Cities, by definition, are magnets for people and jobs. Cities, both metropolitan and regional, and their hinterlands are where most people live and where most economic activity and employment occurs.
Recently, there has been renewed interest worldwide on policies to capitalise on the smart growth of cities for both economic prosperity and social wellbeing.
Chief among the benefits of the density and diversity of cities are the twin advantages of access to jobs and access to labour. Often the challenge for cities is how to ensure the right jobs are in the right places.
Further, as the nature of work is changing, the challenge is how to anticipate and prepare for change. In particular, what can be done to help people make a timely transition from skills more suited to the old economy to ones that fit the new world of advanced manufacturing, knowledge-based services, small high tech start-ups, or disruptive business models like Uber and Airbnb.
One insight is the importance of job density to the productivity and competitiveness of particular localities. Consultants SGS Economics & Planning, in recent studies, have defined ‘effective job density’ in terms of the proximity and accessibility of jobs, measured by the level of employment relative to the travel time to that employment by employees by various modes of transport.
Investigations by SGS Economics & Planning and others by the Victorian Department of Transport show that the doubling of job density can result in productivity improvements of between 4% and 13%. This is due to the sharing of infrastructure and inputs; the sharing of ideas (knowledge spill-overs) that occur due to close proximity and that drive innovation; and the ability to match skilled workers to jobs.
So, creating employment precincts and jobs close to home through smart work centres and co-work spaces should be encouraged.
But, there is also concern about the ‘tale of two cities’. Commentators point to the divide between the growth of well-paid jobs for knowledge workers in the inner areas of capital cities and outer urban areas where population and housing are growing, but with few jobs and poor job access, significantly due to traffic and transport obstacles.
Solutions to this mismatch between jobs and residents include strategies for metropolitan-wide mobility and access to key services, through improved transport connections and better provision of information and communications technologies that diminish the disadvantage of distance.
Single solutions, however, are unlikely to be effective. For smart cities, the natural benefits of agglomeration are just a starting point. Action on a broader front with a mix of policy instruments is necessary to boost access to jobs where they are needed most. Smart cities invest in both the hard and soft infrastructure that allows them to make the most of their existing strengths and their distinctive, if embryonic, local capabilities.
This approach was summarised as ‘smart infrastructure’ factors in earlier work by SGS Economics & Planning as follows:
- Factors that reduce investment and operating uncertainty, such as transparency in government processes, leadership directions and economic management.
- Infrastructure to support basic production processes such as transport, labour, communications, power.
- Workforce skills and accessibility to quality education institutions for ongoing skills development.
- Innovation infrastructure and programs that underpin the development and commercialisation of new ideas.
- Business cultures that promote competition, collaboration, entrepreneurship, risk taking and openness to new ideas.
- Connectedness to other members of the value chain, including relevant research institutions and brokers of market intelligence, capital etc. through clustering.
- Quality living environments that offer the necessary services for attracting and retaining knowledge workers.
- A strong cultural economy which helps to power the industrial economy with new ideas and which keeps knowledge workers engaged with their local community.
- Social cohesion, whereby the various economic and other agents in the community have a strong sense of a shared future and a willingness to support each other’s ultimate competitiveness.
These smart infrastructure factors integrate policies that are typically treated as separate. To secure the right jobs in the right places means acting on initiatives at the intersection of industry and economic policy, innovation and business support, infrastructure, urban and land use planning, and education and employment policy, to name the key areas.
Putting smart cities to work goes beyond technology and data analytics. Cities are smart when they understand their competitive strengths and weaknesses, anticipate realistically patterns of business and jobs growth, and shape their future prospects to meet both the social and economic aspirations of their people.
SGS Economics & Planning, Productivity and Agglomeration Benefits in Australian Capital Cities, Final Report, COAG Reform Council, June 2012.
SGS Economics & Planning, Comparing Effective Job Density in Sydney and Melbourne, 2012.
Victorian Department of Transport, Job Density, Productivity and the Role of Transport, 2012.
SGS Economics & Planning, SGS Forum on Agglomeration 12 April 2012, The Fifth Estate, 2012, http://www.thefifthestate.com.au
Place Making — Beyond the Florida Thesis, Urbecon, Volume 4, 2009.
Attracting Jobs to Outer Urban Growth Areas, Urbecon, Volume 1, 2015.
Smart Infrastructure Audits—How Well Placed are Communities for Future Prosperity?, Urbecon, December 2002.