In Australia, Jobless Multiply as Economy Goes Down
ALEX, an unemployed electronics engineer, has just returned from a trip to France. "I didn't know there was a recession on," he says as he emerges from the Job Center, run by the Commonwealth Employment Service. Now, Alex has joined the ranks of the unemployed, like scores of others reading the job cards inside.
The people looking for work are part of a growing number of Australians now unemployed. On May 10, the government reported the April unemployment rate hit 9.9 percent, its highest level since 1983. Now, economists are predicting the rate will continue to rise through the year to 10.5 to 11 percent.
John Dawkins, minister for Employment, Education, and Training, says there is a danger that unemployment will remain high in Australia for some time - as it did in Western Europe after the last downturn there. "We're not necessarily saying it will be the case here," Mr. Dawkins says.
A curious feature of Australian unemployment, he added in an interview, is the high participation rate - the number of people working divided by the population - in the economy. Economists figure that rate results from the large number of women in the work force.
The high unemployment is prompting calls for a "jobs summit" to consider government infrastructure projects. Dawkins, however, says, "We're not convinced our government should be getting into job creation." One problem for the government is funding for any jobs program. The recession is now expected to chew up any federal surplus.
The weak economy is giving the government an opportunity to reduce interest rates especially since the annual rate of inflation is slowing. On May 15, the government reported the Consumer Price Index fell 0.2 percent, bringing the annual inflation rate down to 4.9 percent. Within a day, interest rates fell 1 percent.
Even with falling interest rates, however, economists believe the economic recovery will be slow. "The Westpac-Melbourne Institute Leading Index is showing no clear sign of recovery. We don't think it will happen till the early part of next year," says Dennis Mahoney, acting chief economist at Westpac Banking Corporation, Australia's largest commercial bank.
Stephen Miller, senior economist at Bankers Trust Australia, believes any recovery will be shallow. The biggest drag on the economy, he says, will be the difficulty companies have in borrowing as Australian banks try to recover from the bad loans of the 1980s. Unemployment won't return to single-digit levels until the end of 1992, he predicts.
If so, it could give Bob Hawke's Labor Party a difficult time in the next election in 1993. At a by-election on May 18, there was a 14 percent shift against the Labor government in Queensland.
Already the tight job market is affecting Australia's immigration policy. Last week, the Minister for Immigration admitted the government had cut its intake of immigrants by 15,000 people this year. Most of the cutbacks are in the skilled or trade area where the unions have argued for less competition.
There is no question the competition for skilled jobs is fierce. Peter Wells, a New Zealander, is skilled in repairing and installing computers. With 10 years of experience in New Zealand, his skills should be in demand in Australia. However, he says the job interviews have been "few and far between.
An unemployed married male with a working spouse and two children could receive in benefits up to $609 (Australian; US$469) every two weeks depending on the amount his partner makes and his age. There are additional benefits such as a job search allowance and a housing subsidy.
As of July 1, there will be a new structure for unemployment benefits, placing a greater burden on the job seeker. The aim is to promote early returns to employment. For those out of work a year or more, the restructured program is supposed to result in a more comprehensive and intensive job search process.
"The unemployed sign a contract with my department and retain their eligibility as long as they participate in a job training program or continue active attempts to get a job," says Dawkins.
"It's not just the dole anymore," says Kerry Colquhoun, who has been looking for secretarial work for the past four weeks. Ms. Colquhoun says the federal unemployment officers have a reputation for being "nasty" to encourage job seekers.