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Young Professional Network of Tasmania
Dr Paul Blacklow
President
Tasmanian Branch of the Economic Society of
Tasmania
Lecturer in Microeconomics and Econometrics,
School of Economics and Finance,
University of Tasmania
Introduction
• GFC - Global Financial Crisis
• Examine the effect of the GFC on Young Tasmanian Professionals, via the labour market.
• All data and figures are derived from ABS statistics (cat no.s: 6202.0, 6291.0, 6291.0.55) unless otherwise stated.
IntroductionAustralia
0%
4%
26%
16%
18%
19%
9%
8%
Professionals nfd
Arts and Media Professionals
Business, Human Resource and Marketing Professionals
Design, Engineering, Science and Transport Professionals
Education Professionals
Health Professionals
ICT Professionals
Legal, Social and Welfare Professionals
Tasmania
0%
4%
18%
13%
24%
22%
8%
11%
GFC and the Labour Market• The decline in the confidence of business and to
a lesser extent consumers, has led to…
• A fall in sales for and projected future sales for businesses.
• They need to cut back the scale of their operations to match the lower sales and in order to cut costs.
• It is often difficult to dispose of capital equipment and so cuts are often made to the workforce.
GFC and the Labour Market
• Although costs need to be cut, firms are reluctant lose many of their employees.
– It may be expensive to sack long serving employees due to termination payouts.
– Firms often have invested a lot money in training their employees improving their skills and productivity.
– Employees are also likely to improved their skills and productivity by observing and operating within the business overtime.
GFC and the Labour Market
• Firms are reluctant to lose employees who contribute more value to the firm than they cost in labour expenses.
• It may be difficult for firms to find such good workers again.
• The first workers to be considered for the sack will be those who’s labour cost is greater then the $ of their contribution to the firm.
GFC and the Labour Market
• Often the easiest way for businesses to cut costs is to freeze wages and/or not hire any workers.
• So there will be less jobs available and unemployment will rise.
• In particular this means that school leavers and university graduates will find that there are not many beginner level jobs available, and youth unemployment will rise faster and by more.
Unemployment (Seasonally Adjusted) by Age
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Ma
r-0
7
Ap
r-0
7
Ma
y-0
7
Ju
n-0
7
Ju
l-0
7
Au
g-0
7
Se
p-0
7
Oct-
07
No
v-0
7
De
c-0
7
Ja
n-0
8
Fe
b-0
8
Ma
r-0
8
Ap
r-0
8
Ma
y-0
8
Ju
n-0
8
Ju
l-0
8
Au
g-0
8
Se
p-0
8
Oct-
08
No
v-0
8
De
c-0
8
Ja
n-0
9
Fe
b-0
9
Ma
r-0
9
Aged 15-19
Aged 20-24
Aged 24+
Unemployment(Seasonally Adjusted) by Age
0%
5%
10%
15%
20%
25%
30%
Feb-7
8
Feb-7
9
Feb-8
0
Feb-8
1
Feb-8
2
Feb-8
3
Feb-8
4
Feb-8
5
Feb-8
6
Feb-8
7
Feb-8
8
Feb-8
9
Feb-9
0
Feb-9
1
Feb-9
2
Feb-9
3
Feb-9
4
Feb-9
5
Feb-9
6
Feb-9
7
Feb-9
8
Feb-9
9
Feb-0
0
Feb-0
1
Feb-0
2
Feb-0
3
Feb-0
4
Feb-0
5
Feb-0
6
Feb-0
7
Feb-0
8
Feb-0
9
Aged 15-19
Aged 20-24
Aged 24+
GFC and Professionals
• Unfortunately, the labour market for professionals is also effected by economic downturns and the GFC
Employed Persons in Australia
6,000
7,000
8,000
9,000
10,000
11,000
12,000
Aug-9
6
Aug-9
7
Aug-9
8
Aug-9
9
Aug-0
0
Aug-0
1
Aug-0
2
Aug-0
3
Aug-0
4
Aug-0
5
Aug-0
6
Aug-0
7
Aug-0
8
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
3,000
All Occupations
Professionals
GFC and Professionals
• However professionals are less frequently unemployed.
• When they are they spend less time unemployed than other worker types.
Unemployment Rate: Professionals v All Occupations
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Nov-
96
May
-97
Nov-
97
May
-98
Nov-
98
May
-99
Nov-
99
May
-00
Nov-
00
May
-01
Nov-
01
May
-02
Nov-
02
May
-03
Nov-
03
May
-04
Nov-
04
May
-05
Nov-
05
May
-06
Nov-
06
May
-07
Nov-
07
May
-08
Nov-
08
All Occupations
Professionals
Tasmanian Unemployment Rate: Professionals v All Occupations
0%
2%
4%
6%
8%
10%
12%
No
v-9
6
Ma
y-9
7
No
v-9
7
Ma
y-9
8
No
v-9
8
Ma
y-9
9
No
v-9
9
Ma
y-0
0
No
v-0
0
Ma
y-0
1
No
v-0
1
Ma
y-0
2
No
v-0
2
Ma
y-0
3
No
v-0
3
Ma
y-0
4
No
v-0
4
Ma
y-0
5
No
v-0
5
Ma
y-0
6
No
v-0
6
Ma
y-0
7
No
v-0
7
Ma
y-0
8
No
v-0
8
Professionals
All Occupations
Average Weeks Unemployed when Unemployed
0
10
20
30
40
50
60
70
Nov-9
6
May-9
7
Nov-9
7
May-9
8
Nov-9
8
May-9
9
Nov-9
9
May-0
0
Nov-0
0
May-0
1
Nov-0
1
May-0
2
Nov-0
2
May-0
3
Nov-0
3
May-0
4
Nov-0
4
May-0
5
Nov-0
5
May-0
6
Nov-0
6
May-0
7
Nov-0
7
May-0
8
Nov-0
8
All Occupations
Professionals
Tasmania vs AustralianLabour Market for Professionals
• The demand per capita for professionals is less in Tasmania than Australia as very few large companies establish their head quarters in TAS.
• But the supply is lower too.– Tasmania has relatively less young people than
Australia
– Some Young Tasmania’s leave:• To study on the mainland
• To find work
• By choice
– Although they frequently see there error of their ways and return to raise families.
Tasmania vs Australian Labour Market for Professionals
• Tasmanian Professionals experience the same unemployment rates than Australia as a whole.
• Tasmanian Professionals spend less time unemployed when unemployed than Australia as a whole.
Professional Unemployment Rate: Tasmania vs Australia
0%
1%
1%
2%
2%
3%
3%
4%
Nov-
96
May
-97
Nov-
97
May
-98
Nov-
98
May
-99
Nov-
99
May
-00
Nov-
00
May
-01
Nov-
01
May
-02
Nov-
02
May
-03
Nov-
03
May
-04
Nov-
04
May
-05
Nov-
05
May
-06
Nov-
06
May
-07
Nov-
07
May
-08
Nov-
08
Australia
Tasmania
Professional Average Weeks Unemployed: Tasmania vs Australia
0
5
10
15
20
25
30
Nov-9
6
May-9
7
Nov-9
7
May-9
8
Nov-9
8
May-9
9
Nov-9
9
May-0
0
Nov-0
0
May-0
1
Nov-0
1
May-0
2
Nov-0
2
May-0
3
Nov-0
3
May-0
4
Nov-0
4
May-0
5
Nov-0
5
May-0
6
Nov-0
6
May-0
7
Nov-0
7
May-0
8
Nov-0
8
Australia
Tasmania
Tasmania and the GFC
• The Tasmanian Economy tends to lag the national economy by 1-2 quarters.
• The effect of monetary policy also has a lagged effect in Tasmania.
• So we are probably yet to feel the impact of the GFC, compared to the rest of Australia.
Trend GDP/GSP Quarterly Growth
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
De
c-8
5
De
c-8
6
De
c-8
7
De
c-8
8
De
c-8
9
De
c-9
0
De
c-9
1
De
c-9
2
De
c-9
3
De
c-9
4
De
c-9
5
De
c-9
6
De
c-9
7
De
c-9
8
De
c-9
9
De
c-0
0
De
c-0
1
De
c-0
2
De
c-0
3
De
c-0
4
De
c-0
5
De
c-0
6
De
c-0
7
De
c-0
8
Tasmania
Australia
Unemployment Rate: Hobart v Sydney
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
No
v-0
7
De
c-0
7
Ja
n-0
8
Fe
b-0
8
Ma
r-0
8
Ap
r-0
8
Ma
y-0
8
Ju
n-0
8
Ju
l-0
8
Au
g-0
8
Se
p-0
8
Oct-
08
No
v-0
8
De
c-0
8
Ja
n-0
9
Fe
b-0
9
Ma
r-0
9
Hobart (Greater)
Sydney (Greater)
Sydney (inner)
Tasmania and the GFC
• The positive from this is that by the time the GFC hits Tasmania, it may well be that– the World and Australian economies are
starting to recover.
– The effects of monetary policy starts to filter down to Tasmania.
• Providing a stimulus to the demand for Tasmanian products, to help mitigate the effects of the GFC on Tasmania.
Positives of the GFC
• If you have or can keep your job, these are fantastic economic times for the young.
– Interest Rates at record lows!
– House Prices flattening or falling!
– Prices of G&S flattening or falling!
– Given $ from the Govt and told to spend it!
Lessons to be learnt
• Be productive as possible to ensure you contribute more in $ than you cost.
• If you happen to be made unemployed, being a professional you are likely to only spend about 12 weeks unemployed (compared to the average of 72 weeks)
When will the GFC End? - US
Federal Reserve Chairman Ben Bernanke, 5th May 2009
“We continue to expect to bottom out, then to turn up later this year.”
“We expect that the recovery will only gradually gain momentum and that economic slack will diminish slowly.”
“In particular, businesses are likely to be cautious about hiring, implying that the unemployment rate could remain high for a time, even after economic growth resumes.”
When will the GFC End? - Oz
Governor of the RBA Glen Stevens, 5th May 2009
“While the near-term outlook remains weak, there are further signs of stabilisation in several countries.”
“The Chinese economy in particular has picked up speed in recent months and many commodity prices have firmed a little.”
“The considerable economic policy stimulus in train in most countries should help contain the downturn and support an eventual recovery.”
