This article was published in Tourism Indicators, Australia, March 2002 (ABS Cat. No. 8634.0).
INDIRECT ECONOMIC CONTRIBUTION OF TOURISM, 1997-98
This article has been contributed by Umme Salma, of the Bureau of Tourism Research (BTR).
The total benefits to Australia of tourism go beyond the initial recipients of tourist expenditure. In the Tourism Satellite Account (TSA), the Australian Bureau of Statistics (ABS) has estimated the direct effects of the tourist’s immediate consumption of goods and services (ABS 2000). Although they did not measure it, the ABS has recognised the role of indirect effects, which is ‘a broader notion that includes downstream effects of tourism demand’ (ABS 2000, p viii). Using the information provided by the TSA and focussed on the same reference year of 1997-98, the BTR has estimated the chain effects on output and employment created by tourism consumption (Salma 2001). The BTR’s estimates of the indirect economic contribution of tourism complement the TSA to provide a comprehensive estimate of the total economic contribution of tourism to Australia in 1997-98.
This article summarises the results of the BTR’s recently released report on tourism’s indirect economic contribution. The report identifies the national benefits of tourist expenditure in terms of several factors including Gross Domestic Product (GDP), value added and employment. Beyond the broad overview level, there is also an in-depth analysis of the nature of tourism jobs including an analysis of the gender balance in tourism employment and the role of full-time and part-time employment within the tourism sector.
WHAT IS MEANT BY THE INDIRECT ECONOMIC EFFECTS OF TOURISM?
The economic contribution of tourism has two elements: direct and indirect. The direct contribution is solely concerned with the immediate effect of expenditure made by visitors. For example, when a tourist uses a taxi service, the direct output effect includes only the service of the taxi driver and the direct employment effect includes the proportion of the driver’s employment that is spent driving tourists.
The taxi driver, however, buys fuel from a petrol station, machinery parts from a garage, meals while on duty from a food outlet and so on. Petrol stations, garages and food outlets all hire staff and produce output to serve the taxi drivers, who in turn serve customers, some of whom are tourists. The food outlet in turn engages food manufacturers, electricity companies, delivery services and many other industries to provide the necessary inputs required to prepare the snacks it sells. Similarly, many industries are involved in supplying the necessary inputs to the petrol stations and the garages. The chain effects on output and jobs started by the initial taxi service demand of the tourist comprise what is termed tourism’s indirect effects on output and employment.
Some results from the BTR study are outlined below:
- Tourism as a whole accounted for just over 8.5% of national GDP, with the contributions created through direct tourism demand and through indirect tourism demand being roughly the same in percentage terms (graph F2.1).
- The tourism sector in total generated 853,500 jobs in 1997-98, accounting for 10.0% of national employment. Out of this, 340,600 jobs were created by the indirect effects of tourism demand, equivalent to 4.0% of national employment (graph F2.1).
- Domestic household visitors contributed 64.4% of indirectly created tourism GDP. International visitors accounted for another 23.2% and the remaining 13.4% was due to domestic business and government visitors (graph F2.2).
- The industry accounting for the largest share of direct tourism employment was the Accommodation, cafes and restaurants industry (32%), followed by the Retail trade industry (26%) and the Air and water transport industry (6%).
- The industry accounting for the largest share of indirect tourism employment was the Property and business services industry (27%), followed by the Other manufacturing1 industry (13%).
- Of all the jobs created as a result of tourism in 1997-98, 69% were full-time. Almost four-fifths (78%) of indirect tourism employment was on a full-time basis, compared to 63% of direct tourism employment.
- Converting part-time employment to a full-time basis, the full-time equivalent employment in the tourism industry was 680,700. Out of this, 292,200 jobs or 4.1% of national full-time equivalent jobs were created by indirect tourism demand.
- Labour productivity2 was higher in the indirectly created jobs than in those created directly by tourism demand. The average labour productivity was $78,000 in the former compared to $58,000 in the latter.
METHOD OF ESTIMATION
The BTR’s method of estimating the indirect effects of tourism uses a standard input output multiplier approach. This approach is widely used in many countries in the estimation of indirect effects. The World Tourism Organisation (WTO), in its guidelines for developing the tourism satellite account (WTO 2000), describes multipliers to measure the indirect effects of tourism in an economy which are consistent with the methodology adopted by BTR. Recently, New Zealand has published their TSA, including estimation of both direct and indirect effects (Statistics New Zealand 2001). For the estimation of indirect effects they have used exactly the same methodology as followed by BTR.
The BTR are currently updating indirect effects for 1998-99 to 2000-01, following the release of the Tourism Satellite Account for 2000-01. The results are expected to be released in November 2002.
1 Other Manufacturing industries include, among others, the Prefabricated building manufacturing and the Furniture manufacturing industries.
2 Labour productivity for each industry is gross value added per unit of full-time employment.
Australian Bureau of Statistics 2000, Australian National Accounts, Tourism Satellite Account, 1997-98, cat. no. 5249.0, ABS, Canberra.
Salma, U. 2001, BTR Research Paper No. 6, Tourism’s Indirect Economic Effects 1997-98, BTR, Canberra.
Statistics New Zealand 2001, Tourism Satellite Account 1997, cat. no. 01.095.0000, Wellington, New Zealand.
World Tourism Organization 2000, General Guidelines for Developing the Tourism Satellite Account (TSA), Measuring tourism supply, Vol. 2, World Tourism Organization, Madrid, Spain.
- The ratio of male to female employment was more balanced in the jobs created directly by tourism at 51 to 49. In contrast, the ratio of male to female employment was 60 to 40 for jobs created by the indirect effects of tourism demand.
This page last updated 8 December 2006