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Policies risk making job losses worse

By John Black - posted Tuesday, 6 January 2009


Greenies and union officials often criticised the Howard government for its blinkered views on environmental and industrial relations issues, but John Howard left office having halved our unemployment rate over 11 years and we tend to take that achievement for granted.

The Rudd Government is going to find out this year that these three subjects were linked and that introducing even watered-down versions of an emissions trading scheme and minor re-regulation of the labour market during a global recession are likely to drive unemployment higher than it would otherwise have been.

The Australian Bureau of Statistics breaks the monthly unemployment figures down into 59 regions across the country and I've used these figures to profile unemployment changes in two categories: long-term and short-term.

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The long-term changes take the figure for the last available month - in this case November 2008 - and benchmark them against the figures for the same period 12 months ago. This removes the seasonal element that sees unemployment typically rise over Christmas, as school leavers seek jobs and register for unemployment at the end of the school holiday period, and fall towards the middle of year, as this age group gradually finds jobs.

This long-term figure shows a narrow majority of our labour force regions are experiencing unemployment growth the likes of which we saw at the start of the 1990-91 recession. This is not a good look for the December gross domestic product growth figures. The short-term changes compare the November 2008 figures with the October 2008 figures, so we can see what changes are occurring in the real-time economy. I modelled both sets of changes against our database across the country to see which demographic groups have been hardest hit and which groups have been so far unaffected.

Short-term unemployment modelling for November compared with October shows the latest increase in unemployment to be strongest among men working in the hospitality and service industries. These are people employed serving and selling food and beverages in bars, cafes and restaurants, and their employers in a number of states are being slugged additional penalty rates under the first of Minister for Employment and Workplace Relations Julia Gillard's new standardised awards.

This means we can expect more unemployment increases with these workers in January as already marginal restaurants and bars close shop on weekends, in a pretty stark example of the ACTU and the Government trading workplace conditions for jobs at a time of rising unemployment.

Perhaps the PM needs to remind Gillard about the first part of her ministerial job description: she is the Minister for Employment, and not just Workplace Relations.

To round out the short-term profile, we're looking at more mobile, younger workers, often employed on casual employment structures (for cash) and living in more inner-city type rental accommodation. Females working in the arts and recreation industry are also on the list of short-term job losers. Overwhelmingly, these are people or couples who are unmarried and have no children and, without a job, they are likely to stay that way. Politically these groups tended to vote Labor or Green in 2007.

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Those groups unaffected so far by short-term unemployment increases in November include the older and more stable married couples with children, especially if they're old enough to have fully paid off the family home and they've progressed in their job to a more senior, often managerial position, typically in a secure public service job.

In political terms, these groups were pro-Coalition in 2007, but they provided the bulk of the swing to Labor flowing from the working families campaign. So the outer-urban car commuters who put Labor into office from marginal seats did not feel much pain from last month's unemployment increase.

Which brings us to the longer-term comparisons.

First to the winners from the past 12 months: basically the group is dominated by families with two or three children at home, public servants in health and education, older workers with secure jobs and the big kahuna for Australian political profiling, the Australian-born.

We're talking big mainstream middle Australians here, who at the previous election were still voting for Howard but swinging strongly to Labor. They still are, if the opinion polls reflect more than a simple thank you for the $10billion from a grateful four million voters.

The longer-term unemployment losers on the other hand, include one-car homes (usually inner-city), administrative consultants, especially women, people working in finance and real estate, or in hospitality and services and, most worryingly, those suffering mortgage stress, which should ring alarm bells for the Government in Labor's outer-urban marginal seats.

Mortgage stress wasn't a political issue at all in 2007, but it certainly is now. In fact, during the past 12 months we have seen rises in unemployment first from the top quartile of mortgage holders and more recently from the third quartile.

The former trend will feed into home loan stress figures highlighted by recent statistics from the Reserve Bank of Australia, our profile of which showed rising levels of mortgage delinquency among third-quartile mortgages.

Another group bubbling away beneath the surface of statistical significance for short-term unemployment increases is the demographically small but spatially concentrated group of miners.

This group is like Nationals voters - which, come to think of it, they probably are - in that they are small in number but concentrated in politically significant numbers across non-urban seats. They are also very rich and many have been buying investment homes across the country, which are attractive only if the miner is earning enough income to negatively gear their cash flows.

Any significant increase in mining unemployment should have a pretty strong negative impact on the economies of Queensland and Western Australia, the two states that greatly softened the national impact of the last recession.

When they turn south to a significant degree, we're all in real trouble. With recent mining lay-offs, we expect to see that next month.

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First published in The Australian on January 2, 2009.



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About the Author

John Black is a former Labor Party senator and chief executive of Australian Development Strategies.

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Creative Commons LicenseThis work is licensed under a Creative Commons License.

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