Late last year, Employment Minister, Eric Abetz, trumpeted that the Government would deliver a “powerhouse economy” that will produce 1 million jobs over five years and 2 million jobs over 10 years.
Today, the Department of Employment released its Australian Jobs 2014 publication, which forecasts that only 838,476 jobs will be created in the five years to November 2018, contradicting the Abbott Government’s promise (see next table).
Achieving jobs growth of 838,476 over five years would be a disappointing outcome, and could mean that the unemployment rate would continue to rise.
For starters the creation of 838,476 jobs over five years implies that 13,975 jobs are created each month, which is well below the 17,150 jobs per month created in the decade to April 2014, which also included the fallout from the Global Financial Crisis.
It must also be remembered that this level of jobs creation would be off a much bigger base than was experienced previously. To illustrate, the 2,058,100 jobs created since April 2004 was on a starting jobs base of 9,514,700, representing jobs growth of 21.6%. By comparison, if the Australian economy was to achieve the Department of Employment’s 838,476 forecast, it would represent jobs growth of only 7.2% on a starting base of 11,645,500 jobs.
Australia’s population is also currently growing very strongly, which (other things equal) means that employment must grow more quickly in order to absorb the additional workers. Indeed, it is questionable whether 13,975 jobs per month would be enough to hold unemployment steady, given that jobs growth of around 15,000 per month is required with a steady participation rate; although admittedly, participation is expected to trend lower as the baby boomers retire.
Finally, it is debatable whether the Department of Employment’s population projection is even achievable, given the pending unwinding of the once-in-a-century mining investment boom from 2015, as well as the shuttering of the local car assembly industry by 2017. I certainly have deep reservations.
