Friday, March 13, 2009

More-hollow employment

UNEMPLOYMENT has surged to its highest point in five years as part of a "hollowing out" of the Australian labour market amid news of a further slowdown in China and a World Bank prediction that the global economy will shrink further than had been thought.

Australia's unemployment queue now stretches to 590,000 people - some 100,000 more than the low point reached during 2006 and the longest queue since mid 2003.

While Australia's unemployment rate has soared from 4.8 per cent to 5.2 per cent, the number of Australians in work appears to have remained broadly steady.

But the makeup of jobs is shifting from full-time to part-time, with Victoria in the forefront of the hollowing out...

An Age analysis prepared using the Bureau of Statistics reliable "trend" measure shows that 35300 full time jobs have vanished in Australia since November, replaced by an extra 38400 part-time jobs.

The lower hours worked mean that Australia lost the equivalent of 16100 full-time jobs in that period, more than half of them in Victoria.

In the past six months Australia has lost the equivalent of 21,300 full-time jobs, also more than half in Victoria.

In recent months the destruction of work in Victoria has been exceeded only in one other state - Western Australia.

"This trend away from full-time employment towards part-time employment does not bode well for economic growth," said ANZ economist Riki Polygenis. "It suggests firms are cutting back on staff working hours and will mean downward pressure on household income growth and household consumption."

"Employers are still in the first stage of the cost shifting phase of lowering hours worked in an attempt to lower expenses as business activity falls," said Joshua Williamson of TD Securities. "Unfortunately, the leading indicators strongly suggest they will shed labour outright over the course of 2009."

Women are holding on to full-time jobs much better than men with trend figures showing no loss of female full-time jobs in the past three months, the period in which the government's stimulus package has shored up the fortunes of retailers, traditionally big employers of women.

Victoria's unemployment rate leaped from 4.8 per cent to 5.6 per cent in February, putting it within reach of the highest rate in the country - 5.8 per cent in NSW and South Australia.

The ACT and the Northern Territory remain the most employed places in the nation with unemployment rates of only 3.9 and 2.4 per cent.

In most places the unemployment rate is climbing not because employment is falling but because it is no longer climbing fast enough to meet Australia's population growth. CommSec economist Craig James said an extra 20,000 jobs were needed each month just to keep the rate steady.

World Bank President Robert Zoellick revealed in a British newspaper interview Thursday that he expected the global economy to shrink 1 to 2 per cent over the course 2009. The Bank has not previously revealed its growth estimate, other than to say it expects it to be negative for the first time since the Second World War.

In the interview with the London Daily Mail Mr Zoellick said it would probably be more accurate to say that global economy was on track for its worst recession since the 1930s.

"These are serious and dangerous times. We haven't seen numbers like this since World War Two, which really means the Thirties."

"My guess is growth will probably fall about 1 to 2 per cent."

The Bank's updated forecast will be used to guide Finance Ministers and Treasurers from the Group of 20 leading economies due to meet in London on Saturday. Australia's Treasurer Wayne Swan left for the meeting Thursday. He will address the London School of Economics today.

In comments that will not be welcome to Mr Swan the World Bank President played down the importance of additional stimulus measures saying it was more important to fix the financial system and aid ailing developing nations.

"Stimulus plans will be like a sugar high unless you fix the banking system," he said.

"Developed countries understandably focus on their stimulus packages and bailing out their banks. But if they could just devote 0.7 per cent of their stimulus to those most in need, it could help the developing world."

In Parliament Opposition Leader Malcolm Turnbull asked the Prime Minister to take full responsibility for the downturn refereing 3 times to "the Rudd recession".

China revealed Thursday its industrial output and its retail sales had slowed. Its exports fell slid 26 per cent from a year earlier in February, while its imports slid 24 per cent.

Employment holds up, but the work vanishes

Full time job equivalents lost:

Trend. Since November since August

Victoria 8300 12800

NSW 3200 12900

South Australia 3600 6100

West Australia 9800 7300

Tasmania 900 1700

Jobs gained:

Queensland 3300 7800

NT 2600 4200

ABS, Age calculations

The Unemployment Hit Parade

NSW 5.8%

South Australia 5.8%

Victoria 5.6%

Australia 5.2%

Queensland 4.5%

Western Australia 4.2%

Tasmania 4.5%

Queensland 4.5%

Western Australia 4.2%

Northern Territory 3.9%

ABS, seasonally adjusted