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Australia – Future employment trends unclear

27 September 2013

Research released this week has highlighted a sharp rise in unemployment in mining exploration this year. Weaker commodity prices and negative sentiment over the so-called ‘end of the boom’ have taken their toll on pipelines for future projects, according to the Commonwealth Bank of Australia.

The rapidity of the shift has taken some by surprise and cast questions around how to retain local talent that responded to the demand of the mining investment boom, and what employment growth looks like in the future.    

Reminiscent of the California gold-rush, the last five years have seen an employment spike in mining and mining services as people flocked from around the country to mining boom towns to take advantage of the higher salaries on offer.

According to the Australian Industry Group’s National CEO survey, published in February of this year, direct employment in the sector increased from around 100,000 at the end of 2004 to 270,000 by the end of 2012, with many related industries such as engineering services also seeing growth in employment.

At the time that survey was taken, 38% of mining chiefs said they were expecting employee numbers to rise in 2013, while 23% said they expected a decline, giving a net balance of 15% of companies which expected employment growth this year.

This week however, an Australasian Institute of Mining and Metallurgy (AusIMM) survey found unemployment among professionals such as geologists, engineers and environmental scientists is now sitting just below 11%, compared to a rate of 1.7% just 12 months ago.

In July 2012 only 2.9% of employed minerals professionals said they wanted to work more hours, by July 2013, many of those people were unemployed, with a three-fold increase in reported under-employment among those still working.

AusIMM president Geoff Sharrock said the demand shift has been sharp, coming after years of focus on the need to increase the pool of skilled professionals in the Australian and New Zealand mining sectors.

Mr Sharrock commented: “Traditionally, a downturn in mining industry investment and operations impacts first on exploration geologists and then other professionals, including mining and metallurgical engineers.”

“This research shows that the impacts this time have been sudden and have bitten deeply into the professional employees who are central to finding, developing and running the mining operations that underpin our economy,” he added.

Chief executive of AusIMM Michael Catchpole said there is a high risk that Australia may now lose these skills, which would reduce the ability of the minerals industry to innovate, improve productivity and respond to increases in demand for resources as economic conditions improve.

According to the Commonwealth Bank, there are hopes that Australia’s employment outlook for the fourth quarter of this year will improve amid low interest rates and a falling Australian dollar. That is despite declines in the months leading up to the Federal Election in response to uncertainty around the result.

However, a recent report from recruitment firm ManpowerGroup for October to December suggested that the net employment outlook, which is a measure of the difference between the percentage of employers anticipating total employment to increase and the percentage expecting a decrease in the next quarter, stands at +3%. This is the weakest forecast since 2009.

While the mining and construction sectors were forecasting a decline in staffing levels in the order of -6%, employers in the other six industry sectors surveyed reported positive hiring intentions for the three-month period.

The strongest labour markets are anticipated in the finance, insurance and real estate sectors, with the recent rush to property clearly feeding through to these sector outlooks. Education was also expected to do well, helped along by the lower Australian dollar which should help attract more foreign students back to our shores.

The quarter-to-quarter reports of a change in demand largely relate to cyclical factors, whereas longer-term trends are really of more interest.

This is particularly true given younger people who started studying in mining-related disciplines when Chinese demand for resources was rapidly accelerating, leading to more and more money pouring into mining project investments in Australia, would have only recently entered the workforce just as local demand for some of these professions begins to taper off.

The debate continues around which sectors will drive future economic growth. Employment projections from the Federal Government prepared in 2010 predicted that by halfway through the decade, healthcare and social assistance would be the area of largest jobs growth, with the ageing population phenomenon set to dominate the landscape for years, coming in well ahead of even the newer type of jobs in areas such as IT.

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