A Government report is forecasting a 90 per cent slump in resources construction jobs, but economists are hopeful that mine operations and residential building will pick up the slack.
The report’s author, Keith Spence from the Australian Workforce and Productivity Agency, says there will be tens of thousands of mining construction workers laid off over the next four or five years.
“We’re at about the peak of the construction workforce at around about 83,000 workers, and by around 2018 that could be as low as 7,700,” he observed.
However, Mr Spence has some good news for those more than 75,000 workers forecast to be out of work.
“We’ve seen steady growth in the mining operations sector, I think over the four-year period something in the order of 7.4 per cent growth,” he said.
“But the really strong growth is in the oil and gas sector, where we see just under 60 per cent growth in the oil and gas operations workforce between now and 2018.”
Westpac’s chief economist, Bill Evans, says he is pleasantly surprised by how many jobs are going to be added to run the mining, oil and gas operations currently being built.
“I was encouraged, actually, by the estimated increase in operations of 40,000,” he explained.
“We’ve always been aware of this big downturn in construction jobs as these big projects are completed, but I didn’t expect that the operational lift of 40,000 was going to be anything like as high as that.”
However, that still leaves a forecast surplus of 35,000 workers, and Mr Evans warns they will be entering a very weak jobs market, especially for male workers looking for full-time positions.
“The dominant trend has been the fall in full-time jobs over the last 12 months, where jobs growth has been 0.8 per cent full-time jobs growth has been negative, and we’ve seen a 3.5 per cent jump in part-time jobs,” he added.
Economists hope residential sector will fill jobs gap
Mr Spence is hoping some of the unemployed tradies will head back to the city.
“We think there’s probably something in the order of 30,000 of particularly the trades sort of areas – the concreters, the floor-tilers, these sorts of things – that really aren’t represented in the operations workforce at all,” he said.
“We think many of them may well have come out of things like residential construction and, unfortunately, residential construction’s been in a bit of a low over the last few years; it’s starting to build now, so many of those we would hope would be reabsorbed back into residential construction.”
Mr Evans says there is a good prospect of that happening.
“Infrastructure construction can really fill part of that gap and, of course, we’re now starting to see some sharp jumps in building approvals, and I think the residential construction cycle will also go some way to helping fill that gap,” he forecast.
“So it’s not as depressing a story as I was expecting.”
BIS Shrapnel’s senior manager of infrastructure and mining, Adrian Hart, is also optimistic.
He is expecting a much smaller fall in mining construction than the 90 per cent slump forecast in the report.
“It’ll probably be reasonable to assume that you might be seeing a 40 to 50 per cent decline in mining-related construction over that period of time,” he estimated.
“One thing that you’ve got to really consider is that there’s also a lot of smaller projects that may not have been considered in this report, and also a lot of sustaining capital works.”
Construction workers to compete with jobless auto workers
However, even if things do not turn out quite so badly in mining construction, workers coming out of the sector are set to be competing against thousands of soon-to-be unemployed auto workers for the jobs in mining operations.
“I’m sure there will be skill sets in there [automotive manufacturing] that would be sought after by the mining operations and oil and gas operations,” Mr Spence said.
“As I say, particularly some of the mechanical skills – by that I mean fitters and turners, those sorts of roles; electrical trades; instrument electricians; these sorts of skills are going to be in high demand.”
While optimistic that the mining employment gap may not be as big as had been feared, Bill Evans is still pretty downbeat about the medium term outlook for unemployment in Australia.
“We think it will drift up to about 6.5 per cent next year, and it’ll be slow to come down, particularly given that we’re seeing quite strong population growth and therefore quite a strong increase in the workforce,” he explained.
“We estimate at the moment that 19,000 jobs a month are required just to hold the unemployment rate steady, if you don’t have the benefit of that fall in the participation rate that’s obviously associated with discouraged workers and with the retirement of the aging of the population.
“So I would expect that 6.5 [per cent] will be the peak but, as Treasury has forecast, we think it will be quite slow to come down.”