Creatively creating jobs

We are about to repeat history with a period of significant increase in unemployment. You might think, “How is that possible? Everybody is talking about the lack of skills in Australia.”

Let’s just think about how it was just a few years ago, in 1999 and 2000, when there were plenty of voices saying, “We need thousands of IT workers”. Indeed back then, just like now, employers could not get the right staff. Nobody, however, seemed to notice that IT skills demand was driven by two short-term factors: the Year 2000 Millennium bug and the introduction of GST. Everybody seemed to take comfort in the general IT uptake. But shortly after that, in mid-2001, thousands of IT workers found themselves unemployed, and hundreds of newly established and apparently prosperous companies closed down.

Today’s skills demand is also driven, but this time by a speculative housing boom, and increased consumption fuelled both by credit card debt and by cashing in on increased levels of home equity.

Let’s be clear: these forces have exhausted their capacity to generate economic growth. On the contrary, with negative savings of 5 per cent and ballooning house prices we can only expect this trend to come to an abrupt end.

Stagnation of housing prices will result in a stop to speculative housing investment, which in turn will decrease all associated demands - from raw materials to white goods. It will affect the profits of the financial sector with decreased demand for loans.

Strong demand for raw materials, created by a booming China will not nullify this downhill trend.

Furthermore, Australia, like most Western countries, is continuously losing jobs to newly emerging Asian and East European economies. Today we are losing not only manufacturing jobs but also call centres and programming services. We are even seeing attempts to import engineering services and legal research from overseas.

Even if it is not that significant in terms of numbers, these latest trends have a capacity to undermine public confidence especially when there is the slightest sign of economic downturn.

We need to focus on ways to create jobs. Let’s face it, the long period of continuing prosperity has made us complacent. Jobs creation by encouraging entrepreneurship and facilitation has not been seen as a priority. Successful programs in this area are discontinued or underfunded, and are struggling to survive. For example:

• programs like Slingshot started as a pilot program for the benefit of disadvantaged youth in Melbourne Western suburbs. Despite the pilot’s success it has not been rolled out due to lack of foreseen governmental funding;
• NEIS program is grossly underfunded. NEIS mentors are still paid - just like ten years ago - $50 each client visit. NEIS established in 1986 was justly seen as one of the best programs of this type in the world. Since then, however, competitive pressures have increased and new interesting initiatives have emerged. NEIS providers, barely making ends meet, do not have capacity to do their own research or to finance new initiatives;
• a NSW microfinance project, First Business Finance, proudly announced in 1994, has vanished without a trace. It is bitter irony that in the year 2005, announced by UN, “The Year of Microcredit” concept of microfinance is virtually non-existent in Australia;
• Women in Business - one of just a few west Melbourne regional programs, created by the Western Business Enterprise Centre in co-operation with GWCCI and the Brimbank council, was not continued, despite the great interest it generated; and
• various other successful programs (developed by entrepreneurial employment agencies) that were creating jobs are not continued as they were not "cost effective" in comparison with job placement.

It also seems strange that we do not have a business incubator in the western suburbs of Melbourne despite the fact it is a well proven tool of entrepreneurship fostering.

But there is hope. There are many interesting initiatives that prove a lot can be achieved at a local level. There is a wide range of research being conducted and various governmental bodies have developed entrepreneurial initiatives together with corporations willing to support these projects for their own interests.

What we need is the will and entrepreneurial leadership to make it happen.

But there is also a need to divert funding from redundant employment services, where there are numerous Job Network agencies chasing the same clients and employers while offering the same services. We need to change focus of employment programs from filling existing positions to creating new jobs.

A lot can be done at the community level.

It is estimated that about 70 per cent of new jobs are created by small and medium businesses. If we look into the near future, we can expect in ten years about 80 per cent of jobs will be created by businesses that are now small or which do not exist yet. It is the local and community based initiatives that can encourage creation of new businesses and create relevant support structures.

It is time to make a long, hard look at our performance when it comes to creating new jobs and to search for inspiration throughout Australia and overseas and develop our own unique solutions.