The recent Federal Budget has taken up a lot of column inches in recent weeks, with much discussion on how this will affect certain sections of the population. One question that hasn’t received quite as much attention is the effect this significant budget will have on employment prospects around the country. In this article, TMS assess who the winners and losers may be from the new policies outlined, and how the job market will be affected as a whole.
Prior to Joe Hockey delivering his speech on 13th May, the employment market in Australia had started to improve in certain areas with the unemployment rate having dropped to 5.8% in recent months.
The well-documented “two-speed economy” had started to reverse, with the housing market improving to partly offset the slow decline in a resources sector at the tail end of a decade long boom. House prices were drifting upwards (particularly in Sydney), giving consumers more equity in their homes and more confidence to spend, which in turn was starting to have a positive effect on the retail sector.
However, the big elephant in the room was the impending budget, which the government had pre-empted would be a tough one for all. Now we know what’s in it, how will jobs be affected?
One of the major positives for the employment market in the Treasurer’s speech was the commitment to major infrastructure projects, which will be welcomed by the construction and engineering sectors. Organisations in these industries have been shedding staff in recent times due to their previous reliance on the resources boom, and an injection of new government spending on a range of large projects will help insulate them from this downturn. However, it is questionable how quickly these proposed new roles will come on-line, with most firms likely to maintain their existing staffing levels until projects are won.
Similarly, the resources sector had reason to celebrate, with a commitment to remove the carbon tax likely to mean profits are not eroded quite as fast. However, the big issue in this sector is falling commodity prices, which are causing previously profitable operations to become less economically viable. As long as this trend continues, it is likely that the resources sector will not be a major net producer of new roles in the coming 12 months, despite a favourable budget.
The health sector has received a lot of attention due to the proposed introduction of the Medicare co-payment. However, one possible side effect of this policy may be to increase the dependency on hospitals, as consumers try to bypass the primary health care providers, something pointed out by the AMA recently. This may inadvertently increase the demand for front line medical staff in the coming few years, although this needs to be countered by the reduction in funding for the States, which are the primary providers of healthcare services.
According to figures from 2013, the education sector in Australia represents 7.8% of the total working population. With Education funding largely being distributed by the States, any reduction in state funding (as indicated in the budget) is likely to reduce job opportunities in this sector. Conversely, the ability of higher education institutions to be able to set their own fee structures may well lead to an increase in spending by these organisations, possibly balancing the potential reduction in the primary and secondary education sectors.
On balance, it seems the Federal Budget is a mix bag for employment prospects, with the potential winners being the construction and engineering sectors, and the losers likely to be Health and to a lesser extent Education (although this will largely be determined by the outcome of the funding debate with the States). However, many of these changes are unlikely to feed through to the employment market for another 12-18 months, with short term job prospects more likely to be affected by commodity prices, the strength of the Australian dollar and the impact of a perceived fall in consumer confidence on retail spending. What does seem clear is that high growth in the economy as a whole is unlikely in the current climate, with unemployment likely to remain steady or increase in the short term as the effects of the Budget decisions work their way through the system.