It has been reported that around 4,000 jobs were lost last week and it seems there are a lot more heads to roll off the chopping block over the coming months. In my opinion, to lose that many positions in just one week is significant, and a warning to Australians that unemployment in this country is likely to rise this year.
We’ve been told we don’t have a crisis as Australia’s unemployment rate is low, however, since the GFC a lot of Australians have been underemployed. Remember that a person only has to work one hour to be considered employed and the fallout from the GFC meant that a lot of people are working less hours than was previously the case.
One way to put things in perspective is to look at the under utilisation rate which was on a clear downward trend prior to the GFC, but since then it has been trending up. Therefore, while the unemployment rate is low at the moment I would suggest the real number could be a lot higher depending on how you dissect the employment data. Add this consideration to the further job losses on the cards this year and unemployment will become a much bigger concern.
Wages verses corporate profits
The Financial industry continue to battle against the tide of issues in the current part of the economic cycle and in the wake we’ve seen some of the big corporates argue about wage restraint in this country, on the basis that increases in the cost of labour have not kept pace with productivity. While there may be evidence to suggest this is the case, in my opinion it’s important to also consider the rise in real wages verses the profits of some of the big blue chip companies over the recent decade.
While wages may have grown by around 3.0 per cent pa, corporate profits have gone up in many multiples and in some cases hundreds of percentage points above this rate.
Janine Cox is the Senior Analyst at Wealth Within, a private investment company specialising in managing direct share portfolios through their Individual Managed Account Service. The company is also a government accredited specialist share market educator, where Janine is one of only two lead trainers educating people how to invest and trade the share market. Janine can be contacted at email@example.com or you can visit the website www.wealthwithin.com.au.