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27 April 2015

Regional unemployment hits 12-year high

Unemployment is rising in the Hunter Valley and other mining regions in Australia.

The unemployment rate in regional Australia has risen to 7.3 per cent, a 12-year high, as job demand shifts increasingly to major cities with the winding down of the mining construction boom.

Regional Australia has not experienced unemployment rates this high since March 2003, with regional NSW recording the largest increase in jobless rates in the past three months, particularly in the Hunter Valley and Newcastle - big coal-producing regions.

Regional Australia Institute (RAI) says analysis of this week's Bureau of Statistics quarterly employment data shows the unemployment rate in regional Australia, in non-seasonally adjusted terms, remains structurally higher than in capital cities.

It says employment opportunities are shifting towards the services sector, traditionally a city strength, and this raises questions about where future job demand will come from for the 32 per cent of Australians living in regional areas.

The data shows mining regions are faring particularly badly.

Since February 2012, unemployment in the Hunter Valley region in NSW has risen from 2.3 per cent to over 12 per cent.

In Newcastle and Lake Macquarie, NSW, the unemployment rate has increased by 3.4 percentage points over that time.

In outback Western Australia the unemployment rate has risen 4.9 percentage points, while in Mackay, Queensland, it has risen by 4.8 percentage points.

The unemployment rate in regional Australia is 7.3 per cent, in non-seasonally adjusted terms, while the comparable national unemployment rate is 6.3 per cent.

Jack Archer, RAI's deputy chief executive, says the numbers show that regional economies need to find strategies for new economic development.

"The much-discussed opportunities for agriculture and tourism in Asia are still on the table for many regions, but this potential hasn't yet been converted into jobs, and may remain that way unless regional business act now," Mr Archer said.

"It is also time to focus on the capacity for growth in the regional services sector, [because] regional development has not yet focused on growth opportunities in services but, with the long term shift in job demand to these parts of the economy, it is essential that we do so now."

Regional labour market face problems that capital city labour markets do not.

On average, the labour market in regional areas is substantially smaller than it is in capital cities, and this makes it harder to absorb large changes in labour market conditions in a short space of time.

The RAI says with commodity prices continuing to fall, and with the investment phase of mining projects essentially over, these pressures are likely to persist "for some time."

In the three months to March, regional NSW recorded saw unemployment rise from 7.9 per cent to 8.3 per cent.

Tasmania was the only state to record a decline in its regional unemployment in the March quarter, falling to 6.7 per cent, considerably lower than its high of 9.3 per cent in mid-2013.