500,000 Jobless In Work Shake-up

16 January 2009

MORE job losses are expected after official figures revealing the biggest monthly fall in full-time employment in almost six years, as companies sack some staff and reduce the hours of others.

The number of full-time jobs fell by 43,900 last month, while part-time positions grew by 42,800, leaving a smaller than expected total job loss of 1200.

But growth in part-time work was not enough to stop the unemployment rate hitting a two-year high of 4.5 per cent. Half a million people were searching for work as a slowing economy cut the annual pace of jobs growth to 1.3 per cent, from 2.8 per cent at the start of last year.

The shift from full-time to part-time employment is a common feature of economic downturns, as employers prefer to cut hours before they cut jobs.

The Bureau of Statistics defines a full-time job as one that requires 35 hours or more a week, meaning that working just a few hours less would classify a person as a part-time worker.

While the overall job loss was better than expected, economists predict worse is to come.

Riki Polygenis, of ANZ, said: "As the downturn intensifies, there is little doubt a more significant rise in the unemployment rate is in store."

The sharemarket slumped more than 4 per cent yesterday in reaction to fears of a deeper and more protracted global recession. The fresh bout of pessimism was sparked by news from the United States that the world's biggest consumers had cut spending in December, leading to the biggest annual decline in US retail sales on record.

The dollar shed US 2 cents, sinking back below US 66 cents, after traders realised the deteriorating global outlook and further domestic job losses would mean more interest rate cuts from the Reserve Bank, reducing the attractiveness of holding Australian currency.

The acting Prime Minister, Julia Gillard, said the job numbers revealed the direct impact of the global downturn. "What these figures are telling us is that the global financial crisis has resulted in job losses in this country," she said. Treasury expects unemployment to hit 5 per cent by the middle of the year.

But NSW is already there, home to the second-highest jobless rate in the country of 5.2 per cent. (South Australia is highest, at 5.3 per cent.) NSW has lost 54,600 full-time positions since March, which have only been partially offset by part-time jobs.

An economist at the Commonwealth Bank, Michael Workman, said the state was over-exposed to the economy's weakest sectors. "The largest job losses in the past year have been concentrated in retail, manufacturing and finance and insurance, the sectors heavily represented in NSW," he said.

An industry breakdown of job losses for the year ended November shows the retail industry was worst hit, losing 45,000 positions, followed by finance and manufacturing, down about 20,000 each.

The Australian National Retailers Association said another 50,000 retail jobs could be at risk, if the early 1990s recession was any guide. "We're now entering what is normally a quiet time for the sector after the rush of Christmas and the stocktake sales, so we'll be holding our breath to see how many more retail jobs go," said the chief executive, Margy Osmond.

But Ms Polygenis said overall job losses this year were likely to be milder than during the recessions of the early 1980s and '90s because businesses were carrying less debt and wages had not risen as sharply.

"That is, workers have not on the whole priced themselves out of a job."


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