More signs of economic weakness in WA

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ScreenHunter_18 Jun. 05 13.38

By Leith van Onselen

As debate rages over whether Western Australia’s economy is in recession, anecodotal reports have emerged over the past few days suggesting that the jobs market has deteriorated significantly with un/underemployment on the rise.

Over the weekend, The West Australian newspaper reported how an IGA grocer experienced a sharp increase in applications for one part time position, something unheard of when the mining boom was in full swing:

The owner of Edgewater IGA and long-time Independent Grocers Association president, Mr Cummings said he stopped accepting applications for a part-time retail assistant’s position advertised in a community newspaper when their number hit 140.

Normally such a position would attract fewer than a dozen applicants and “it’s not unusual not to get a response”.

“What it says to me is there are a heck of a lot of people who are employed on a casual basis who aren’t getting the hours they need to balance their family budgets,” Mr Cummings said.

“They’ve had their hours lopped back and they are looking for extra money. We’re seeing a lot of housewives, a lot of young mothers who are looking for extra dollars to balance the family budget, they’re actively looking for work and they’re just not finding it.”

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Today, The West Australian has followed up with a story of an experienced immigrant from Ireland who is offering to pay thousands of dollars in cash and incentives to anyone that can land him a mining job:

Labourer Patrick Johnston, 28, has placed an online advertisement offering $5000 as well as his 1994 Ford Falcon valued at $1500, to anyone who can get him an entry-level mine job.

The university graduate, who recently moved to WA from Ireland, said it was rumoured that applicants had to know someone involved in mine recruitment to be considered for a position.

Mr Johnston said some recruiters had told him that personal contacts were more important than his extensive worksite experience and safety training…

“I’ve come to WA because it’s one of the only places in the world that is not in a recession,” he said…

Mr Johnston’s advert is one of several similar Gumtree adverts, with other cash incentives ranging from $1000 to $4000 in return for help securing a mining job, which mostly pay six-figure salaries.

The incentives appear a sign of desperate times, with an extra 21,000 people in WA joining job queues in the year to May, increasing the State’s unemployment rate from 3.5 to 5.2 per cent…

While Mark the Graph today showed that Western Australia was probably not yet in recession, it is clearly slowing as the mining investment boom unwinds. And with the state’s population growing by around 1,500 people a week, Western Australia is not generating enough jobs to soak-up the excess labour, resulting in a significant increase in the state’s unemployment rate.

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With risks clearly skewed to the downside, the Western Australian economy (and unemployment, in particular) is likely to get worse before it gets better.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.