Business Sector Background
These three industry labels have served economists well. However, we now realize that there are two more industry sectors in which businesses belong: quaternary and quinary. This is because of the rapid growth of service-based businesses. Around three-fourths of all employees work in the service industry. Let's use an analogy involving buckets.
Because most advanced economies are now service-based, it doesn't make sense to force everything into one bucket when we can add more buckets. Business in the quaternary sector focuses on the processing and transfer of information as knowledge. This includes computing, telecommunications, and education. The fifth sector, the quinary sector, focuses on domestic services that were once done in the home. We'll get to the details shortly. First, let's consider the chart on your screen (below) that describes the different industry sectors.
This graphic shows another way to look at the quinary industry sector, where the quaternary and quinary sectors branch from tertiary:
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Quinary Business Sector
The fifth sector, the quinary sector, consists of domestic services. These are services that were once completed by an individual in his or her home. The quinary sector is growing, while in Australia, for example, we are seeing a decline in the primary sector. Breaking down the tertiary sector into quaternary and quinary sectors really helps us see where the growth is coming. Remember that quaternary businesses include education, information technology, and professional services.
Quinary jobs include the following:
- Hospitality (resorts, spas, hotels, restaurants)
- Health and community services
- Daycare (including child and elder care)
- Domestic cleaning services
- Recreation
If we look at employment numbers from early 2016, we see that the quinary sector takes up 26% of jobs. We've seen a large increase in domestic services, hotels, and restaurants. Restaurants have always existed, but cooking is technically a domestic activity. Now that we have the five sectors to analyze, it helps economists, investors, and employers see where the trends are.
Lesson Summary
As the economy evolves, we can no longer classify businesses into three sectors of industry, which defines what types of production is being done and helps us classify the various businesses and services. An industry is a categorization of a business that tells us the type of goods or services that business produces. Apart from the sectors like primary, or production of raw materials, secondary, or converting the raw materials into usable goods, and tertiary, focused on service delivery, we now have quaternary and quinary sectors defined. The quaternary sector means fourth, and focuses on the processing and transfer of information as knowledge. Quinary simply means fifth. It consists of services once performed in the home, or domestic services. Chefs, daycare providers, and cleaning services are types of quinary businesses.
