Jobs Left Out of Mining Industry's Pot of Gold
Source: Sydney Morning Herald, Peter Martin (5/10/11)
"Australia's headed for more mining income than ever before."
Australia is about to be showered in more mining income than ever before, but little of it will flow through into jobs, according to budget papers.
The volume of minerals sent overseas should climb by 20% over the next two years.
The mining industry is set to invest a record $76 billion in 2011–12, about eight times the amount it spent before the boom—and $380 billion of resources investment is in the pipeline.
But job gains will be minimal by recent standards. The unemployment rate is at present 4.9%, and Treasury forecasts no improvement by June, and then a minimal slide to 4.75% a year later, inching down to 4.5% by June 2013.
The rate of job creation will slow from more than 300,000 this past year to 250,000 in each of the next two years, at a time when the economic growth rate explodes from 2.25% this financial year to a blistering 4% in 2011–12 and 3.75% in 2012–13.
Treasury says this mining boom won't generate as many jobs as the last one, partly because Australia is running low on skilled workers. It says: ''The starting point of the economy is now different, with the economy operating closer to full capacity at the start of Mining Boom Mark II, indicating less room for above-trend growth without generating wage and price pressures."
Put more brutally, Treasury thinks unemployment can't fall much lower without igniting wages and inflation and inviting retaliation from the Reserve Bank.
Treasury has re-estimated the non-accelerating inflation rate of unemployment and found it between 4.5 and 5%, meaning future gains in employment will invite higher interest rates, choking off further gains.
As evidence that it means it, it has plugged in an unemployment rate of 5% to calculate its economic projections for 2013–14 and 2014–15.