UNEMPLOYMENT

BACKGROUND

“Changes to the labour market over the last twenty years have led to high levels of joblessness
that are not reflected in the official unemployment figures and are a cause of deepening social
and economic disadvantage within our communities.” (ACOSS, 2003)

This paper will focus on issues relating to unemployment and under-employment in Newcastle.
Unemployed people are defined by the Australian Bureau of Statistics as not being employed,
that is have not had one hour or more of paid work in a week, have been actively seeking
employment within the last four weeks and are able to start work immediately. Under-employed
people are not working full time and would like to work more hours. (ACOSS, 2003)

While the ABS definition of unemployment is in line with the International Labour Organisation’s
agreed standard measure, ACOSS is concerned that the term does not:
y Measure the extent of economic and social disadvantage caused by a lack of paid work
y Identify whether people are working enough to earn a basic level of income
y Identify people who want to work but have given up looking or may not be able to start work
immediately.

The ABS definition does not include all people who are registered with Centrelink as
unemployed.

Over the past 5 years, there has been a decrease in the reported unemployment rates in the
Lower Hunter from 9.4% (1999) to 7.1% (2004) (HVRF, 2004). The rate of unemployment has
remained under 10% since July 2003 with the gap between the State and regional rates falling
from 4 - 5 percentage points to 1 - 2 percentage points.

The Hunter has been successful in creating jobs and is now considered to be one of the more
successful job growth areas. Since May 2002, over 40,000 new jobs have been created and
participation rates have increased to over 60%. Newcastle generates 73,000 job opportunities
which employ 36,000 (out of a total 55,000) local working residents. The remaining job
opportunities employ people primarily in the Lower Hunter.

Newcastle has made a successful transition from reliance on the manufacturing sector to a
more diverse range of employment options. The Service Sector is the major supplier of new job
growth opportunities, with the health and education sectors now being our major employers.

In the Newcastle LGA the Inner North and Mayfield planning districts have the highest
proportion of people receiving Newstart payments (NCC, 2003).

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TRENDS, POLICY AND LEGISLATION

A key theme since the early 1980’s has been to reduce the ‘speed limits’ on growth. Structural
reforms and improved design of institutions have fostered productivity and a sustainable
expansion in employment.

In the Hunter Region, trends include:

y Employment opportunities provided by the manufacturing sector are now below the national
average
y Increasing reliance on small to medium sized businesses for job creation opportunities
y Growth in part-time work has exceeded growth in full-time work
y Women are more likely to work part-time
y Skill gaps eg technical trades and health professionals
y Decreasing proportion of 20-24 yrs olds. This could indicate that although Newcastle is an
education centre, young people are not staying post-graduation.

There is undoubtedly concern about the impact of the ageing community on the labour market.
Pressure to address the financial needs of the ‘baby boomer’ cohort as they approach
retirement is likely to impact on how people are employed in the future.

The following trends will impact on people seeking to enter the workforce, or having problems
entering it:
y Less access to Government income support systems, and greater reliance on the private
sector to provide jobs
y Greater promotion of ‘user pays’
y Industrial Relations reforms which are expected to undermine collective enterprise
bargaining and reduce worker’s wages and conditions.

ISSUES

Unemployment and Under-employment

Whilst the continued decrease in unemployment rates and the increase in participation rates is
good news, unemployment, under-employment and employment ‘equity’ continue to be issues
in the Hunter. Impacts on individuals and their families include financial strain, decreased
capacity to participate in recreational and civic activities, and increased risk of ill health.

ACOSS (2003, p130) has provided a four tier hierarchy of the labour market:
1. Highly skilled workers with secure full-time jobs (who are likely to sustain employment even
if they change jobs frequently or are engaged on a temporary basis)
2. Workers with middle-order skills in full-time jobs (for example trades and advanced clerical
workers), whose jobs are vulnerable in economic down-turns
3. Low-skilled workers (the majority of whom are women or young people) who are
increasingly segregated into more precarious or part-time jobs, and face the prospect of
frequent bouts of unemployment
4. People who mainly rely on social security payments for their income for prolonged periods
(mostly low skilled, and often with limited experience in secure, full-time employment).

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People in the last two groups are at high risk of unemployment, hidden unemployment, and
joblessness generally. They generally receive lower incomes and have low job security. (See
Ageing Paper)

It is estimated that around 20,000 people in the Hunter are searching for work. New HVRF
research suggests that part-time workers are under-employed in the sense that they worked on
average 13.6 fewer hours than they would prefer to work. At the same time, full-time workers
are over-employed, working more hours than they are legally obliged to work.

Discouraged workers are people who have stopped actively seeking employment but would like
to work. They include:
y Women who would work if both a suitable position and child care were available
y Mature-aged people affected by labour market changes forcing them to accept early
retirement
y People with disabilities disadvantaged by employer discrimination, lacking appropriate
support to participate in employment and access to transport
y Indigenous people who have suffered systemic disadvantage, and who may be working on
CDEP programs, which require them to forego unemployment benefits to undertake part-
time community work.

According to the literature, “neighbourhoods with high adult unemployment have generally
higher youth unemployment. To a large extent unemployment, as well as other aspects of
economic and social disadvantage, is intergenerational and, possibly, geographic in nature.
The implications are that job creation is far more problematic than simply generating economic
growth” (Lewis, 2004).

The national youth unemployment rate is approximately twice the overall unemployment rate.
In Newcastle, youth unemployment is 25% (ABS, 2001). It is highly variable across the
planning districts. Full time employment opportunities for young people without tertiary
education have declined sharply. As a result, a growing majority is continuing their education.
There is concern that teenagers who are not studying or working full time suffer future labour-
market disadvantage in addition to the immediate negative impacts of unemployment and
underemployment (ACOSS, 2003).

Youth unemployment is high because of the ‘shrinking’ labour market, or ‘demand’ for this group
of Australians. The push into casual or part-time positions fails to provide additional skills and
experience which further reduces likelihood of finding full-time work (See Youth Paper).

Skills Gaps

State wide skill shortages have been identified in the following areas: childcare; nursing;
secondary school teaching; welders; stainless steel and aluminium; motor mechanics; panel
beaters; spray painters; chefs; cooks; bakers; cabinet makers and hairdressers. (DEWR, 2004).
In the Newcastle region, there are 800 trade jobs employers cannot fill because of the critical
skills shortage. 29% of employers receive no applications for good jobs in the manufacturing
field. (Broadfoot in Wendt 2004).

The Australian Industry Group launched the Hunter Skills Development Action Plan in 2004. It
will bring together key stakeholders in the region to address the ongoing local skills shortage.

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Possible strategies include:

y Making these jobs more appealing to attract young people
y Developing new apprenticeship arrangements and pathways to replace the capacity of the
local manufacturing sector to engage in ‘trade training on the job’ as occurred in the BHP
days
y Encouraging mature-aged people and unemployed/underemployed people to re-skill
y Supporting development of small and medium businesses, which are the employment
growth providers. For example, the Lower Hunter Business Enterprise Centre has assisted
over 2,700 clients to establish more than 300 new businesses with an 85% success rate.

The good news is that this region spends more on training per employee than any other region
(Ridout in Wendt, 2004). There is increased reliance on small and medium sized businesses to
provide training. However, their size and structure constrains their capacity to engage in the
scope of training that larger manufacturing businesses previously provided, creating challenges
for the sector.

Entry level positions with training opportunities in the public sector and large private enterprises
are declining. In their place, employees are faced with casual, temporary, and insecure
positions and their need to build skills is ignored.

Increasingly, individuals are responsible for meeting their own training needs. As the tertiary
education and VET sectors move towards user-pays, those with the highest need can’t access
loans or sufficient funds to pay for training.

Some concern has been raised about the low pay of apprentices and the cost of providing
traineeships to the private sector. Centrelink is now allowing young people to claim youth
allowance (as from 1 July 2005) whilst they are undergoing an apprenticeship if they meet the
eligibility criteria.

Job Network providers are provided with funding to assist unemployed people to find work. This
funding covers training costs. Some concern has been raised from the community sector about
the accessibility of training to the clients (particularly those with high needs), and liaison of job
network providers with trainers to plan programs to meet training needs.

The performance of local job network providers in Newcastle has been reported to be generally
lower than other areas in the State however it is not clear why. Job Network providers have an
obligation to accept all clients. Clients are only allowed to be linked with one Job Network
provider at any one time. Individuals can negotiate a transfer to another provider if they are
unsatisfied with level of support after discussing their concerns with staff. However, in effect
choice is minimised due to accessibility.

Ageing Workforce

In view of the ageing work force, the Commonwealth Treasury suggests a flexible, strategic
approach to optimise employment:

“Rising incomes and an ageing workforce will result in more and more people choosing to work
part time. We will need to accommodate these preferences. We will also need to ensure that
younger Australians, including those currently reliant on income support, are able to find a job.
It is important that our system is flexible enough to address these diverse needs and generate
jobs for all those who want them” (Commonwealth Treasury 2004, p. 13)

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The baby boomers including significant numbers of tradespeople are retiring. There is a
shortage of “generation Y” tradespeople, leading to a potential crisis (Julia Connell, 18
November 2004). It is also likely the ageing population will contribute to further growth in the
proportion of casual, part-time or contracts jobs (Lewis, 2004).

Trends in other OECD countries suggest that as long as employment growth continues, the shift
towards early retirement will reverse. Strengthening labour force participation and employment
opportunities for mature-age workers will require major structural changes in the workforce and
cultural changes among employers and mature age workers (ACOSS, 2003).

Most mature-aged people find it difficult to access jobs because:

y They are regarded by potential employers and themselves as too old
y They lack experience and training for the jobs that are available
y Their vocational skills have eroded or become out dated after time away from the work force
to care for children or elderly parents (particularly for women).
(ACOSS, 2003)
Studies on employer attitudes towards older workers reveal widespread stereotypical views
about the way age influences a person’s capabilities. Older workers are perceived to be more
likely to suffer poor health, more resistant to change; less creative; more cautious; less
physically able, less interested in technological change, less trainable and more accident prone.

These prejudices are not supported by evidence. Companies that employ older workers report
success in terms of retraining, reliability, flexibility and loyalty. They cite other benefits including
good customer relations, low staff turnover and a positive ‘working atmosphere’ (Rickard, 1999).

To achieve economic and social sustainability, Newcastle must achieve a diverse, flexible and
skilled workforce with a balance of older and younger workers. Strategies include:
y Increase skilled migrant flow to Newcastle (See CALD Paper)
y Encourage the aged population to remain skilled and involved
y Encourage the creation of entry level employment opportunities and on-the-job training
y Maximise opportunities created as skilled workers retire or reduce their participation in the
workforce, by creating pathways from paid to voluntary work, and developing mentoring
programs.

Financial Literacy

There are concerns that current employment trends will result in decreasing employment
security. Financial planning will become more challenging for disadvantaged individuals. Given
the relatively high proportion of welfare recipients in Newcastle and the comparatively low
average income, there is a need for services to improve people’s capacity for financial planning.

It is estimated that one million Australians are living in poverty despite living in households
where one or more adults are employed (ACSJC, 2004). The growth of the casual workforce
and insecure, low paid jobs has contributed to ‘working poverty’.

Paul Clitheroe (2004) stated at an AGSM conference that the average Australian wasted
$700,000 in a lifetime. He argues that there is not enough education on financial literacy
enabling people to make ‘good’ and ‘sound’ decisions. He warns that health care costs will
increase dramatically, and that with the real risk of the income support system being
constricted, there is a need for Australians to plan financially for the future and to become
financially independent.

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The Community Plan Survey indicates that 12.5% of the Newcastle community are experiencing
difficulties meeting their daily needs. 25% of the population believed they were worse off than 3
years ago. This was more frequently reported by the over 50s, who are feeling the financial
impacts of retirement and decreased interest rates.

Reliance on the Volunteer Sector

The Mutual Obligation Program and other Back to Work programs put pressure on the volunteer
sector to provide work and skill building opportunities. The community sector has reported
working to improve their capacity to manage the expectations of these programs and the
workers. Organisations are not being reimbursed for performing these responsibilities.

People who would like to volunteer but are not on a Centrelink list are finding it increasingly
difficult to find opportunities independently. Some have said that they have had to register as a
Centrelink recipient in order to be able to do volunteer work.

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KEY ISSUES

y Unemployment and under-employment

y Skills gaps
y Ageing workforce
y Financial literacy
y Reliance on the voluntary sector.

KEY STRATEGIES

y Maintain Council’s commitment to providing traineeships and apprenticeships.

y Continue to provide a Business Attraction First Stop Shop (provides information to potential
new businesses which maybe thinking of moving to Newcastle) service.
y Continue to support Council’s equity employment initiatives and evaluate them as models
for other medium – large employers.
y Encourage the development of innovative employment and learning models that will have
positive outcomes for the local workforce.
y Encourage partnerships between schools, VET providers, job network providers and
employers to develop strategies that address the skills gap.
y Encourage the development of models that enable businesses to be effective learning
organisations.
y Encourage the provision of frequent, direct transport services between centres of activity.
y Support formal/informal learning programs that engage young people who have left school
early.
y Support programs that improve financial literacy of the Newcastle community.
y Advocate for and facilitate the provision of flexible childcare models, which can respond to
contract and shift work requirements.
y Advocate that the Federal Government provide more structural support to volunteer
organisations that participate in work for the dole programs to enhance their capacity to
undertake governance responsibilities.
y Monitor current and future skills shortages for Newcastle City Council and explore different
models of skill acquisition and employment.

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REFERENCES

ABS, 2001, Census of Population and Housing New South Wales, Local Government Area.

ACOSS, Hidden Unemployment in Australia, November 2003.

Anglican Diocese Sydney, November 2004, Social Issues Committee – Unemployment 2000,
Found at www.anglicanmedia.com.au/old/socialissues/unemploymentnew.htm.

Australian Catholic Social Justice Council, May 2004, The Human Costs Behind the Official
Unemployment Rate, found at www.socialjustice.catholic.org.au 09/11/04.

Commonwealth Treasury, Budget 2004-05, Australian Government, found at

www.budget.gov.au/2004-05/bp1/html/bst4-03.htm

Connell, J., Hunter Skill Shortage needs Attention Now, The Herald, 18 November 2004.

COTA National Seniors, Older Women in Australia’s workforce, found at

www.cota.org.au/olderwomen/htm 10/11/04.

Department of Employment and Workplace Relations, 2004, Skill Shortages for NSW,
www.workplace.gov.au (June 2004).

Eardley, T., and Matheson, G., June 1999, Australian Attitudes to Unemployment and
Unemployed People, Social Policy Research Centre.

Hunter Valley Research Foundation, Hunter Region Economic Indicators, September Quarter,
2004.

Kanjanapan W., Labour Force Patterns and Self-Perceived Health Status Among Older
Australians: Implications for Healthy Ageing, Commonwealth Department of Health and Ageing.

Muir, K., et al, 2003, Youth Unemployment in Australia: a contextual, governmental and
organisational perspective, The Smith Family.

Rickard S, Counting the Cost of Ageism, Management Focus Issue 12, September 1999.

Wendt, G., Jobs go Begging, The Herald, 28 October 2004.

Wendt, G., Part-time doesn’t work for all, The Herald, 12 November 2004.

Zimmer, E., 2002, Older Workers hardest hit by unemployment in Australia, World Socialist Web
Site, found at www.wsws.org/articles/2002/apr2002/aged-a04.shtml (9/11/04).

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