Unemployment as bad as during financial crisis

April 11, 2014
13.4% of women aged 25-34 in the workforce are unemployment or underemployed — almost the same as at the height of the GFC.

The preparations for the federal budget, due to be handed down by Treasurer Joe Hockey on May 13, began on October 22 last year. This is the date on which Hockey announced a National Commission of Audit.

The commission is chaired by Tony Shepherd, who just happens to be the President of the Business Council of Australia, the organisation representing Australia’s 100 largest companies. Shepherd’s appointment amounts to an invitation to big business to tell the government how it wants the economy to function in its favour during the Coalition’s term of office.

The terms of reference ask Shepherd to prioritise which Commonwealth assets should be privatised and in what order, where welfare cuts should be made, and what government programs should be scaled back or abolished.

The terms of reference are silent on the billions that are spent on corporate welfare, so we can expect either business as usual or an increase in taxpayer assistance to the desperately needy in the corporate sector, such as Gina Rinehart.

The budget will ensure that the already bleak employment prospects for too many Australians will get worse.

Between November 2003 and November 2008, 1.4 million jobs were added to the Australian economy. In the five years since the onset of the global financial crisis (GFC) in late 2008, net job growth has shrunk to 700,000.

The manufacturing sector lost 82,000 jobs in the five years to November last year and more have been lost in the five months since then. But worse is still to come as all remaining car-making plants are set to close. Many companies in the auto component sector are now in a dire position as well, which could lead to the devastating prospect of tens of thousands of job losses.

Then there is the attrition in the manufacturing sector that will come from technological change. The Australian Workforce and Productivity Agency has forecast that the introduction of hi-tech production methods will lead to manufacturing jobs shrinking by between 1% to 1.5% a year.

The decline in discretionary spending that comes with unemployment will add job losses in the services sector to those being slashed in the public sector by state and federal governments. This is at a time when the economy is creating employment for only 20% of all new workers entering the labour market.

Disturbing as these overall statistics are, the position in regional economies is even more precarious. Conventional economic wisdom has it that major regional economies with unemployment growth above 1.5% a year are in recession. On this measure, 31 of the 87 labour force regions in Australia have been in recession over the past 12 months.

The much-hyped recovery from the GFC is not doing anything for women workers in the 25-34 age bracket: 13.4% are unemployed or in part-time jobs unable to secure more working hours. This is almost exactly the same as it was at the height of the GFC.

For women aged 55 and over, the position is even worse. Only 10.9% are actively seeking work, up from 9.1% during the GFC.

The Australian Bureau of Statistics estimates that 162,800 women were seeking part-time work in February — the highest figure ever.

Australia escaped recession in 2009 thanks, in large part, to the counter-cyclical economic policies that were implemented both here and in China. The Tony Abbott government’s first budget looks likely to remedy this by providing a recipe for recession.

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