Australian jobs in “budding nightmare”

ScreenHunter_1234 Feb. 13 14.22

By Leith van Onselen

Business Spectator’s Callum Pickering has provided a nice synopsis of the Australian labour market, which he describes as a “budding nightmare”:

Australia’s unemployment rate is at its highest level in a decade and is set to deteriorate further but the unemployment rate continues to understate the swift deterioration of labour market conditions…

The first of the ‘Baby Boomer’ generation hit retirement age in 2011 and since then we have witnessed a sharp decline in the participation rate.

This process is only beginning and the reality is that an ageing population will continue to put downward pressure on the participation rate for years to come. Increasingly we will be relying on a smaller share of our population to drive the economy.

The obvious implication is that it will become increasingly harder to maintain the level of growth that Australians have become accustomed to. For years favourable demographics and a resource boom has hidden our lacklustre productivity performance but now the worm has turned.

Now we find ourselves at the beginning of a structural change and unless our productivity performance improves what we now consider ‘trend growth’ will become a pipedream.

Callam goes on to describe the difficulty for the RBA in cutting rates further given housing speculators and the government’s challenge in restoring surpluses before concluding:

Recession talk is premature but the reality is that the labour market will only get worse before it improves.

The only thing I will add is that although we’ may see a little cyclical flush of hiring in the first half of this year, the unwinding of the once-in-a-century mining investment boom begins in earnest in the second half and will renew the downward pressure on jobs since the the production (export) phase of mining projects are far less labour intensive than the construction phase.

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41 Responses to “ “Australian jobs in “budding nightmare””

  1. Mark Out West says:

    From the the very small end of town I can say that many small businesses I speak to are seeing the larger companies moving into their territory. I’m presuming they need cash flow.

    There is also the flow of unemployed miners back into the metro picking up pace. While those I talk to say that these peoples approaches to work for lower rates have been rejected to support their loyal work force. These attitudes will change when work becomes scarce and cutting pay rates becomes about the only avenue to make a buck.

    • Failed Baby Boomer says:

      Mark,
      Thanks for the intel.
      How do you think this will effect the Perth housing market?

      • Mark Out West says:

        FBB

        That is for much wiser people within these blogs to suggest (as I’m also a FBB). I’m waiting till the end of the year to assess if the suggestion from these pages are right we will get the early indications of their impact then.

      • AngryMan says:

        Guys guys dont be so negative.

        Look.

        http://www.news.com.au/finance/real-estate/property-prices-to-keep-growing/story-fncq3era-1226826140488

        Perth, another strong performer last year, is also predicted to see price growth for houses of about 6.3 per cent.

        While the figures may differ from forecasts by ANZ chief economist Warren Hogan this week, the sentiment is still the same, prices are starting to claw their way back up.

        See. See.

        It all good. All it means is those unemployed people will have plenty of time to spend looking at realestate to buy and rent out.

      • rich42 says:

        @Failed Baby Boomer…..That user name made me laugh. Not in a macabre way (I’m sure you’re exaggerating). It just tickled something. Very funny.

    • interested party says:

      and while the small end of town gets white-anted by the bigger boys starving, we have this from the top to look forward to as well…….
      http://www.zerohedge.com/news/2014-02-12/europe-considers-wholesale-savings-confiscation-enforced-redistribution

      this ain’t funny anymore…

      • This was never funny.

        Management of the big 4 banks have genuine grounds to believe they have the country checkmated – including bank shareholders.

        The only alternative move is Steve Keen’s Modern Debt Jubilee.

        I can’t see Joe Hockey playing that.

      • interested party says:

        David,

        I have just read a report on the chance of a bail-in occurring here in Australia and was surprised that “The EU, UK, the U.S., Canada, Australia and New Zealand all have plans for bail-ins in the event of banks and other large financial institutions getting into difficulty.”

        The report is from Goldcore and you need to supply email and name.
        I suspect that we are distant chance of this occurring here in Aust as the riots in the other countries will make our government think twice……..unless we go first…….then we will be rioting.
        Not sure on the Steve Keen jubilee…..smells of moral hazard to the enth degree. Can you share any thoughts on how that would go down?

        I totally agree on the banks having us checkmated……we will pay no matter which way to game goes..

      • kodiak says:

        If they’re flogging gold then they’re just talking their book.

        It would be interesting to see how this played out in the US. I’d expect rioting. Good thing it’s been training police to brutalize the citizens for a while.

      • interested party says:

        “If they’re flogging gold then they’re just talking their book.”

        Yeah, agreed…….and they are. But in all seriousness, the precedent has been set and I have heard rumblings on Canada, Britain and NZ laying the ground work for bail-ins and wanted to know where Aust sits.
        the link I chased was from this..
        http://www.zerohedge.com/contributed/2014-02-12/bank-england-stress-testing-banks-property-crash-risk-bail-ins
        click on the image for the report……..no loss if you don’t though.

        I have trouble believing that it could happen, but we live in a pretty eff’d up world right now so forewarned is fore-armed.

      • Opinion8red says:

        @IP,

        The talk of bank bail-ins G20-wide … including AU and NZ … is not just rumour, or GoldCore talking its book. It is fact. And there is reams of government-sourced evidence out there to prove it.

        Click on my username to visit an unmentionable (here) now-defunct blog; choose “Highlights” at the top, and then read the linked posts uppermost.

        In particular “Australia Plans Cyprus-Style “Bail-In” Of Banks In 2013-14 Budget”, and “G20 Governments ALL Agreed To Cyprus-Style Theft Of Bank Deposits … In 2010″

      • Opinion8red says:

        You might also find three other posts not listed in “Highlights”, carrying the titles:

        “New Zealand Banks “Pre-positioning” For Cyprus-Style Bail-In”,

        “Canada Plans Cyprus-Style “Bail-In” Using Depositors Money”, and

        “Timeline For “Bail-In” Of G20 Banking System”

        … respectively, of additional interest.

        Google those titles, or use the search box.

      • interested party says:

        Op8,
        This one…..?
        http://barnabyisright.com/2013/07/10/australia-plans-cyprus-style-bail-in-of-banks-in-2013-14-budget/

        LOL, had to do it.

        Good digging…..thanks heaps. Short ropes and tall trees are in the future.

        GOOD GRIEF………some of the stuff you have is downright scary…….bloody hell. Don’t know if I should thank you or stick my head back in the sand. Shit!

      • interested party says:

        L O C,

        Many thanks dude.
        I am as of now removing cash from accounts starting this monday. It seems this is game on. Thanks to Op8 also.

      • aj. says:

        It is clear that deflation is the anti-christ. Perhaps the main game here is just to scare the bejesus out of anyone hoarding money?

      • interested party says:

        Gunna, thanks.
        That link is in top of thread that started this discussion. All the same though, it really is bad when this shit is tabled.

      • interested party says:

        AJ,
        I grew up with a Com bank money box handed out at school, and to see this shit going down gets up my nose. Save for your future we are told, then all of a sudden they design methods of parting the saver and his/her cash as if it is a bad thing to do…………..#^^%#%^&###&$%%&^holes!!!!!

      • Gunnamatta says:

        Sorry chief, I should have looked.

        For mine, after the experience of having fried the good punting masses of Cyprus last year, there would be a very serious risk of the EU coming apart. Spain has held off on asking for assistance simply because of what that may imply in terms of strings on ECB assistance, Slovenia has done similarly and Hungary wouldnt be that far away.

        They may try it. But my guess would be that nations would – starting with the Poms who have their vote already lined up – walk away.

      • aj. says:

        Indeed. We are all coming to terms with the sheer magnificence of the lies.

        There is no doubt that the time value of currency is a massive risk, there is a concerted attempt to ensure that a currency is a transactional tool, but not a savings mechanism. This is in stark contrast to the pork pies told to punters, but to be fair that was in the day before money was truly confetti.

      • Opinion8red says:

        @LoC,

        Thanks for the Hockey link. Always fascinating to me, the timing and the similarity of phrasing used by politicians and other “public servants” the world over when making statements that are always kinda sorta smearing over and/or skirting around the truth … that they are acting in a coordinated way, to f*ck us all over. Hockey’s language in many instances is near identical to some of that used in the Reuters article (referenced by Zero Hedge) viz. cash-grabbing the EU continent.

        FWIW, our govt (Laberal) has been angling to go after our super for some years now. This be the beginning, methinks, now that they have many regulatory wheels in motion for several years now to enable it.

        “Encouragement” to “invest” where the goverbanksters want = first stop. Stealing it outright (no doubt to “help” / save us from some dire financial crisis/emergency) = second stop.

      • Opinion8red says:

        @Gunna,

        “But my guess would be that nations would – starting with the Poms who have their vote already lined up – walk away.”

        We’d like to think so. But I can also see a high likelihood the politicians will be spooked by lurid assertions of TEOTWAWKI if they do not comply. Given the obvious fact that they are all self-serving invertebrates, I do not trust our elected “representatives” (ROFLMAO) to ever act contrary to the banksters’ decrees. Hell, they’ve all been blithely going along with this BIS/FSB mandate since April 2009!!

      • interested party says:

        Op8,
        you are so all over it dude.

        I have struggled to explain the possibility of this to my parents and my wife’s parents as well and …you know…. I have three heads and all that………frustrating, really really frustrating.

        Once the population start pulling cash, it becomes self fulfilling, so I spose first in is the safest bet.

      • flyingfox says:

        Once the population start pulling cash, it becomes self fulfilling, so I spose first in is the safest bet.

        The question is, what do you put it into?

      • Opinion8red says:

        @IP,

        Hey, don’t feel bad. I’ve been trying to alert folks to this stuff for years now. Almost noone wants to hear. Even when you can point them direct to official documents on the websites of governments, central banks, and “neutral” (LOL!) internationalist bodies like the BIS, FSB, IMF, et al.

        Even here on MB, what appears to be the most intelligent and open-minded economics / financial forum in Oz, some people’s political and/or intellectual biases and conceits mean they don’t want to hear it, and so, ban you from linking to prepared exposés. Which of course makes it tough getting anyone’s notice, because (as you’ve now seen) most of the time the really damning admissions are hidden by obscure language, and buried deep down amongst hundreds of pages of other BS no one ever reads. Moreover, often the truth is found only by connecting little snippets from here and there and all over in the official propaganda; post a comment with more than one or two links direct to government docs, and you find your post “disappeared” for having too many links, or, if it does get published, no one can be bothered tracking each piece for themselves, wading through hundreds of pages of crap. Frustrating. And of course, everyone automatically presumes you’re a nutter for even daring to think the ruling class might actually be planning to screw the populace. The old “tinfoil hat conspiracist” accusatory mode of self-comforting is ever-present, even here, in this forum of thinkers.

        Ahhhh, the sufferings of every Cassandra throughout history ;-)

      • interested party says:

        FF,
        I really have no answer at this time.
        Some will be going into more PM’s, and other long life storage items. I run my own business and employ so cashflow is paramount……having said that though, I do not trust 1 single politician…..and if you investigated the linked items above, and are of sound mind, then you are in the boat with me.
        This will not be an announced event is what the take away is…..read into that what you will, but the evidence is surely mounting.

      • Locus of Control says:

        @Op8. Looks like a coordinated thing. A day after it comes up as a thought bubble in Europe (via @Gunna’s Reuters link) our Treasurer throws it out there too.

        Likewise FF & IP I am increasingly nervous about my not insignificant cash holdings. Cyprus was the precedent, what will follow? Prudence is for suckers apparently…

        I’m also at loss FF. If you withdraw it you lose the (meagre) interest earnings. If you buy gold there could be another confiscation as was enacted in the US during the Depression. You can put it into shares of your own choosing, but they’re not what they used to be with the algos, HFT, shorting & other manipulation that goes on. Leverage it for property, but not sleep at night? In the mattress, but then a bout of high inflation will leave you with Monopoly money? Just spend it all today & worry about tomorrow when it comes might give me the greatest joy, but I just can’t break years of instilled savings habit (thanks for nothing grandma!).

        Whatever you do has to be staggered. My bank will only let me move a max. 10k a day. Frightening – the whole lot’s mine & if I want it tomorrow, I SHOULD by rights have access to it.

  2. jim from qld says:

    My father-in-law runs a building company of about 30 employees. He was shocked to find out that on a residental single home project contract size circa 800k, that the behemoth Hutchinson Builders were involved.

    Thankfully he won the tender as Hutchinson said they didn’t operate sites where the owner came on site and spoke to tradesmen directly, but I’m sure this is a microcosm of what’s happening everywhere in the economy. It’s quite foreboding.

    • Yes, in the engineering game, the big boys are hungry, too. They’re strugglinf to be competitive, though….but it is making them more creative, which is good…

      There are goods and bads.

      Word on the street is that whilst the big biys cut margins and struggle for work, the little guys are only going to survive by looking after eachother; and, it’s quite impressive how frequently networks of little guys are frequently beating out the larger guys, fat on corporate largesse and inertia…

      My 2c

      • aj. says:

        I have cut my renovation quote from project builders by 50%!! Just by dealing directly with honest tradies and their friend network. And the quality is outstanding.

        The pen pushing and seat polishing part of the building industry should be very nervous.

    • The Patrician says:

      but but but Worktime said things are so busy he couldn’t find a colour consultant!
      DAAAAHLING ;)

    • Schadenfreude says:

      I concur… Our small firm as recently as December last year had a rep from Metricon coming to us and saying that they were prepared to take on project builds that they previously wouldn’t have looked twice at…

      Looks as though they are trying to reinvent themselves now, new designs and branding etc… Same old s**t……IMO.

  3. Willy2 says:

    “Falling off the demographic cliff” (Harry Dent), any one ??

  4. DMc says:

    As the mines ramp up production, that means money coming in. I wonder how much of it will flow into other parts of the economy rather than go o/s to foreign owners, to fund overseas mining investments, or via purchase of imported goods.

    Could we see cash flow from production as well as spending by retirees fund a mini-boom in services, including health related?

  5. pelych says:

    Re participation rate.
    The fall may be due to normal retirements but it could also be that many previously retired or about to retire (c2007/2008 onwards) were forced back into the workforce as their superannuation took a belting. Now that share prices have substantially recovered, many are returning to retirement or finally entering their postponed retirement. The sudden release of the backlog could create a statistical aberration that may clear in a few quarters.
    My 2c

  6. Gunnamatta says:

    I just watched ‘The Business’ with Ticky Fullerton and saw 3 seemingly credible mainstream economists state emphatically that the end of year unemployment rate would be 6%. 2 of them waffled on about construction filling in the gap from a mining downturn.

    I dont believe that, short of the government pulling all sort of massive stimulus out of its kitty. Maybe the ABC has decided to dumb things down to appear more MSM like.

    • Ortega says:

      The unemployment rate in Greece has just hit a new all-time record. It is nothing short of catastrophic and may lead to convulsions that could trigger the demise of the zone.

      All by way of saying that positive forecasts (vomit) about the unemployment rate in Greece have literally been prognosticated by every 2-bit economist for the last 3 years. (from the ECB, ELSTAT, to the IMF).

    • flyingfox says:

      I think the majority are just deluding themselves and have been for a while.

      Just five months back at election time, everyone was was disputing the mining cliff, housing was taking off seriously and confidence was up. Go back another 6 months and the mining boom was going to last another 20 years.

      Apart from MB and a few other outlets, the consensus has been that it is and will be good for a while.

    • Gunnamatta says:

      this is the sort of thing to trigger the demise of the zone

      http://mobile.reuters.com/article/idUSBREA1B1ZI20140212