Australia may have survived the global financial crisis, but China’s appetite for coal and iron ore kept the recession wolf that stalked other countries from our door.
That’s all changed now as the latest rise in the jobless rate to 6.3 per cent from 6.2 per cent tells us. Joblessness now sits at a 12-year high.
The economy is still creating jobs, with 42,700 new ones emerging in November, but it needs to create tens of thousands more each month if employment is to stabilise.
The trouble is all but 1800 of those were part-time jobs and the number of people who’d like more work is growing as a result.
Australian Industry Group senior economist Julie Toth told The New Daily she was not expecting strong improvement in employment growth over the next 12 to 18 months.
“Job ads are improving, but these will probably not translate into positive job growth within the next six to nine months,” Ms Toth said.
Bank of America-Merrill Lynch economist Saul Eslake told The New Daily that the jobless rate will peak at 6.75 per cent in a year as the economy bottoms and starts to improve.
You don’t have to look far to see signs of economic weakness.
The most recent GDP figure had the economy growing at only an annualised 2.2 per cent mid year, only two-thirds of the long-term trend.
And in the last week reports tell us consumer and business confidence are on the skids.
Ominously, the big department stores David Jones and Myer are reportedly planning to start their Boxing Day sales before Christmas, and not because Santa is coming early. It’s because shoppers are reluctant to reach for their wallets.
That will be worrying Joe Hockey, who urged consumers to get out and spend, but with people feeling uncertain about their jobs, a Christmas splurge is unlikely.
Up, up and … away?
Unemployment has been rising inexorably for the past 31 months and is now the highest it’s been in 12 years.
The worrying thing about that rise is, it’s the second longest stretch of rising unemployment in almost 60 years, with only the 38-month run-up to the peak of the early 1990s recession when unemployment hit double figures being longer.
For the past decade or more our national income has been driven by a rampaging resources industry that grew to account for about eight per cent of our economy when traditionally it was closer to two per cent.
The multi-billion dollar projects the boom underpinned are mostly built and that means a lot of those people in fluoro jackets earning six-figure salaries are losing their jobs and heading back south in reduced circumstances.
That’s taken a lot of cash out of the economy as will the current collapse of commodity prices driven by oversupply created by a lot of those new projects.
Another boom needed
So we are looking for a new economic champion but there is none stepping up to the plate.
Sure, housing construction is on the up but it isn’t close to taking over from mining construction at its heights.
And there’s lots of well-paying, secure jobs being lost in the car industry and areas like aluminium as Australia deindustrialises.
All that leaves us trapped in a pincer movement with unemployment.
There’s no recession but we are creating about 135,000 jobs a year while we need about 354,000 to hold the employment ship steady.