SYDNEY—Treasurer Joe Hockey set the tone at the G20 in Sydney last week, gaining agreement from the group of 20 nations to increase economic activity, encourage private sector investment and focus on creating jobs. The call may prove hollow on Hockey’s home turf, however, unless strategies to deal with a slowing economy and rising unemployment are developed, analysts say.
“Private investment is slowing quicker than they ever thought and unemployment has now risen to 6 per cent, higher than it was at its highest point in 2009, after the crisis hit and before the stimulus took effect,” said the University of Newcastle’s Professor Bill Mitchell, Director of the Centre of Full Employment and Equity(CofFEE).
A Feb 20 report from the Australian Bureau of Statistics (ABS) showed youth unemployment (ages 15-24) is at 12.2 per cent, up from 8.8 per cent in 2008.
The Melbourne based non-government organisation, Brotherhood of St Laurence, launched a national campaign Feb 24, describing youth unemployment as a “crisis” of national proportion and identifying “disaster zones” in rural and regional areas.
“Hot spots” include Queensland’s Cairns, with a youth unemployment rate of 20.5 per cent; Victoria’s Goulburn Valley, Wodonga and Wangaratta, with 17.5 per cent; and Parramatta in New South Wales, with 16.8 per cent.
Mr Hockey’s call for structural reform and a 2 per cent global economic growth target over the next five years was endorsed by finance ministers and central bank governors at the G20 summit.
The Treasurer took the endorsement as a clear mandate for reforms he plans to announce in his first federal budget due in May.
“These are reforms that need to be undertaken if we’re going to grow the economy and will be entirely consistent with our election promises,” Mr Hockey said at the summits end.
“We are only going to create more jobs in Australia if we have stronger economic growth.”
With little detail on how that will be achieved, the Coalition Government is pinning its hopes on the private sector promising to cut the mining and carbon tax, reduce red tape and implement structural reforms. But with the Australian economy already taking big hits and structural reform rendering many communities vulnerable, analysts warn that the Government will need to do more to address the social fall-out from increasing unemployment.
In recent months Australians have learned that the remaining car manufacturers will be shutting up shop over the next few years. The automotive industry follows others, from bakeries to aluminium smelters, horticultural to clothing manufacturers. And while new industries are likely to develop, the transition will not be easy and many will slip through the cracks, warns Dr Martin O’Brien, economist at the University of Wollongong.
“The whole idea about opening up the market and basically relying on what you have a competitive advantage in, is that the resources that go into that just can’t neatly change from one industry into another,” he said by phone.
It is also the flow-on effect on other service industries, Dr O’Brien says, pointing to Blue Scope Steel in his hometown Wollongong, which he says is likely to see further job losses and will hit the city hard.
Retraining and education are the keys for future employment for many workers but technical centres like TAFE have received little support or funding in recent times.
“The [previous] Gillard government took a chunk out of the tertiary sector and there has been no word from this government of putting money into tertiary education,” Dr O’Brien said.
Government spending critical
Without giving away too much before the budget, Mr Hockey has said that the rate of government spending is unsustainable, and has indicated that cuts in health and education are likely in the future.
Professor Mitchell believes cuts in government spending will be “disastrous” as it will not only increase unemployment but also reduce services to those most in need.
He says many people have already been reduced to part time work or have given up searching for a job altogether.
The social fall-out from chronic unemployment is corrosive and can create greater costs than timely government spending, he said, particularly in health where research has shown high levels of alcoholism, depression and general malaise among the unemployed.
“We know children that grow up in jobless households inherit the disadvantages of their parents,” he said, adding that unstable families, patchy work histories and “all those social pathologies” add to the mix.
Referring to the Employment Vulnerability Index developed by CofFEE and Queensland’s Griffith University, Professor Mitchell said suburbs and regions identified as places most at risk of future unemployment include the mortgage belt and areas not usually associated with disadvantage.
While some may be able to transition to new industries, there will be many low skilled workers that will be unable to compete in the job market.
Professor Mitchell proposed not only more and better training programs but also government support in terms of a minimum wage “job guarantee” for those that lose their job.
Research conducted with local councils by CofFEE has identified thousands of low-skill jobs in areas of unmet community need he said, including aged and environmental care, that could be offered should the Federal government fund them.
A “job guarantee” is critical not only for the psychological wellbeing of those that lose their jobs but it can also protect communities and save families from being uprooted.
“Government should be responsible for a just transition [so that] that the losers are minimised, or losses for those that lose are minimised,” he said.