Ask yourself a key question. Why are the green eyeshade brigade lead by Ken Henry and Glenn Stevens telling us that the bad news may not be over? After all, the US is going to close its $US3billion cash for clunkers program (buying old cars) next Monday, the Chinese are buying lots of iron ore from Fortescue Metals and trainloads of gas and we have avoided a technical recession.
And to top that off, the weekly Roy Morgan Consumer Confidence Rating is now standing at 32.5 points higher than in early August 2008.
The real reason can be found in labor market information. Chief executive of Roy Morgan Research, Michelle Levine, points out that since October 2008, Roy Morgan has identified and warned of the problem of under-employment in Australia (now estimated to be 1.02 million Australians for July 2009).
Their latest report on aggregate hours worked in the Australian economy shows the very real impact that the global economic slowdown has had on Australia – and which states and people it has hit the hardest.
“Roy Morgan’s extensive research over the past year indicates that this downturn – while not being referred to as a ‘recession’ under the technical definition, has resulted in hardship for many Australians – especially younger people, men and those in Sydney and Melbourne,” it says.
“The dramatic fall-off in hours worked by younger Australians (under 25) shows just how hard it has been for younger Australians emerging from school and university over the past year to get a job – the contrast with the increasing hours worked by those over 35, and especially those 50+ is very apparent.
“Although aggregate hours worked has increased in Queensland, and kept steady in resource rich Western Australia and South Australia – there have been many full-time employees in New South Wales and Victoria that have been told to work fewer hours – if they want to retain their job.”
The market is responding in three ways. The first is the household sector, which had a cash splash at the same time as knowing a family member who is on reduced hours and a friend who is still looking for a job. They are cutting back on everything to make sure that they do not join the dole queues.
The second is the small business and retail sector, which is finding that it has to work twice as hard, open for longer hours and improve unit productivity to just keep the doors open and hang on to their good staff and their best sales team.
The final sector is the big end of town, which wants to return to the good ol’ days of large fees, profits from short selling and any way to turn the ASX and ASIC laxity (even despite the James Hardie rulings yesterday) into a massively increased volatility index based on increased earnings from firms that have cut their total number of employees.
The problem for Treasury is to keep the lid on wages and costs and face the real prospect of a worldwide currency collapse as the Chinese and other lenders of their domestic savings decide to focus on their own backyard and let the West find a lower level of consumption of both capital and energy.
If we start to see a run on the dodgy banks and unregulated financial institutions, a cut back in our manufacturing exports and increased costs of energy policies on household expenditure predictions, it is time to watch out and redo over-optimistic business plans.
Dr Colin Benjamin
Entrepreneurship and Strategic Thinking Consultant
Marshall Place Associates offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship.
Email dr.colinbenjamin@marshallplace.com.au
Contact: CEO Dr Jane Shelton, Phone +61 3 96400099
For more Futurist blogs, click here.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
