“Extraordinary and disappointing.”
That was how Treasurer Joe Hockey described the surprise spike in unemployment in January.
The Prime Minister went one step further. In the heat of battle during Question Time he said there had been a “holocaust” of job losses in defence industries. Outraged ALP parliamentarians howled their disapproval. He withdrew the statement and later apologised.
Employment Minister Eric Abetz took a more conventional approach. He blamed the former Labor government.
Bad jobs numbers always leave senior ministers scrambling for an explanation, and particularly those in a government which came to power promising to create millions of new jobs.
They were all trying to explain a shock rise on the national unemployment in January from 6.1 per cent to 6.4 per cent, a 12-year high.
Hardest hit was South Australia, where unemployment surged to 7.3 per cent. Western Australia was the only state that saw a fall in unemployment – from 5.9 to 5.6 per cent. All other states saw an increase in unemployment, apart from Tasmania, where it remained steady at 6.6 per cent.
Unemployment hasn’t been this high since 2002, when the mining boom was a speck on the horizon.
Unfortunately for an embattled government, economists say many more workers will lose their jobs before the unemployment rate reverses direction. It also put another rate cut on the table and sent the Aussie dollar plunging to 76.46 US cents, dangerously close to a six-year low.
Does this result point to really bad times ahead for the jobs market, or is there a sensible explanation for it all? And what’s the outlook for your industry?
First, the good news
The first thing to note, according to the University of Melbourne’s Michael Coelli, is that we are not in recession.
“It’s not as if employment is declining,” he said. “It’s just that it’s not growing fast enough to absorb the growing labour force.”
This is good news for people who already have a job. New entrants into the work force, however, “are the ones who will suffer”, says Dr Coelli.
The not-so-good news
Unfortunately, everyone The New Daily spoke to expected unemployment to stay above six per cent for at least the next two years.
University of Melbourne economist Professor Jeff Borman said: “Even if growth picks up next year, unemployment will still be in the sixes. If it doesn’t pick up, it could go even higher.”
He said growth needs to be 3.2 per cent for employment to be stable, and it is currently far below that.
Macquarie University economist Professor Jeffrey Sheen agreed that unemployment will stay above six per cent for the next couple of years as the economy transitions out of the mining boom.
However, he said the transition would take time. “I’m not saying it’s transitioning fast. There are always pains during a transition. But they are normal pains, not abnormal pains.”
Abnormal or not, pains are pains. So what industries are most at risk over the coming years. We looked at the official data to find out.
In 2002, the mining industry employed just over 80,000 people. At its peak in August 2012, it employed 271,000 people. But by November 2014, 43,000 jobs had disappeared. New figures due in March are expected to more jobs will have been lost. Mining is one of the most unstable industries to work in at the moment.
Manufacturing jobs have been in decline since 2002. Nevertheless manufacturing still provides four times the number of jobs as the mining sector. In November the sector provided 911,000 jobs. Professor Sheen says, a lower exchange rate will “automatically” boost this sector.
Apart from a dip in 2012, the number of jobs in construction has steadily risen since 2002. The total number of jobs in construction now stands at almost 1.06 million. The trend suggests this figure will keep rising. If you work in construction, you should be hopeful.
During the mining boom, the number of jobs in retail jumped around between 1.1 million and 1.2 million. However, since February 2012 the number has risen and now stands at 1.246 million. Retail is overall a stable industry, but it depends on which sector you work in. A recent ABS study reported that fashion is good, while household goods and department stores are not.
It may surprise readers to learn that healthcare and social work are the biggest job providers in the country. Between 2002 and 2014 the number of jobs steadily increased to almost 1.4 million. However, between May and November 2014, 8000 jobs were lost in the sector. Government cuts may impact this sector.
Over the past year public administrative and safety jobs have fallen sharply. Thirty thousand jobs have been lost in those 12 months, bringing the total to 726,000. Melbourne University’s Dr Micheal Coelli says that, along with mining, public administration is the most unstable sector to work in thanks to government cuts. With the federal government committed to “cutting red tape”, things are unlikely to pick up any time soon.
The number of jobs in education has steadily risen since 2002 to 912,000, and that trend shows no signs of reversing. If you are a teacher or educator, you are statistically in a strong position.
Jobs in financial services increased until the GFC. Since then they have fluctuated between 380,000 and 420,000, without any obvious trend. With ex-bankers and financial lawyers now in federal cabinet (Malcolm Turnbull made millions in hedge funds, Joe Hockey was a banking lawyer), you might expect this sector to boom. However, the future is uncertain.
Jobs in hospitality have risen steadily over the past 12 years. And with a lower Aussie dollar, this sector can expect a boost from increased tourism.