Why Aust jobs going, what it means

OPINION By KELVIN DAVIS (Kelvin Davis is the director of Greymouse, a cloud service-provider that supplies high quality, time-bound and cost-efficient services through its own facility in Fiji.) Investor sentiment
24 Feb 2014 11:09



(Kelvin Davis is the director of Greymouse, a cloud service-provider that supplies high quality, time-bound and cost-efficient services through its own facility in Fiji.)

Investor sentiment turned sour after new data showed unemployment in Australia is at its highest rate in nearly a decade.
Australian Bureau of Statistics data showed the jobless rate hit 6 per cent last month, its highest rate since July 2003, and exceeding expectations of 5.9 per cent.

The highest unemployment rate is 7.6 per cent in Tasmania followed by South Australia at 6.7 per cent.

Business Reality
After speaking to over 30 business owners about the reasons for changes in their business and the reduced employment activities the general responses are High cost of wages, Staff on costs, Utilities cost, Leasing costs, Markets changed and Reduced profit margins

Businesses have lost confidence in future economic conditions and so are trimming jobs, turning to offshore workers and working their existing staffing harder.
Thousands of jobs are relocating to the Philippines with tours of the Philippine outsourcing companies becoming a major hot topic.

I have attended these tours whereby I have met many businesses going through the outsourcing movement. Business change and job losses are now on an increasing scale.

Right across the Board
While full time jobs disappear, part time work sometimes increases reflecting a reduced consumer and business demand.
These changes are seen right across the board, in all industries from mining, automobile, manufacturing, services and finance. Interesting results include:

q It’s affecting everyone even if they have the skills and the education.
q Skilled and academically potential candidates are being told by employers that about 100 people had applied for the same job.
q Academics say the ‘real unemployment and underemployment rate’ could be as high as 15 per cent in Australia representing about 2 million people.
q Warehousing and administration jobs seemed to be drying up and the ABS statistics show that mining jobs have halved since the end of the boom.
The Bureau of Statistics confirms that 7100 full time jobs have been lost with 3400 part time ones added for January.

Notable Job Losses
q Ford is closing plants in Geelong and Broad meadows and also on the outskirts of Melbourne. This decision follows planned exits by Ford and General Motors.
q General Motors plans to close its operations in Melbourne and in South Australia’s state capital, Adelaide
q Toyota also announced the closure of its plant by 2017

Now the total auto manufacturing industry, and supplier / shipping job loses is forecast to reach 50,000 workers.

Extra losses
q Small business outsourcing tasks off shore at record rates (Traditionally the largest employing group)
q Flag carrier Qantas Airways Limited said recently it would cut 1,000 jobs to help stem financial losses.
q The ABS data analysis shows that there were 1,081,664 manufacturing jobs at the start of 2008 and 938,280 by the second quarter of 2013 – meaning there was a net decline of 143,384 jobs.

q Perth based mining services contractor Forge Group went into administration after its financial backers withdrew support. The receivers KordaMentha have laid off 1,400 employees on power stations and mining projects in WA and Queensland

Participation Rates
The participation rate is the percentage of people within the age and physical ability to be employed.
Participation rate for Australians aged 15 and over either looking for work or in the workforce in some capacity, has been dropping for close to a decade. Reasons for this change include,

q Job seekers are getting discouraged and just ‘giving up’, joining the ranks of what are commonly called the hidden unemployed.
q Due to demographic change more people are in older age groups where workforce participation has traditionally been lower.
q Participation rate among 15-24 year olds peaked at around 75.7 per cent in late 2002 but that’s fallen to 68 per cent last year which is a very substantial decline.

Looking Ahead
Tony Abbott (the Prime Minister) faces his biggest challenge ever as Australia is about to undergo a domestic upheaval of unprecedented proportions with forecast for 2015 and 2016 predicting at least 350,000 job loss in the mining investment, motor, retail and the public service.

Business has changed. Philippine workers can now compete for Australian work inside small to medium business without leaving the country.
2014 will be the year of increasing unemployment and business shakeup that will be felt within Australia and then beyond.

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