Fairy dust still puts sparkle in job pool

For the past few years, Australia has had a Goldilocks economy - not too hot and not too cool. As a result, Australia's job market has been just right for employees; lots of jobs and not many candidates.

Although the economy has been buffeted since August by the fallout from the US sub-prime crisis and hip-pocket nerves have been pinched by rising oil prices and interest rates, the job market has remained resilient.

Well, until last month, that was the case.

In May the longest run of sustained employment growth in more than three decades ended with the loss of 20,000 jobs - a whopping 17,000 of them in NSW.

It is the first time since 2006 that the economy had shed jobs. Economists were betting on an increase of 13,500 jobs.

So are the terms "skill shortage" and "full employment" things of the past? Probably not, say recruitment experts.

The managing director of Chandler MacLeod, Steve Cartwright, says the shock loss of jobs was more likely a blip than the start of a long-term trend.

He says signs are that businesses took a breather in February and May.

"Although there are pockets where employers are taking a breather, overall the job market is very strong," Cartwright says.

"I think that is highlighted by the fact all the large employers of graduates have not taken their foot off the accelerator at all.

"They are going ahead with their graduate intake as in years before."

While the overall job market was still strong, NSW was the weakest of the states.
Western Australia, Queensland, and South Australia are still riding high on the mining boom, and the outlook for the rest of 2008 is positive.

"We are, to some extent, being protected from the full impact [of rising interest rates and fuel prices] by the buoyant resources sector," Cartwright says. "The Reserve Bank and petrol prices have done enough to slow the economy.

"I don't think they will jeopardise it by having another [interest-rate rise]."

The general manager of Link Recruitment Sydney, Andrew Williams, believes it is far too early to tell if the loss of jobs in May signals the start of a long-term trend.

"There is just an element of caution going through the market in the run up to the end of the financial year," Williams says.

"People are probably trying to protect financial-year profit numbers."

Williams says the danger of reading too much into the negative figures is that they can easily become a self-fulfilling prophecy.

"One of the things I am conscious of is that you can talk yourself into a recession quite easily," he says.

"Fundamentally we are still down [below] 5per cent unemployment ... and that it is still pretty good."

Longer term, Williams and Cartwright say the employment market is headed for uncharted waters as baby boomers retire.

"I don't think the usual models of what happens to employment have been tested in an environment where the baby boomers are all retiring and you have more people leaving the workforce than you have entering the workforce," Cartwright says.

Employers are starting to plan for the exodus by introducing plans to entice older workers to stay in the workforce and up-skill their employees, Williams says.

"Hiring demand is going to be high - because the demand is going to outstrip supply," he says.

So it would appear that Australia's Goldilocks fairytale for job seekers is to continue for a while yet.

"Where, historically, you may have seen a large rise in the unemployment rate when the economy starts to slow, this time around there is the counter balancing factor of the retiring baby boomers," Cartwright adds.


Drop in the ocean

The loss of 20,000 jobs in May might sound like a big number, but in comparison to the number of people employed it's relatively small.

Despite the loss, Australia's unemployment rate stays unchanged at 4.2per cent in May.

The unemployment rate - the percentage figure that is quoted in the media and by politicians - is calculated as the unemployed divided by the labour force (that is, employed plus unemployed).

According to the Australian Bureau of Statistics, as of last month there were 10,705,300 people employed, up from 8,597,500 a decade ago. So a loss of 20,000 jobs is roughly 0.2 of 1 per cent of the total number of people employed.

While the total number of jobs has been headed upwards over the past decade, the number of unemployed has decreased from 725,900 in May 1998 to 465,500 last month.

The Daily Telegraph. Saturday 28 June 2008