After last month’s anomaly, the unemployment rate for March has increased to 5.6 per cent, up 0.2 per cent. While 36,100 jobs were lost, a falling participation rate helped soften the headline increase.
This compares to Roy Morgan’s unemployment rate of 10.8 per cent for March, down 0.1%.
Contributing to rising unemployment in the coming months will be jobs lost in the automotive manufacturing sector after Holden this week announced 500 jobs to go, the biggest round of cuts from Holden since July 2009. 400 jobs will go at the production line in Elizabeth, north of Adelaide and 100 engineering jobs from Melbourne. Many more are expected in the component supply chain, as the industry adjusts to lower volumes.
While job cuts are never pleasant at the best of times, what is angering the government and tax payers is the amount of government funding Holden has received to keep automotive manufacturing & jobs alive. Figures from Holden suggest it has received $2.17 billion dollars worth of handouts from state and federal governments over the past 12 years. Ford has received $1.1 billion, while Toyota got handouts of $1.2 billion.
The Australian reports “The cuts come barely a year after the company received a $275 million assistance package, $215m of which was from the commonwealth, $50m from the South Australian government and the remainder from Victoria. The package was intended to underwrite investment in new models and preserving manufacturing until at least 2022.”
Another industry currently getting substantial government handouts is the residential construction industry. After the predictable fate of the Automotive sector, should government’s now be questioning the fortune of spending good money after bad by propping up jobs in the construction industry? The residential construction sector is in a downturn of depths that have not been seen in decades. The reason is severe unaffordability of the product they offer. Can throwing endless buckets of money at it, fix this problem?
Small and medium business leaders, many close to insolvent, should rightly be asking – where is their bailout?
» 6202.0 – Labour Force, Australia, Mar 2013 – The Australian Bureau of Statistics, 11th April 2013.
» Holden ‘cannot guarantee jobs’ after axing 500 jobs – The Australian, 9th April 2013.
“Where is their bailout?”
Good pick up! Have been hearing this for quite some time.
Ironically, many business owners missed out on both rounds of cash handouts from the stimulus, due to not meeting the criteria.
As for the point of small and medium businesses being close to insolvent, I think that many large companies even though they may have cash reserves, are running massive debts. Why pay down a debt, when in 6,9,12 months you may need to borrow again, but the bank wont release any extra funds?
Reminds me of a great quote “If you owe the bank $10k, YOU have a problem. If you owe the bank $10M, THEY have a problem”
This is when things will get interesting. When people cant service their debt guess what will happen to the market. The thing is its probably higher than 5.6 because if you work 1 hour your considered employed. I cant believe they do that. I wonder what the true unemployment rate is.
This article is more evidence of financial incompetence from the institution called government. While they hypocritically cut important Healthcare and social programs and introduce more and more taxes, it sees fit to instead waste our hard earned taxes and resources propping up and subsidizing a minority of failling industries while the majority of businesses are told they do not meet criteria for any help. Big business have deeper pockets to fund politicians personal political campaigns. Maybe politicians are returning that favour back and saying ‘Thank you’ by way of something called ‘subsidies’?
SPREAD THE WORD-DONT BUY NOW!!
Spread the word, Don’t buy now!
Sorry Theo, I have been trying that here in WA but have had to stop recently for fear of being kidnapped and taken to the SA border. It’s prices to the moon here. I take solace in the fact that nationally it is investors mainly buying at the moment and this is diluting their equity with more debt.
As for first home buyers, well, sadly, there will be another vintage of mortgage in the coming years with negative equity and repayment arrears.
Steve,
I live in WA and property prices are on the way up again. We are still riding the Mining boom and most of those people flooding into WA are looking for jobs in that market.
I went to one home open the other day (no intention of buying), and the RE agent said to me that the normal mortgage in WA was from $700K – $1.5M. The house was advertised for 1.1M and had plenty of lookers rolling through.
There are so many people coming into WA at the moment that this is putting pressure on house prices and Rent.
It will end though, as current projects run through their design and infrastructure phases, as nothing new is going into the pipeline to keep it going. Browse LNG is typical of what the future holds.
I suspect you will see the current projects run for the next 1-2 years before everything starts to wind down. Price of Iron Ore will drop as well due to World wide availability increasing from Aus, India and Vale mines.
I think folks coming into WA believe this Boom will last forever. It won’t, I’ve worked with the mining industry during slumps and when they happen, they happen for a while. Expect IO prices to drop to historical levels ($80 per ton) and watch what happens next.
I rent, and resist the urge to buy knowing it won’t be forever. Hang tight.
Not Spending,
I have exactly the same take as you. Projections are for Iron Ore to move into a sea borne surplus this year and get worse in the coming years. There were news reports this week of 1.75 million temporary visitors in OZ of which 600k are kiwis. When it turns down in WA people will leave in droves. Kiwis like Oz but they love NZ and if they or other temps cannot get the dole they will tend to move on, this even goes for the Aussies from the east coast, they will return home.
So investors, buy up the land and put houses on them, SQM Reserch now has the vacancy rate starting to climb and watching real estate.com.au closely for rentals it is actually becoming
quite noticeable.
I have a mate with tiling company and he has a lot of Chinese workers working for him who are suppose to be students but are not actually going to school. With Browse getting knocked on the head and the construction side moving to a production phase in mining WA is a basket case waiting to happen.
This unemployment statistic is a work of fiction. Not only are those people not counted who work an hour a work, the 820,000 “invalid” pensioners are also not counted nor is the army of single mums
100 people at my work were retrenched this week, with another 600 to be retrenched at a later date (jobs being off shored).