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Productivity growth over the historical period was 9.0 per cent per year.
The base case forecasts imply continued strong productivity growth, with
communications employment falling at an annual rate of 2.9 per cent.
Part of this fall can be attributed to the assumption of strong primaryfactor
saving technical change continuing in the sector (column (III) of
Table C.3). The rest can be attributed to a forecast of good profit growth,
encouraging rapid capital growth.
Finance and business services (ranked 2)
The finance and business service sector benefits from technological
changes which result in more intensive use of its products by industries
and from a shift in household preferences (column (I) of Table C.3).
These factors give it a growth rate of over five per cent per annum.
The forecast of employment growth in the sector implies productivity
growth of 4.4 per cent a year. This is similar to the productivity growth
in the historical period. With productivity growth at this rate, the sector
ranks twelfth in employment growth prospects.
Electronic and other specialist equipment (ranked 3)
As with the sectors ranked one and two, Electronic and other specialist
equipment is favoured strongly in the forecasts from technological shifts.
These have been apparent since the mid-1980s. However, in the 1980s,
output growth in the sector was retarded by rapid growth of imports. In
the 1990s, the sector began to specialise in the provision of parts and
repairs, making its products complementary with imports rather than
competitive. This has allowed the sector to achieve strong growth over
recent years, in line with growth in the economy’s stock of electronic
equipment. It is expected that this will continue through the
projection period.
The employment forecast for the sector is 1.8 per cent average annual
growth, implying average annual productivity growth of 3.0 per cent.
Productivity growth is strong because forecasts imply that the sector has
good profit prospects, encouraging investment and hence capital growth.
Transport and storage (ranked 4)
Strong growth in tourism exports (see Table C.2) enhances the growth
prospects of air transport, and hence of the transport and storage sector
generally. Transport services are also used intensively in facilitating
international trade, and with trade forecast to grow rapidly throughout
the forecast period (see Table C.1), this gives a further stimulus to the
sector’s growth prospects. This stimulus would be even stronger were it
not for the restraints imposed by technological changes economising on
the use of transport inputs.
The forecasts used imply productivity growth for the transport and
storage sector of 2.9 per cent, about the same rate as that achieved over
the historical period. Together, output and productivity forecasts imply
average annual growth in employment of 0.8 per cent.
Basic metal products (ranked 5)
The industries in this sector produce basic iron and steel, basic nonferrous
metals and simply transformed products such as metal sheets. The
largest industry is non-ferrous basic metals (mainly aluminium and
alumina). This has very good growth prospects, due to a forecast of
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