Get ready for cracks in our jobs market
Prepare for fundamental cracks in wide sectors of the labour market during coming months. The employment fall started in the Victorian retail sector but will quickly spread along the east coast and into other occupations.
The younger generation are set for a big shock and, if the momentum continues, then working from home more than a day or two a week will come under pressure for those which don’t have specialist skills.
For years, a great many young people have been working on the basis they are doing their employers a favour by working for them. Many young people feel they are entitled to a job if they want one. They need to be prepared for a shock.
These work attitudes are very different to the traditional attitude to work, but are understandable given labour shortages have dominated the employment scene over the past decade.
Like all Australian enterprises, retailers are facing never-ending cost rises which have often been neutralised via innovative marketing and spending support by 70 per of the population which are not mortgage or rent stressed.
But many in those ranks are now holding back their spending, so costs must be reduced.
Bunnings is now the pre-eminent Australian retailer and according to Morgan Research is the most trusted brand in Australia. Its strategies we will set the pattern.
Over the weekend, a small business owner explained to me his son is in a group of young people who are in a state of shock — they have been long time casual workers in Bunnings stores and their hours have been slashed.
The son asks his father: “How could this be? Bunnings makes squillions and my mates need the money”.
And, of course, a similar conversation theoretically could have taken place among Commonwealth Bank employees. In the CBA case, permanents are often headed for the chopping block. Again, CBA is highly profitable. Other banks will follow and some of those bankers, without specialists skills, who don’t turn up to the office may be made redundant.
Increasingly, people in corporate and government life are going to find their jobs less secure.
Already, executives who take retrenchment packages are noticing a difference. Six months ago they would have had a choice of jobs — now the competition has intensified.
Bunnings would have been impacted by the overall spending cutbacks, while the great building boom of recent years has slowed dramatically.
But, high sales of pet foods and, I think, cleaning fluids would have helped provide an offset.
In addition, Bunnings, like all other enterprises, has increasing costs — labour costs, transport costs, government-imposed charges including energy costs and so on.
The first reaction of any enterprise — and Bunnings is no different — is to look at what efficiencies can be obtained, but after this labour has to be reduced in line with the fewer customers.
A great many enterprises are seeing a constant staff turnover, and they will simply not re-hire people who leave.
The strategies of non-replacement of leaving staff and the Bunnings cutback on casuals hours is OK for a time, but if trading levels cause it to be pursued for too long the wrong people exit and the business becomes damaged.
Leaving Bunnings aside, if the downturn continues during this year, there will be a higher rate of CBA-style retrenchments, including retrenchment from bloated organisations, like state governments led by Victoria and NSW.
Given the shortages of labour which still exist, we are looking at the beginnings of a trend which will take months to gather momentum and boost unemployment. And any rise in unemployment takes additional time to find its way into the statistics.
As has happened in the past, there is a risk the Reserve Bank will take too long to lower interest rates, especially given the looming tax cuts.
A serious part of the Australian problem is the Albanese government has passed through industrial relations legislation which will considerably lower labour productivity. At a time of unavoidable costs rises and lower consumer demand, employing labour has become less flexible and more costly as a result of the Albanese government actions.
The legislation doesn’t come into operation until August 26, but already enterprises are beginning to look at how they will need to overcome the labour rules being introduced.
Further retrenchments and removing more casuals are on the Australian employment menu. For those in danger of losing their job, the Albanese government actions could not have been worse timed.
In my commentaries I often reach conclusions via information from enterprises on the ground rather than from the statistics, which in the current environment can be confusing as they combine both the mortgage and rent stressed groups and the more affluent areas.
But, my colleague, Terry McCrann, using the statistics, has come to a similar unemployment trend conclusion, expecting we will be seeing considerable labour shedding as the year progresses.
He believes unemployment might reach five per cent.
If he is right, and there is no way of telling until the event takes place, then a far more serious situation will arise. In the current environment, five per cent unemployment rate will trigger a much deeper economic and social catastrophe
The younger generation will be very confused and while older people have seen it before, it was a long time ago.
Indices 4/3, page-73
Job losses across Victoria’s retail sector are set to quickly spread along the east coast and into other occupations. Picture: Gaye Gerard
Bunnings in Alexandria, Sydney. Picture: Gaye Gerard
CBA branch in Sydney. Picture: Brent Lewin
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