Where will the jobs of the future come from?

After the national hand-wringing over the mining bust, attention has turned to where the growth in employment will come from next.

As the economy rebalances, by necessity, away from a decade-long boom in mining exports, a huge opportunity for growth that has received scant attention is services exports.

Earnings from services exports last year totalled $59 billion, a little less than the $66bn earned from iron ore exports, and are growing quickly.

The rise of Asia’s middle classes right on Australia’s doorstep from about 500 million today to an estimated 3.2 billion in 2030 offers a chance for exponential growth in education, tourism and business services exports, provided Australian companies can step up to the challenge.

This is the flip-side of the plans by Chinese authorities to engineer their own rebalancing of the economy away from infrastructure and housing investment towards household consumption as the economy matures, and it offers a great income prize for Australia.

Annual services exports to Asia alone could support more than 1 million jobs by 2030 and rise in value to $163 billion, according to one of two recent studies that focus on the services sector.

The first study, by Asialink, PricewaterhouseCoopers and ANZ, points out that although services exports to the rest of the world excluding Asia amount to 54 per cent of value-added exports, they only comprised 34 per cent of exports to Asia, suggesting plenty of room for growth.

The second report, by HSBC, notes that rebalancing is already under way, led by education and tourism exports.

“These sectors have been picking up over the past year, driven by the ongoing rise in middle-class incomes across Asia, particularly in China, and the lower AUD,” says HSBC chief economist Paul Bloxham.

Foreign student enrolments rose 12 per cent last year, partly reflecting new visa arrangements and also helped by the declining Aussie dollar after a long period when parity made it relatively more attractive for students to go to the United States rather than Australia.

Education exports are Australia’s fourth largest individual export at $16.7bn, behind iron ore, coal and natural gas.

It’s a similar story in tourism, which is being driven by growth in Chinese visitors, with exports rising 8 per cent in 2014 to $14bn, and in business services, which covers financial services, IT, consulting, engineering and so forth.

So while the value of iron ore exports fell $3.5bn last year despite rising volumes as the price collapsed, services exports actually rose $3.7bn or 7 per cent, more than offsetting the commodity’s slide.

The mining boom and the accompanying once-in-a-century windfall in the terms of trade has dominated the nation’s economic narrative on the way up and on the way down, but it has consistently been out of proportion to the role that mining plays in the broader economy.

The services sector accounts for a massive 80 per cent to 85 per cent of Australian jobs, or about 10 million people, while mining accounts for only 2 per cent of employment.

So a pick-up in demand for services exports is also more likely to create jobs than the mining boom, HSBC’s Bloxham believes.

The Asialink report reaches a similar conclusion. It says that between 2000 and 2013, services have been responsible for the vast bulk of employment growth, adding 2.9 million new jobs. Over that time, agriculture and manufacturing jobs fell by 256,000 while employment in the resources sector rose 165,000.

“The services sector is on track to become Australia’s number one exporter to Asia by 2030, and will support more jobs than all other exports combined,” Asialink argues.

But the jobs won’t land in our laps. Only 4 per cent of directors on Australian boards are from Asian backgrounds, compared with 9.6 per cent across the community, according to the Diversity Council of Australia.

Companies will need to be increasingly sensitive to the demands and complexities of Asian business cultures and move people who understand and have experience in the region into senior roles if they want to ensure deeper engagement, and capture a larger share of the market for services.