Australia's Jobs Picture Darkens

Updated Dec. 11, 2013 11:48 p.m. ETIn the Western Australian mining town of Kalgoorlie, the gateway to Australia’s historic goldfields, Neil Cull waits for the phone to ring. Like many of his peers, Mr. Cull is unable to find work after being retrenched amid a cost-cutting push by resources companies earlier this year.
“My applications have all been rejected whereas five years ago I would have at least been shortlisted,” said Mr. Cull, a 59-year-old mining veteran who has tried for dozens of jobs in Australia and overseas since he lost his job as a mine superintendent in March. Even attempts to land a junior role have been knocked back.
It is a situation replicated across Australia as a once-booming economy grapples with slower growth and a sharp fall in resources investment. Australia’s jobless rate rose to 5.8% in November, edging closer to a post-financial crisis high and posing a challenge for the country’s conservative government.

Workers pack orders for shipment at a Myer Holdings distribution center in Melbourne, Australia, on Dec. 4. Bloomberg News

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The Reserve Bank of Australia has been trying to spur weaker parts of the economy such as manufacturing and consumer sentiment by cutting interest rates eight times since late 2011. But so far the economy is stuck in low gear, with only tentative signs of a transition away from mining-dependent growth.
Thursday’s jobs data showed the participation rate remained at a seven-year low of 64.8% as disgruntled workers gave up looking for work.
“Eighteen months ago, the Australian market was hot. Now it’s slowed dramatically and there are unfortunately a lot of people sat at home waiting for opportunities,” said Shaun McCambridge, managing director of Stellar Recruitment. His firm is based in Queensland state, which has been badly hit by a downturn in the nation’s once-booming coal sector.
“People are having to become much more flexible about remuneration, rosters, and even relocation,” with many workers opting to head to countries like Papua New Guinea, or even as far away as Africa, to find work, said Mr. McCambridge.
The central bank recently lowered its growth forecast for the year and toned down its jobs outlook, just as the U.S., European and Chinese economies looked to be recovering from slowdowns dating back to the financial crisis five years ago.
Prime Minister Tony Abbott’s conservative Liberal-National coalition was elected in September on a pledge to quickly boost the slowing economy and create more jobs by cutting taxes and building new infrastructure. So far, though, much of the news has been bad. Earlier this month national carrier Qantas Airways Ltd. QAN.AU -2.02% Qantas Airways Ltd. Australia: Sydney $0.97 -0.02 -2.02% Dec. 12, 2013 4:49 pm Volume : 8.99M P/E Ratio 518.19 Market Cap $2.12 Billion Dividend Yield N/A Rev. per Employee $478,040 12/06/13 S&P Cuts Qantas Rating to Junk 12/05/13 Qantas to Cut 1,000 Jobs, May … 12/03/13 Shareholder Activism Rises Dow… More quote details and news » QAN.AU in Your Value Your Change Short position announced 1,000 job cuts and flagged possible asset sales as it is mired in a damaging price war on its home turf.
Economists had expected unemployment to rise in November. Surprisingly, though, the number of people employed rose 21,000 in the month, compared with an expected 10,000 increase.
Shane Oliver, head of investment strategy at AMP Capital, said this rise was “more likely to be statistical noise than the start of a jobs recovery,” especially if recent bad news such as the Holden and Qantas job cuts affected wider sentiment.
Business and consumer confidence have fallen sharply in recent times, reversing a wave of optimism that accompanied the election of Mr. Abbott’s government. Consumers are also unsure about the outlook for jobs, while firms are indicating they are less likely to take on new staff in coming months, according to separate nongovernment surveys published this week.
“We are not expecting a slew of outright job losses. But the pace of employment growth is likely to remain below population growth, putting ongoing upward pressure on the unemployment rate into 2014,” Michael Turner, a Sydney-based strategist at Royal Bank of Canada, said in a research note.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com and David Rogers at david.rogers@wsj.com

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