SA Unemployment: Women Out of Work and a Need for Infrastructure

There is now a high risk that unemployment will rise above eight per cent in the first half of 2018. The labour under-utilisation rate, which captures underemployment, could rise above 18 per cent. The Federal Budget hasn’t provided the antidote to this, placing pressure on the State Budget to deliver additional investment in job generating measures.

South Australia’s unemployment rate is stubbornly high. It has been hovering around seven per cent for some time. The April ABS jobs figures saw it rise to 7.3 per cent in seasonally adjusted terms. The smoothed out trend series shows tells us that it is around seven per cent compared to 5.8 for the nation. What these headline figures mask are significant and surprising movements in the male and female unemployment rates. South Australia’s female unemployment rate rose sharply from 6.8 per cent to 8.3 percent, the highest it has been since the early 2000s. In some welcome news, the male unemployment rate came down from 7.3 to 6.4 per cent. What is going on?

It is likely that female employment is being depressed by slow retail sales, which is not helped by the failure of wages growth to keep pace with inflation. The promise of sharp growth in disability sector employment is yet to be realised. While male employment growth is anemic, there has been a recent recovery in manufacturing jobs growth in South Australia. Of course the worst is to come in this sector with the closure of the automotive manufacturing industry in October this year.

There are few policy measures at our disposal that are capable of boosting jobs growth in the short term. Industrial diversification and encouraging the growth of existing companies and startups will deliver benefits over the medium-term but won’t fill the short-term jobs gap. Funding for the Northern Connector road project from the federal government will help but we need additional investment in large-scale projects like this to prevent unemployment rising.

While South Australia will be a beneficiary of the federal government’s naval shipbuilding investments over decades to come, this will not be enough to offset the impact of the closure of the automotive industry over the next few years. Employment in naval shipbuilding will grow significantly in South Australia but not until early in the next decade when the Future Frigate and Submarine projects are well underway. Jobs will continue to be lost in the sector over the short-term as the Air Warfare Destroyer contract winds down.

Unfortunately, the Federal Budget didn’t deliver additional commitments to major infrastructure projects in South Australia. Given political tensions between the federal and state governments, heightened by a rapidly approaching state election, the federal government is unlikely to do the Weatherill government any favors. What might work is the state government joining with industry, unions and local government to jointly present a raft of infrastructure projects for consideration of the federal government. A strategy to cut through the political noise is urgently needed.

South Australia needs a ‘Plan B’. This means the state government boosting debt funded infrastructure investment through the June State Budget. Interest rates remain at historically low levels. There have been few better times in history to borrow for productive forms of investment than now. There are no shortage of projects including expansion of the AdLink light rail network, expanding the 1000 homes in 1000 days social housing building program, upgrade of the Strzelecki Track and renewal of the Elizabeth City Centre. Of course, all of this would be much more politically palatable if the federal government co-invested with the state government in a package of new measures over the next few months. While genetically engineered pigs might fly one day, I don’t think we should be waiting. The costs of inaction are too high, the consequences too dire for those who are about to lose their jobs.

So, with just four months to go before the closure of the automotive industry, the June State Budget needs to deliver additional investment in job rich infrastructure projects. This is a pragmatic response to the circumstances we find ourselves in, circumstances where it will prove to be difficult or impossible to forge short-term agreements with the federal government on co-investment in new projects. This should not prevent us trying however. It would be refreshing to see a bi-partisan response, even at this late stage in the countdown to closure.