Telstra to ship Sensis jobs offshore to “world-class vendors” as economists debate impact of massive job cuts

Economists have expressed mixed responses to recent announcements of more than 1,000 jobs to be cut across a range of industries, saying while the trend may just be seasonal due to reporting season, it could also have a long-term impact on unemployment.

The comments have been triggered by Telstra’s announcement yesterday confirming hundreds of jobs will but cut from its directories business, Sensis, with a significant number to be sent offshore.

“This is seasonal,” says APM chief economist Shane Oliver. “But on the other hand, the fact it’s continuing is consistent with the rise in the unemployment rate.”

Ivan Colhoun, head of Australian economics and property research at ANZ, told SmartCompany he believes the recent layoffs are a testament to both the rising unemployment rate and a seasonal reporting change.

“I think it’s representative of both trends, but it doesn’t always happen at once. There are seasonal peaks in these types of announcements…but also, job cuts can take place over a number of months or even years.”

Massive job cuts have been announced over the past two weeks, including:

  • 300 cut from manufacturing giant Amcor;
  • 350 to be cut from Origin Energy, with 500 already announced;
  • 200 cut from mining company Iluka; and
  • 648 cut from Sensis, with many of those to be taken offshore.

While Sensis chief John Allen confirmed the job cuts yesterday – representing about 20% of the company’s workforce – he later said 399 of the 648 cuts may be moved offshore.

“What we’re considering with one of the proposals is that in some parts of the business that we move to using world-class vendors,” he told the ABC.

“Now those vendors are organisations that are outsource providers. They are based in other countries. They work internationally for directory companies like ourselves.”

This comes after a disastrous year in 2012 for the retail industry, during which thousands of stores were flagged for closure along with hundreds of job losses.

Yet it comes as the unemployment rate has remained fairly steady, hovering around 5.4%. Economists are split on the issue – the recent cuts may be just a seasonal occurrence or signal a shift towards a more volatile job market.

“There have been talks of layoffs over the past couple of years now,” says Oliver. “My take on it is that part of this may relate to the profit reporting season, and the fact we’re seeing a lot of announcements tied to that.”

However, he argues, this does coincide with a softening job market, with job ads continuing to decline. “Company profit margins have been under pressure for some time, and while the unemployment rate hasn’t increased all that much, the overall job market remains soft.”

Colhoun says there has been a clear trend in many industries regarding job losses, as businesses restructure themselves, particularly in banking, financing, manufacturing and retail.

“Partially that’s because of this two-speed economy that we’ve had, because we’re still getting moderately positive employment growth.”

“There are a lot of different factors occurring here, and there are a lot of forces on the economy with regard to international uncertainty.”

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