Australia’s nearly at full employment, so who is hiring?

If 5% unemployment is a ‘full’ labour market then Australia is pretty much there, going on yesterday’s official job figures.

Employment Minister Bill Shorten says micro businesses, health services, the service sector and companies nicely placed for changes in consumer spending are leading the employment charge.

Yesterday’s job figures show that the mining states of Western Australia and Queensland each added 20,000 new jobs last month, but New South Wales also created more jobs, pushing its unemployment rate down 0.4% to 5.2%.

But news that the unemployment rate had dipped 0.1% to 5.1%, with 46,300 people joining the workforce in January, doesn’t gel with screaming headlines of job cuts in ANZ, Qantas and Toyota. Some say last month’s job figures are an anomaly, driven by part-time employment and unlikely to be maintained through 2012.

At 5.1%, unemployment is at its lowest level in six months, and the jump in new jobs was the highest in 14 months. The participation rate was also higher, at 65.3%, from 65.2% the previous month. So where are the jobs?

Speaking on Radio National this morning, Shorten said that there are more Australians working than ever before, and despite high-profile job cuts in financial services and manufacturing, there is a “silent revolution” underway in services.

“It would appear there’s been jobs being created in health services… in smaller micro-businesses, which show that a combination of people using the internet to create business, and also the changing, I think, consumer patterns of Australians.

“We’re not prepared to spend so much on some things, but on other things – personal services – we are willing to spend more.”

Questioned on large hirings that fly on the under the radar, Shorten nominated 340 new construction jobs at Holcim in Brisbane and a Deer Park company Digital Reality creating 200 jobs in IT.

The Australian Financial Review today also profiles two business that are expanding their workforce: Builtsmart, run by Nick Reynolds, which builds temporary housing for resource workers in Queensland and plans to increase its workforce by two-thirds; and Kapp Engineering in WA which says it is working at 95% capacity after taking on its ninth engineer.

On a larger scale, coal-to-supermarkets giant Wesfarmers is planning to boost its workforce this year. It is already Australia’s largest private employer. Corporate advisory firm Greenhill Caliburn is also believed to be expanding its workforce.

Peter Strong, executive director at the Council of Small Business of Australia, says that anecdotally, he’s hearing that manufacturers and those that are taking advantage of technological changes are making small additions, and combined this could be supporting employment.

Strong says he’s surprised but heartened by the figures, given the well-documented troubles in retail and hospitality. He’s also calling for better data on where the jobs are actually being created.

Speaking after the job figures were released, Westpac – which announced it was cutting 560 jobs this month – said although the jobs figures were better than forecast, they followed a weak December in which 39,500 jobs were lost.

The bank added that the “labour market is hardly surging ahead” and is “in transition rather than being robust”, with employment growing by just 5,300 over the past three months.

ANZ, meanwhile, said that monthly employment seems to have troughed in the last quarter of 2011, and the labour market is entering 2012 in a “stable position,” although will likely rise through 2012 to just under 5.5%.

Broker CommSec, meanwhile, says the labour market is “going sideways” but last year’s rate cuts will help support activity in the coming months.

“It’s clear that the lack of momentum in the domestic economy is being reflected in the labour market. Employers are looking at avenues to remain profitable and subduing costs is a clear priority,” economist Savanth Sebastian says.

“There is no doubt that trading conditions are difficult and profitability is being affected. In addition the strength of the Australian dollar will continue to cripple manufacturing, tourism and exports outside the resources space.

“As a result it is more likely that businesses will hold onto current staff rather than significantly adding to their workforce.”


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