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Yes, a jobs crisis is building

By Syd Hickman - posted Monday, 17 February 2014

The car industry is closing, Telstra is sending thousands of jobs offshore, banks and mining companies are cutting staff and many other companies are retrenching, offshoring or closing. More big announcements are due in coming weeks. And unemployment numbers do not account for the self-employed contractors who see workload shrink but are not unemployed. How you see this situation will depend on the big picture of the economy in your head.

Tony Abbott, like most liberals, is inspired by Paul Keating's description of the 1980s and 90s. He believes it is all about individual firms, dud managers and greedy workers. Let them go broke and the economy magically creates new jobs and we all roll on more efficiently. No action is needed except by those wise folk in Canberra who get the economic settings right.

Through those decades I worked for Kim Beazley in Defence and later in Finance. I was heavily involved in eliminating thousands of jobs from Defence-owned factories and dockyards, and then in selling off numerous government-owned companies such as Qantas, CSL, the Moomba-Sydney Gas Pipeline and many more, with lots more jobs gone. All of this was very good for the nation and good for most of the people involved, who did find other jobs.


But there was no magic involved. There was a big plan and a very active government. Tariffs came down, there were specific change programs for various industries, the union movement agreed to undertake dramatic reform and consolidation, government finances were revolutionised and the finance sector freed up and given the great gift of compulsory superannuation. Low-cost-nation competition was a minor factor. Education was just starting to become a huge industry with high export value. New technology was destroying some jobs but creating many more as the computer revolution swept the world.

It could be argued that the only people who got their role wrong were the people responsible for the economic settings, hence the recession we supposedly had to have.

It is now a different world.

Since then nearly two billion people have joined the global economy and they are competing for jobs in a globalised market, offering low wages and other costs. Technology is replacing more people than new jobs it creates, in blue collar and white collar jobs.

With the aging of our population more people expect to live off capital earnings but there is a surplus of capital and a weak economy so returns are low. There are no government plans for industry except to preserve inefficient family farms; to remove a mining tax that collected almost no money and a carbon tax that brought in cash to cut the deficit and provided incentive to invest in energy-saving equipment. There are no industrial relations plans except to smash unions via a royal commission. Upper and middle class welfare is to be preserved or even expanded.

There are also huge global challenges building up, with resource limitations, population imbalances and environmental crises. We must plan to manage these issues at the national level. The solutions to these problems are the most likely sources of new jobs.


In the past, and in the theories most economists still believe, bad firms lost out to good firms and workers moved to jobs where they would be most productive. New industries employed capital and labour resources taken from old and dying industries. It all happened within the national economy and to the national benefit.

That is still true in a sense, except it now happens within a global economy and that makes it fundamentally different. The 'good' firms are often in other countries, resulting in some cost reduction for Australian customers but also less jobs and tax income. The new industries, where we can afford them, employ less people than the old.

Ross Garnaut and other have made it clear that the new global competition will mean we confront the need to manage a decline in living standards. The global economy is tending towards equilibrium, as theory says it must. That means rich nations must come up with sensible survival strategies before unhappy victims of change come up with their own mad ones.

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About the Author

Syd Hickman has worked as a school teacher, soldier, Commonwealth and State public servant, on the staff of a Premier, as chief of Staff to a Federal Minister and leader of the Opposition, and has survived for more than a decade in the small business world.

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All articles by Syd Hickman

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