It might be impossible to keep up with the exponential advances in technology, but some things never change – like the curve balls life throws us with monotonous regularity. The way I see it you can either cave in, or catch the opportunities. In the end, it’s how we deal with them that count. There’s a formula you can adopt, and it works for just about everything – even the ups and downs of the economy and jobs (which are the subject of this case study).
Here are a few curve ball trends (from May) to get things rolling.
- ANZ job ads fell 5.6%, following a 4 month up-trend. Senior economist Justin Fabo said “In particular, consumer spending has slowed and housing market activity has cooled somewhat, at the same time resources investment is falling sharply.”
- Meanwhile, the ABS unemployment rate held at 5.8%, despite a fall of 4,800 jobs.
- Roy Morgan’s Poll was quite optimistic. They revealed that unemployment fell for 3 consecutive months to 9.7%, while under-employment also dropped to 8.1%. This indicates that 17.8% of Australians are unemployed or under-employed, which (strange as it sounds) is headed in the right direction, and the lowest since May 2013. Nonetheless, their research suggests official unemployment is well below what is actually happening in the economy.
Despite the ambiguity, what is clear from both ABS and Morgan measures is a downward trend in the participation rate (65% and 63.6% respectively). This is a sign that more people stopped looking for work, lost their jobs, or are retiring. The participation rate is on track to continue falling as more baby boomers retire.
To look at a bigger picture, new research by Laurence Ball, John Hopkins University shows that the aftermath of the global financial crisis continues to dog growth for most OECD countries. He expects global productive capacity will be 8.2% lower than pre-GFC levels in 2015, and said, “This is roughly the size of the German economy — so basically productive capacity equal to Germany has disappeared over the past eight years”.
Australia escaped relatively unscathed, attributed to China, the government stimulus program and a healthy banking sector. However, his analysis highlights implications for our economy, with a need to address these two issues:
- As the economy moves away from resources, there is a risk that the productive capacity of manufacturing and non-mining sectors has been irreparably harmed. This was articulated by Callam Pickering last week. “A lot of that has to do with the sheer size of the boom and the sacrifices the non-mining sector made so that we could become China’s quarry”. (Source: Business Spectator, 11/6/14)
- Long-term youth unemployment, left unchecked, leads to skills atrophy, with a generation of workers less skilled than the generation it replaces. In a weak labour market, this is more about the economy than the individual.
Look for the upside, and go for it
If we tackle each of these issues (specifically the economy, baby-boomers and youth unemployment), what becomes apparent is that the positives outweigh the negatives. Here’s how it works.
Job losses are devastating for families, but those losses will be absorbed across the rest of the economy. The threat of international competition is only problematic for specific sectors, rather than the entire economy. A vast majority of Australia’s production is consumed by Australians and doesn’t face international competition.
Over the past 2 decades, Australia experienced strong population growth and a once in a lifetime mining boom, creating ideal conditions for strong growth. However, as the first of the ‘Baby Boomers’ hit retirement age in 2011, we have witnessed a decline in the labour force participation rate.
This has broader implications for the labour market. “At present the number of new entrants to the labour force after finishing education each year exceeds the number retiring,” RBA’s Governor Glenn Stevens said. “Ten years from now those numbers could be roughly equal.”
Further out the Australian workforce will begin to contract. The ABS suggests this could occur by around 2030 when there will be more Australians over 65 (than there are under the age of 15). This will shift the dynamics from a job shortage to a worker shortage, as competition for labour drives skill shortages. Glenn Stevens said,
“The question will be less ‘where will the jobs come from?’ and more ‘where will the workers come from?’
To address where the jobs will come from, new research from Deloitte has identified the hotspots to lift Australia’s growth trajectory over the next 20 years. Their “Positioning for Prosperity” Report found that mining (which comprises 10% of our economy) is set to be overtaken by the “Fantastic Five” sectors of:
- International education
- Wealth management
These have the potential to add $250 billion to the economy over the next 20 years and keep Australia on top. “As Asia’s boom evolves and new domestic opportunities arise, our research shows that Australia’s growth options remain excellent,” said Deloitte’s Chris Richardson. “Our future prosperity will come from a more diversified spread of sectors, enabling Australia to remain the fastest-growing developed Western nation in the world in the coming decade.” Australia has a head-start with world-class resources in land, minerals and energy and proximity to Asia.
Youth unemployment was the other issue raised in Laurence Ball’s research. Whilst it may be harder for young Australians to find work, this presents a strong case for training that leads to job outcomes. If there was any doubt about the value of education, Graduate Careers Australia’s new study highlights a compelling case. Almost all graduates from 2010 gained full-time employment in 2013, according to Graduate Careers Australia’s Beyond Graduation 2013 Survey.
- 3 years after completion, 90.2% of all bachelor graduates were in full-time roles (based on their study of over 12,000 graduates in 2013).
- Health and engineering graduates enjoyed strong employment growth after course completion, while natural and physical sciences and agricultural studies graduates showed “the best job growth improvements” (compared to three years ago).
- In 2013, the median salary for all bachelor graduates in full-time employment had increased to $67,000 (from $50K in 2010).
- Average salaries for IT graduates rose from $50K in 2010 to $73K in 2013 (up 46%),
- Engineering is the highest-paid graduate role, rising to average $78K in 2013.
The study also confirmed what we already know, that a business degree will lead to better outcomes. However, it also dispelled the myth that Arts degrees don’t lead to jobs, with 88% job outcomes for graduates. It brings home the empowerment of education, to turn lives around and create opportunity from adversity.
Just in case you need more career inspiration, a new Reader’s Digest poll gives an insight into our most trusted people and professions. Dr Charlie Teo, neurosurgeon, took the top gong. Voted amongst the top professions were medical specialists, paramedics, scientists and rescue volunteers. Entrepreneur Dick Smith, actor Hugh Jackman and Crown Princess Mary of Denmark also got the thumbs up, to make the top ten. Conversely, politicians and mining magnates rarely clawed above 60th spot. Clive Palmer came in at 90 out of 100, one spot ahead of Rolf Harris. The Corby sisters held the dubious honour of sharing the bottom 2 spots.
So there you have it. Depending on whether see you think the glass as half empty or full, you can draw your own conclusions.