The built environment encompasses the entirety of the human built world.
The built environment sector is the collection of industries responsible for
producing, managing and maintaining those buildings and structures.
Employment and IVA per Employee
As a sector, the BES accounts for 19 percent of
employment in Australia. Total employment in the BES increased steadily but not
dramatically for a decade, reaching 2.1 million in 2017-18. Over that time, in
the composition of employment across the BES the significant changes have been
the rise in Professional, technical and scientific services from 10 to almost
12 percent (however, the current year estimates are usually revised), and the
fall in manufacturing BES numbers from 9 to under 7 percent.
The significance of BES employment is not just the scale,
nearly one in five employees, but also the distribution. Supply side industries
contribute 63 percent of BES output and 71 percent of employment, due to the
high labour intensity of Construction. The three Construction industries all
have a low value of IVA per employee compared to income per employee,
converting relatively low shares of revenue into value added of 19, 30 and 40
percent respectively. On the other hand, the demand side industries of property
and real estate contribute 26 percent of BES output but have only 16 percent of
employment, and convert 65 percent of income per employee into IVA.
Capital expenditure by firms is their purchases of
buildings, structures, software and machinery, the known as gross fixed capital formation (GFCF), “gross” means the expenditure is
measured without deducting the consumption of fixed capital (the wear and tear
caused by its use in production). GFCF has two types of assets, material and intellectual,
the latter includes mineral exploration; computer software and databases; and
entertainment, literary and artistic originals. In the long run, investment
measured by GFCF determines industry growth rates and their level of labour
productivity.
Over time, annual GFCF becomes the capital stock of an
industry, the quantity of assets used in production, and industries range from
labour intensive to capital intensive. Capital intensity is typically measured
as the ratio of fixed capital to labour, or of assets to revenue in a company’s
accounts. Industries that are capital intensive like cement, water and
sewerage, and real estate require large amounts of capital, and therefore high
levels of GFCF. In the absence of capital stock data at this level, GFCF is an
alternative measure of capital intensity across the BES. When GFCF per employee
is compared to IVA per employee there is a close match, industries with high
IVA per employee also have high expenditure on GFCF per employee.
