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It’s hard not to lean towards Roy Morgan Research’s latest 9.3 per cent unemployment figure for March as correct over the Australian Bureau of Statistics’ 5.2 per cent.
A low unemployment rate is typically associated with rising incomes as employers scramble to maintain a sufficient workforce.
Looking at two of the biggest employers, financial services and retail, employment is falling as employers struggle to raise earnings to justify return on capital in difficult markets and a high capital risk environment. But across the board, the main threat to salary outbreaks is coming from union agitation.
In addition to the research firm’s 9.3 per cent unemployment figure, an additional 7.9 per cent of the available workforce is looking for extra work, taking the total of under-employed and unemployed to 17.2 per cent.
Roy Morgan used the numbers to point to two requirements to meet the challenges, an immediate cut in interest rates and changes to the industrial relations platform .
Similar sentiments are coming from the Business Council of Australia and an array of business leaders.
The May federal budget is going to repatriate more cash from business to meet its promise of a return to surplus in 2013. If Morgan’s research is correct and the government continues its destructive path of suppressing the performing parts of the economy while pumping money into non-performing or unsustainable areas such as the auto industry and alternative energy while continuing to inflate the power of unions to dominate workplace negotiations, unemployment will rise further and our international competitiveness will stay on a downward slope.
Lower retail sales cannot be passed off as foregone revenue shifted to online sales. People are spending money but selectively and the mottled economy it’s creating is containing inflation.
Reserve Bank of Australia governor Glenn Stevens has about three to five years before he has to start ratcheting up rates to cope with “pay-back” day for all the quantitative easing that has occurred worldwide. He won’t be alone as other central banks will be doing the same thing.
When it occurs, it’s going to be a tough period for business, so there are a few years to try to inject some growth into the non-mining sectors and lower the barriers for making a return on capital.