Tuesday, March 17, 2009

Stand by for big red splotches of unemployment

Check out your own suburb here

THE MAP of Melbourne is set to be rewritten with vast swathes of unemployment and hopelessness appearing in suburbs that were previously aspirational.

A new index of employment vulnerability to be released today by the Centre of Full Employment and Equity at Newcastle University finds that newer mortgage belt suburbs including Narre Warren, Pakenham and Lilydale are set to join older "battler" suburbs in a new pattern of disadvantage that will spread further than in previous recessions.

"You used to have the old industrial belt around 15 to 20 kilometres out from the centre, all the way around in a sort of circular pattern - Dandenong and Clayton out to the southeast, Broadmeadows out to the north and then Sunshine out to the west. They are still disadvantaged," says Bill Mitchell, co-creator of the index and director of the Centre.

"But what we are predicitng is new growth outside of that ring, say Narre Warren and Pakenham and those sort of areas in the south east and places like Lilydale up the Yarra Valley and also places out near the airport, around the northern ring road. They are new, typically highly-indebted areas - ones that that are vulnerable to major job losses"...

Professor Mitchell's team has mapped the kind of industries in each suburb with other known characteristics about its residents such as education levels and extent of casual employment.

It has identified 100 "red-alert high-risk" suburbs in Victorian cities where job losses are set to be the most severe. Victoria has a higher proportion of such suburbs than any state other than Queensland and South Australia.

"These new red-alert regions have high debts, high casualisation and industries such as construction and light manufacturing at risk of going under."

"Their families have needed two earners to service their debt. In order to stay solvent the wife has had to work in low-skilled, low-paid but plentiful casual jobs.

"As underemployment climbs before unemployment climbs, these families will be threatened immediately, whereas in the 1991 recession there was less debt and causal work.

The Centre has developed an interactive website that will allows people to check their own suburb for employment vunerability and the characteristics that put it at risk.

Melbourne has the highest geographical concentration of potential job losses outside of Adelaide, something Professor Mitchell believes makes it especially vulnerable to sustained unemployment.

"So it you're in a low-risk suburb and you lose your job, you're likely to hear about a new one in the pub or in the golf club or down the surf, and you'll probably meet someone who will make an introduction," Professor Mitchell says.

"But if you are in a red zone surrounded by other people who are unemployed you and get very little quality labour market information coming from anywhere."

"We have studied 15 to 19 year olds who grew up in jobless households during the last recession and found they are now typically unemployed themselves."

Ballarat, Bendigo and Geelong are also vunerable. "The outlook for Geelong's north shore is terrible, as well as Geelong's east," says Mr Mitchell. "Most of Ballarat where the manufacturing is concentrated looks pretty vulnerable, most of Bendigo similarly.

Mildura, Shepparton, Taralga, and Wodonga are at less risk.

The Centre expects expects Australia's uenmployement rate to soar above 10 per cent if the global recession continues for the rest of the year as forecast, with total "underutilisation" climbing to 20 per cent.

Underutilisation also counts people who would like more work than they presently have. The Centre believes 1.2 million Australians are underutilised, around 11 per cent of the workforce.

It has proposed an "Employment Guarantee" under which the government commits to pay the minimum wage to anyone willing to work.

"The government would go on TV tonight and guarantee to job at a minimum wage to anybody who turns up to a Job Guarantee depot. These would be localised in every few suburbs," Professor Mitchell says.

"We would abolish the dole. Anyone who wants pay would have to work for it." The Centre has costed the project at $8 billion to $10 billion, modest by the standards of today's stimulus packages.

"We have asked local government how many people they could take on quickly and we have identified the on-costs and spending on the equipment that would be needed. For $10 or so billion we would cut the unemployment rate to 2 per cent."

Professor Mitchell says the Coalition became examined the idea as unemployment climbed during 2001.

"The then Employment Minister Tony Abbot came to Newcastle to talk to me and was sold on the idea for all long-term unemployed. He had it costed but then he left and became Minister for Health. His replacement Kevin Andrews wasn't interested."

The Newcastle Centre has had more success in South Africa, Nepal, and Argentina which have adopted versions of its plan.

Professor Mitchell fears that without such a plan Australia will emerge from the recession with new entrenched centres of disadvantage.

The Employment Vunerability Index can be viewed at http://e1.newcastle.edu.au/coffee/indicators/job_loss_index/index.cfm

3 comments:

Ilya said...

I noticed this study as well. The interesting - although rather obvious - correlation is that these are also the suburbs that have seen increased rates of delinquency on home loans over the past year. So, the EVI is not only a forward projection but a reflection of the reality on the ground today.

Anonymous said...

maybe they were previously "aspirational"

Peter Martin said...

Er, yea. I've corrected it. Thanks.

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