Table 1. Value of use of products by Construction industry groups 2022-23

However, Construction services is also the largest single source of products for all Construction industry groups, because Construction services provide many intermediate inputs to a large number of tasks and processes, and the value of that input includes the wages and salaries of more than three quarters of a million workers employed in Construction services. As Table 2 shows, Construction services supplied 41% of the products used in construction, and between 35 and 50% of all intermediate inputs, including 41% to itself.  

Table 2. Construction services share of products used 2022-23

Intermediate Supply of Inputs in Construction

 Many industries are not just end producers but also consumers of their own output. In a supply-use table, when an industry supplies products to itself some of its output is being used internally, within the industry, as an intermediate input to produce more goods or services. This is easy to see with vertical integration, where different stages of production occur within the same firm, for example a steel manufacturer produces raw steel and uses it to make finished steel products, or a chemicals manufacturer uses its own basic products to make more complex ones [2]. 

In construction, a contractor may do demolition, steel fabrication or precast concrete inhouse, or directly employ trades like carpenters, electricians or form workers. Many large firms use a hybrid model, self-performing selected core tasks while subcontracting specialised work. Contractors will often supply many of the materials and components used in a project, even if placed or fixed by a subcontractor, and the value of those items is included in their industry group not Construction services. 

Subcontractors self-supply when they provide their own materials, tools, equipment, and expertise rather than relying on the head contractor. For example, a plumbing subcontractor can bring their own pipes, fittings, and fixtures, or a tiling subcontractor can supply tiles, grout, and adhesives. Subcontractors can use their own machinery and tools, and they self-supply skilled labour. Sometimes they provide design-build services like HVAC systems, custom cabinetry or engineered steel framing.

 The stages of a construction project are all intermediate inputs, from site preparation through structural work and concreting, followed by trades like electrical, plumbing, HVAC, roofing, and painting. Thus there is a large element of self-supply in construction, because contractors supply many of the materials and equipment used and the widespread use of subcontracting and pyramid contracting for specialised trades. This is why Construction services supply 41% of the services and products used within construction. 

 Current Data for 2022-23

 The seven largest categories of products and services used by the construction industry totalled $115.3 billion in value in 2022-23, over a quarter of total use value. These were: 

• Professional, scientific and technical Services, with $33 billion;
• Manufactured wood products (including sawmill products) with $22.4 billion;
• Structural metal products was third at $16.2 billion;
• Iron and steel manufacturing was $13.7 billion;
• Polymer products were $12.4 billion ;
• Electrical equipment was $11.6 billion; and
• Cement/lime/ready-mixed concrete was $11.4 billion 

The following tables have the percent share of product groups that accounted for over 45% of construction’s total use of products in that year. Adding Construction services share of 41%, this is over 85% of the goods and services used in construction. To get a clearer perspective of the importance of the products used in construction, the following tables have two columns, one showing product shares of total construction and the other their shares of the total when Construction services 41% share is excluded. 

Manufactured Inputs

Manufacturing product groups add up to 32% of the total, excluding food and beverages. Table 3 has the major manufacturing product groups supplying 1% or more to Construction, accounting for over 27% of the total and 45% of the adjusted total. After Construction services, these twelve manufacturing products make up the largest group of inputs to construction. 

Table 3. Manufacturing product groups with 1% or more use in total Construction

Services Inputs

 Table 4 has the eleven major service product groups. These contribute nearly 19% of the total, or 32% excluding Construction services. Finance includes banks, Regulatory services include regulation, licensing and inspection activities, Rental and Hiring Services (except Real Estate) includes motor vehicles and transport equipment, and hiring, leasing or renting heavy machinery and scaffolding without operators [3]. Computer systems design and related services is included in the table to emphasise the low level of expenditure on these services. Also of note is the high value and share of Public administration and regulatory services. 

Table 4. Service product groups

Industry Input Shares Since 2017

 Data from the three use tables for 2016-17, 2019-20 and 2022-23 are compared. Table 5 has the industry group shares of total construction in those years.

Table 5. Share of Construction industry groups in total

Table 6 has the share of Construction services in the inputs to the industry groups. This shows a gradual change in the structure of the industry, as the share of Construction services in total Construction declined by 2.7% between 2016-17 and 2022-23.

Table 6. Construction services share of products in Industry groups

 The share in total Construction of the major manufacturing product groups increased by 1.4% between 2016-17. However, as table 7 shows, there were some manufacturing products with a decreased share, like Cement, Plaster and Other wood products, some were stable, like Petroleum and coal and Polymer products, while the others like Sawmill products and Electrical equipment had increases. The big changes in shares were increases in Iron and steel, Structural metal and Other fabricated metal products, which strongly suggests there has been an increase in prefabrication and offsite manufacturing in construction. 

 Table 7. Manufacturing product groups percent of total construction

The was also an increase in the share of the eleven major services product groups. Again, there is a mixture, with decreases in Finance, Public administration and regulation and Non-residential property services and rental and hiring, some unchanged like Auxiliary finance and insurance and Computer systems design, and some with increases like Professional, scientific and technical services, Building cleaning, pest control other support, and Automotive repair and maintenance. 

 Table 8. Services product groups percent of total construction

Between 2016-17 and 2922-23 there was a decline in Construction services’ share of products used, from 44.1% to 41.4%, matched by a similar small and gradual increase in the shares of the major manufactured products from 25.8% to 27.3% and of services products from 18.3% to 18.9%. Although these shifts of one or two percent are too small to indicate serious structural change, they do suggest the industry is continuing to evolve and substitute offsite manufacture and design work for some of the onsite work done by subcontractors. 

Figure 1. Changes in product groups used in Construction

Source: ABS 5217, Table 2. 

 

Conclusion

The supply-use tables from the ABS provide granular detail on the flow of goods and services between industries. The use table shows the amount of a product purchased by each industry as an intermediate input into the industry’s production process. There are 68 industry groups and 115 product groups in the table. The most recent data is for 2022-23. Construction is divided into four product groups and four industry groups.

The shares of the four Construction industry groups in the $444bn total of products used by Construction in 2022-23 was: Residential building 21%, Non-residential building 20%, Heavy and civil engineering 10%, and Construction services (the trades) 50%. A distinctive feature of Construction is the within industry supply of 41% of products used from Construction services. When an industry supplies products to itself, some of its output is being used as an intermediate input to produce more goods or services. 

 Contractors will often supply many of the materials and components used in a project, even if placed or fixed by a subcontractor, and the value of those items is included in their industry group not Construction services. Subcontractors self-supply when they provide their own materials, tools, equipment, and expertise rather than relying on the head contractor. Therefore, there is a large element of self-supply in construction, because contractors supply many of the materials and equipment used and the extent of subcontracting.

In this analysis the four industry groups have been combined to get shares of total use of products by construction. After Construction services, the seven major product groups currently used in construction accounted for another 26% of all products. The largest product or service used was Professional, scientific and technical services ($33bn), followed by Wood products ($22bn), Structural metal ($16bn) and Iron and steel products ($14bn).  The other three were Polymer products, Electrical equipment and Cement/lime/ready-mixed concrete, all around $12bn. These seven largest categories accounted for accounted for 26% of total inputs to construction activity. 

More broadly, the twelve major manufactured product groups were 27.2% of all use, and the eleven major service product groups were 18.9% of all products used. Looking at changes in the percentage shares of product groups in total construction, comparing the 2016-17, 2019-20 and 2022-23 use tables, there was a decline in Construction services’ share of products used, from 44.1% to 41.4%, matched by small increases in the shares of the major manufactured and services products, from 25.8% to 27.3% and from 18.3% to 18.9% respectively. 

 The big changes in product shares between 2016-17 and 2022-23 were increases in Professional, scientific and technical services, Iron and steel, Structural metal and Other fabricated metal products. These changes in product shares strongly suggest there has been an increase in prefabrication and the industry is continuing to substitute offsite manufacture and design work for onsite work done by subcontractors.

                                                             *

 [1] This is the production approach to measuring GDP, as the sum of gross value added by all  industries. This is the difference between an industry’s cost of inputs and its value of output. The supply-use tables align the income, expenditure and production approaches used to measure GDP.  

[2] Measuring industry self-supply accurately is important for understanding productivity, cost structures, and value-added in the national accounts.

 [3] These definitions are from the Australian and New Zealand Standard Industrial Classification (ANZSIC). 

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Recent Research on AI Effects on Employment and Work

 AI scenarios range from apocalypse to slow and gradual adoption

 

There has been and currently is a lot of discussion on the effects of artificial intelligence (AI) on employment. Across that research there is a wide range of views on the timing and extent of those effects, from a looming jobs apocalypse with high unemployment to slow and gradual adoption with low unemployment. The picture is clouded by tech firms self-serving promotion of AI solutions and the attention given to the possibility of an out-of-control unaligned AI killing everyone, or turning them into paperclips. 

 

A few examples will suffice. According to Goldman Sachs Research on How Will AI Affect the Global Workforce? in August 2025,  AI is unlikely to lead to a large increase in unemployment ‘because technological change tends to boost demand for workers in new occupations’, creates new jobs, and increases output and demand. They estimate unemployment will increase by half a percentage point during the AI transition period as displaced workers seek new positions and, if current AI use cases were expanded across the economy, 2.5% of US employment would be at risk of related job loss. So far, they believe the ‘vast majority of companies have not incorporated AI into regular workflows and the low adoption rate is limiting labour market effects.’ 

 

Massachusetts Institute of Technology professor Daron Acemoglu, who has written extensively on technology and work, believes only 5% of all jobs will be taken over, or at least heavily aided, by AI over the next decade. However, the World Economic Forum’s Future of Jobs Report 2025 estimates that, by 2030, new job creation and job displacement will be a ‘combined total of 22% of today’s total (formal) jobs.’ Their jobs outlook is based on the macrotrends of technology, economic uncertainty, demographics, and the energy transition, of which ‘AI and information processing technologies are expected to have the biggest impact – with 86% of respondents expecting these technologies to transform their business by 2030.’

 

On the threat of extinction, in April 2025 the AI Futures Project, a credible non-profit research group, released their AI 2027 scenario, when AI systems ‘become good enough to dramatically accelerate their research’ and start building their own superintelligent AI systems. Without human understanding of what’s happening, the system develops misaligned goals: ‘Previous AIs would lie to humans, but they weren’t systematically plotting to gain power over the humans.’ The superintelligent AI will manipulate humans and rapidly industrialise by manufacturing robots: ‘Once a sufficient number of robots have been built, the AI releases a bioweapon, killing all humans. Then, it continues the industrialization, and launches Von Neumann probes to colonize space.’ 

 

In September the US think tank RAND published a research paper on the potential for the proliferation of robotic embodiment of superintelligent AI called Averting a Robot Catastrophe, arguing for ‘the urgent need to proactively address this issue now rather than waiting until the technologies are fully deployed to ensure responsible governance and risk management.’ Another 2025 RAND paper on The Extinction Risk From AIconcluded ‘Although we could not show in any of our scenarios that AI could definitely create an extinction threat to humanity, we could not rule out the possibility… resources dedicated to extinction risk mitigation are most useful if they also contribute to mitigating global catastrophic risks and improving AI safety in general.’

 

While AI is developing rapidly, and there are examples of AI deception from Anthropic and OpenAI, a cautionary tale is US-based Builder.ai. The company claimed its product, an AI bot called Natasha, could help customers build software six times faster and 70% cheaper than humans. In 2023 it was ranked third by tech industry magazine Fast Company behind OpenAI and Google’s DeepMind in its innovative AI companies list, and was valued at $US1.5 billion. Builder.ai collapsed in May: ‘Alongside old-fashioned start-up dishonesty with dramatically overstating its revenue, allegations arose that the work of its Natasha neural network was actually the work of 700 human programmers in India.’ This is reminiscent of Elon Musk’s Optimus robots being remote controlled in a 2024 demonstration. 

 

Although it is still too early to say what the effect of AI on employment will be, there has been some useful recent research on the effect of AI on jobs and work, particularly in the US. This post surveys some of the research released over the last few months. 

 

Australian Research

 

The Productivity Commission’s August 2025 Harnessing Data and Digital Technology report said: ‘The economic potential of AI is clear, and we are still in the early stages of its development and adoption… multifactor productivity gains above 2.3% are likely over the next decade, though there is considerable uncertainty. This would translate into about 4.3% labour productivity  growth over the same period.’ The Commission argued data underpins growth and value in the digital economy. And a ‘mature data-sharing regime could add up to $10 billion to Australia’s annual economic output. Experience shows that we need a flexible approach to facilitating data access across the economy.’ In another report for the Economic Reform Roundtable on skills and employment, the Commission recommended improving education and training systems.

 

Grattan institute researchers Trent Wiltshire and Hui-Ling Chan’s September 2025 article AI is Coming: Prepare for the Worst argues ‘in the event of significant disruption, the federal government may need to consider how Australia’s safety net and retraining systems’, with better preparation and scenario planning for Australia for the possibility AI will cause mass unemployment. They suggest changes to income support should be considered, such as lifetime learning accounts, unemployment insurance (a time-limited payment linked to a person’s previous income widely used in Europe), easier access to superannuation when unemployed. They also recommend Denmark’s ‘flexicurity’ system where it is easy to retrench workers but there is a safety net that includes up to two years unemployment insurance, and education, retraining, and support programs. About 25% of Denmark’s private industry workers change jobs each year, and 67% of workers are union members. 

 

A June 2025 PwC AI jobs barometer ‘looked at close to a billion job adverts from 24 countries and 80 sectors to understand how the demand for workers is shifting in relation to AI adoption. The global study found that AI is making workers more valuable, not less. Industries most able to use AI have seen productivity growth nearly quadruple since 2022 and are seeing three times higher growth in revenue generated per employee. Jobs numbers and wages are also growing in virtually every AI-exposed occupation, with AI-skilled workers commanding a 56% wage premium, on average.’

 

The PwC survey found the Australian industry effect of AI was a surge in demand for AI skills in the overall jobs market, nearly doubling from 12,000 postings in 2020 to 23,000 in 2021. Since then there have been 23,000 postings a year, although this was only 1.8% of total job postings in 2024. As Figure 1 below from the report shows, Finance and Insurance was the leading industry, but there has been rapid growth in Construction industry AI job postings.

 

Figure 1. Job postings

 

Source: PwC

 

 

RBA Survey of Australian Businesses

 

The Reserve Bank Governor Michele Bullock gave a speech on September 3^rd which included results of an RBA survey of businesses about AI, robotics and technology adoption. Although not about employment, the speech had the Figure below from the RBA survey of businesses about technology adoption, with the striking finding that 80% of firms expect to be using AI in the next three years, up from 25% today. This is probably due to the RBA survey population being skewed toward larger firms. 

 

Figure 2. Australian businesses’ technology adoption

Source: RBA

 

In her speech she said: ‘ Firms mainly expect these tools to augment labour, automating repetitive tasks and redesigning the composition of roles. Firms thought they may initially see an increase in their headcount as they design and embed new technologies, though this may be followed by a small decline as they mature in their adoption of new technologies. Lower skilled roles may decline, while demand for higher skilled roles is expected to grow, continuing (and perhaps even fast-tracking) a decades-long trend away from routine manual work. While AI may eventually automate even some higher skilled tasks, firms tell us that it is too early to fully understand what this means for their workforce beyond the next few years. Some roles may change and the demand for different or new skills may in turn increase.’

 

US Research

 

An August 2025 paper by Eckhardt and Goldschlag called AI and Jobs: The Final Word (Until the Next One),found no detectable effect of AI on recent US employment trends using five measures of job exposure to AI. For three of their five measures there was no detectable difference in unemployment between the more exposed and the less exposed workers, and only a small difference, of 0.2 or 0.3 of a percentage point for two measures. They say ‘One pattern is clear in the data: highly exposed workers are doing better in the labor market than less exposed workers. Workers more exposed to AI are better paid, more likely to have Bachelor’s or graduate degrees, and less likely to be unemployed than less exposed workers.’

 

Their conclusion was that AI isn’t taking jobs yet, or the effect is very small. Figure 3 has their unemployment rate of workers with varying degrees of predicted AI exposure (1 is the least exposed, 5 is the most exposed), where there is no correlation between t AI exposure and unemployment.

 

Figure 3. Unemployment rate by AI exposure quintile

 

Source: Eckhardt and Goldschlag 2025.

 

In their Appendix they used US Census Bureau data, which in August had 9% of surveyed firms using AI, up from 5% a year and a half earlier, although 27% of firms in the information sector said they were using AI. The Appendix had the Figure below, showing Construction having one of the lowest levels of AI usage.

 

Figure 4. Percent of businesses using AI

 

Source: Eckhardt and Goldschlag 2025.

 

 

The next word on AI and Jobs came in a paper from the Stanford Digital Economy Lab by Brynjolfsson, Chandar, and Chen Canaries in the Coal Mine? Six Facts about the Recent Employment Effects of Artificial Intelligence. This paper uses two measures of AI exposure, then compares recent employment trends for more and less exposed workers. Their conclusion is radically different to Eckhardt and Goldschlag. The abstract explains:

 

‘We find that since the widespread adoption of generative AI, early-career workers (ages 22-25) in the most AI-exposed occupations have experienced a 13 percent relative decline in employment even after controlling for firm-level shocks. In contrast, employment for workers in less exposed fields and more experienced workers in the same occupations has remained stable or continued to grow. We also find that adjustments occur primarily through employment rather than compensation. Furthermore, employment declines are concentrated in occupations where AI is more likely to automate, rather than augment, human labor. Our results are robust to alternative explanations, such as excluding technology-related firms and excluding occupations amenable to remote work. These six facts provide early, large-scale evidence consistent with the hypothesis that the AI revolution is beginning to have a significant and disproportionate impact on entry-level workers in the American labor market.’

 

Brynjolfsson et al. found ‘substantial declines in employment for early-career workers (ages 22-25) in occupations most exposed to AI’, such as software developers and customer service representatives. In jobs less exposed to AI, employment growth for young workers was comparable to older workers. Declining employment in AI-exposed jobs is driving ‘tepid overall employment growth for 22- to 25- year-olds as employment for older workers continues to grow.’ It should be noted that Eckhardt and Goldschlag use of three other metrics gives a broader perspective. Figure 5 shows growth in employment between October 2022 and July 2025 by age and GPT-4 based AI exposure where quintile 1 is least exposed and 5 the most exposed [1]. 

 

Figure 5. AI exposure group growth in employment.

 

Source: Brynjolfsson et al. 2025

 

 

Is AI a Complement or Substitute?

 

The different conclusions from this US research by throws into sharp relief what is, at this point, the core issue: is AI a substitute for workers, particularly skilled workers, or a complement? In other words, is AI replacing workers in some occupations, or is it being used as a tool to enhance productivity and pefomance? 

 

If AI is a substitute for workers, wages and employment fall, and because AI is substituting for human cognition, businesses will replace expensive humans with a skill or experience premium that is no longer valuable, probably older workers. On the other hand, if AI is a complement, wages and employment increase, and businesses will recruit humans with skill or experience, probably older workers.

 

What Figure 5 above shows is that young workers saw reductions in AI-exposed jobs, but for the other age groups it was positive. In particular, employment for older workers in AI-exposed jobs increased. Eckhardt and Goldschlag also found workers exposed to AI are doing better in the labour market than less exposed workers. This strongly suggests AI is a complement not a substitute. AI complements human skills and augments productivity of workers with the necessary skills and experience, so these people with tacit knowledge not available to an AI are the ones firms are employing. 

 

What About Construction?

 

The US Bureau of Labor Statistics (BLS) 2025 Occupational Outlook Handbook covers 600 occupations [2]. Based on that, the Employment Projections program develops US labour market estimates for 10 years in the future, based on the assumption that labour productivity and technological progress will be in line with historical experience which shows ‘technology impacts occupations, but that these changes tend to be gradual, not sudden. Occupations involve complex combinations of tasks, and even when technology advances rapidly, it can take time for employers and workers to figure out how to incorporate new technology.’ Because technological developments over the next 10 years are ‘impossible to predict with precision,’ new projections are released annually. Figure 6 has Construction employment growing at 4.4% to 2034.

 

Figure 6. US labour market 

 

Source: BLS Employment Projections, August 2025. 

 

In the BLS sector specific projections for the Infrastructure sector by 2030: ‘new job roles are expected to be created for Big Data Specialists and Organizational Development Specialists... Twenty-seven percent of employees in the sector are anticipated to be able to upskill in their current roles, with an additional 17% projected to be reskilled and redeployed. Almost 70% of respondents expect reskilling and upskilling to improve talent retention and enhance competitiveness and productivity of their company, with 50% planning to increase talent mobility through training programmes.’

 

An article in the February 2025 BLS Monthly Labor Review on Incorporating AI impacts in BLS employment projections: occupational case studies argued ‘GenAI can support many tasks involved in architecture and engineering occupations, potentially increasing worker productivity.‘ Their technical expertise and existing regulatory requirements create uncertainty about the extent and employment impact of AI adoption, and underlying demand is expected to remain strong, resulting in US employment growth of 6.8% for architects and engineers.

 

AI Development and Diffusion

 

An April 2025 paper by Arvind Narayanan and Sayash Kapoor from Princeton University’s Center for Information Technology Policy was called AI as Normal technology: An alternative to the vision of AI as a potential superintelligence. They view ‘AI as a tool that we can and should remain in control of,’ and argue this does not require drastic policy interventions. They do not think viewing AI as a humanlike intelligence is ‘currently accurate or useful for understanding its societal impacts.’ 

 

Their lengthy and sometimes digressive paper is based on the idea of a normal technology, where sudden economic impacts are implausible because ‘Innovation and diffusion happen in a feedback loop… With past general-purpose technologies such as electricity, computers, and the internet, the respective feedback loops unfolded over several decades, and we should expect the same to happen with AI.’ They dismiss catastrophic AI because it ‘relies on dubious assumptions about how technology is deployed in the real world. Long before a system would be granted access to consequential decisions, it would need to demonstrate reliable performance in less critical contexts.’

 

Narayanan and Kapoor’s ‘AI as normal technology is a worldview that stands in contrast to the worldview of AI as impending superintelligence.’ They don’t believe progress in generative AI is as fast as claimed, nor that AI diffusion will be much different to electricity or computers, because diffusion ‘occurs over decades, not years.’ This is very different to what they call the utopian and dystopian worldviews of AI, both based on the idea of superintelligence but with opposite consequences. Because the idea of immanent take-off superintelligence is so prevalent in the discussion about AI, as either the solution to many problems or as an extinction event, the suggestion that AI might just be the latest in a long series of powerful general purpose technologies and develop over time in a historically familiar way is both radical and unusual.

 

There is support for this slow adoption and diffusion view from the McKinsey 2025 State of AI report, which is somewhat ironic as McKinsey is one of the biggest boosters of corporate use of AI. Published in March 2025 but based on a mid-2024 survey sample of 1,491, it  found 75% of respondents using AI in at least one business function but only 1% ‘described their gen AI rollouts as mature.’ The survey showed a quarter of large organisations and 12% of smaller ones had an AI roadmap, 52% of large organisations but only 23% of small ones had a dedicated team to drive AI use, and only 28% and 23% respectively had effectively embedded gen AI into business processes. In McKinsey’s sample, 92% of companies plan to increase their AI investment over the next three years. However, that sample will not in any way be representative of most businesses. 

 

Figure 7. AI deployment

 

Source: McKinsey 2025 State of AI report, 42% of respondents  work for organizations with annual revenue over $500 million.

 

Chat GPT was launched in November 2022 by OpenAI. When GPT-4 was released in March 2023, AI went from being unreliable and error prone to being able to synthesise, summarise and interpret data. In August 2005 GPT-5 was released, which again improved performance but not by as much as the previous upgrades, so progress in AI models might be slowing down. The latest models still require supervision and checking of results. 

 

Conclusion

 

There are very many possible futures that could unfold over the next few decades as technologies like AI, automation and robotics develop. However, the key technology is intelligent machines operating in a connected but parallel digital world with varying degrees of autonomy. AI agents will be trained to use data in specific but limited ways, interacting with each other and working with humans. The tools, techniques and data sets needed for machine learning are becoming more accessible for experiment and model building, and as well as the cloud-based large language models like Gemini and ChatGPT, new AI systems like small language models and agentic AI are now appearing. 

 

So far, in many cases these technologies are not a substitute human labour. Generative design software does not replace architects or engineers, automated plan reading does not replace estimators, and optimization of logistics or maintenance by AI does not replace mechanics. Nevertheless, there is an immediate and important need for politicians and policy-makers to increase the urgency and attention given to the effects of AI on employment. Governments have to integrate AI literacy into school curriculums, provide learning subsidies for retraining, and ensure access to technology. 

 

The BLS employment projections show employment declines concentrated in occupations where AI is more likely to automate rather than augment human labour. The industries most affected are mining, retail, manufacturing and employment by government. For construction, between 2024 and 2035 in the US, the projection is for an increase of 4.4%, and for architects and engineers and increase of 6.8% in employment. How representative that is for other counties is impossible to know, but AI use in the US is probably more advanced than in most places.

 

Current employment data from the US shows that employment is steady or increasing for older workers with skills and experience, even in jobs that have high exposure to AI, although for younger workers with less experience there has been an increase in unemployment. At present, AI is affecting entry-level jobs but there are few wider employment effects, and the limited evidence suggests AI complements human skills and augments the productivity of workers with tacit knowledge not available to an AI. 

 

The picture is mixed. Surveys of companies, like the ones from the World Economic Forum, the RBA and McKinsey, report strong interest in AI and a high level of investment planned for the next few years. The share of job postings requiring AI skills is small but increasing. At the same time, employment in AI exposed jobs in the US is rising, not falling, with little or no difference in current unemployment levels between more exposed and less exposed workers. However, research shows  unemployment among 20 to 30 year old tech workers has risen. 

 

There are some other signs of AI effects in the US, with BLS data showing employment growth in marketing, graphic design, office administration, and telephone call centres in 2025 below trend, with reduced demand for workers attributed to AI-related efficiency gains. In Australia there are similar reports, like the use of chatbots by Origin Energy, insurer Suncorp, and banks cutting jobs (announced this week were 3,500 by ANZ and 400 by NAB). 

 

None of this data is conclusive. Survey results are primarily from large firms, micro and small size firms are missing, and surveys do not accurately capture most of the medium size ones. Employment and unemployment data is a lagging indicator that is variable and often revised over the following months, does not include many casual workers, and misses all informal workers completely. Many companies will retrain or relocate workers displaced by AI. The online jobs databases researchers use to estimate AI employment effects are a subset of the overall labour market, and they can only be partially representative of current conditions at best.   

 

On present trends and performance, more extreme AI scenarios are not plausible, such as AI superintelligence delivering annual economic growth of 20%, as a breakthrough problem solving, research and innovation bonanza, as a jobs apocalypse, or as an extinction event. Whether that means AI is a ‘normal’ general purpose technology that will take a few decades to become widely used across industries and the economy is not obvious. According to OpenAI, in mid-2025, ChatGPT had about 800 million weekly active users and 122-130 million daily active users, and 10 million paying users, including 92% of US Fortune 500 companies (N.B. these numbers are from a query on the OpenAI Research website). 

 

Another indicator is downloads of AI models. ChatGPT is averaging 45 million a month, and according to Wikipedia by ‘January 2023, ChatGPT had become the fastest-growing consumer software application in history, gaining over 100 million users in two months. As of May 2025, ChatGPT's website is among the 5 most visited websites.’ That level of uptake is a lot faster than the decades taken for previous technologies like electricity, the internal combustion engine or the internet to become widely used. This reinforces survey findings that many people use AI, including at work, but AI adoption by companies remains low, especially for small and medium size ones, and the great majority of companies have not incorporated AI into their workflows.

 

There are two key points that emerge from, what is at present, an unclear picture of the next decade. The first is that AI automates tasks not jobs, so jobs with structured workflows doing routine and repetitive tasks will be quickly and heavily affected. Examples are administration and data compilation, document processing, customer support, data management, note taking and drafting reports. Employers will do this because it is cost effective and relatively straightforward to train an AI agent for a specific task if the data is available. 

 

The second is the value of tacit knowledge and experience. One example is trade skills and tasks, where some can be automated but some will not, because of the  physical demands of the work. Construction trades will be one of the occupations least affected by AI. Another more pertinent example is in health, where AI assisted diagnostics require oversight by a knowledgeable human. For skilled workers like architects and engineers, using AI requires a high level of knowledge gained through learning by doing in the person responsible for supervision and checking the AI output, and AI could increase demand for these workers. The assumption is that some insight into how the AI works is required.

 

Ethan Mollick’s 2024 book Co-Intelligence outlined how humans can work with an AI chatbot as a co-worker, correcting its errors, checking its work, co-developing ideas, and guiding it in the right direction. This is a widely held view of the way AI will be used. However, in September 2025 he  wrote: ‘I have come to believe that co-intelligence is still important but that the nature of AI is starting to point in a different direction. We're moving from partners to audience, from collaboration to conjuring.’ Mollick suggests the newest most powerful AI models like GPT-5 Pro have ‘impressive output, opaque process’ and ‘for an increasing range of complex tasks, you get an amazing and sophisticated output in response to a vague request, but you have no part in the process….Magic gets done.’ 

 

In the twentieth century, the electrification of workplaces took several decades, well into the 1930s, as organisations restructured around the new technology, relocating and redesigning factories, creating new jobs and developing new products. Now, a hundred years later, AI is having the same effects, but it will not take decades for the restructuring of organisations and the jobs they provide. While the future is uncertain, within a decade AI will probably have become as ubiquitous as electricity and the internet, something we use all the time without thinking about where it comes from or how it works. 

 

                                                            *

 

[1] Eckhardt and Goldschlag, and Brynjolfsson  et al., use a metric based on queries to the Occupational Information Network (O*NET), an online database with hundreds of job definitions, using ChatGPT, developed by Felton, E., M. Raj and R. Seamans in Occupational, industry, and geographic exposure to artificial intelligence, Strategic Management Journal. It was also used by Eloundou, T., S. Manning, P. Mishkin, and D. Rock. 2023. GPTs are GPTs: Labor market impact potential of LLMs, arXiv. 

 

[2] The BLS 2025 Occupational Outlook Handbook includes information on about 600 detailed occupations in over 300 occupational profiles, covering about 4 out of 5 jobs in the US economy. Each profile features 2024–34 projections, along with assessments of the job outlook, work activities, wages, education and training requirements.

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