Clock ticking on auto closure…

As the national automotive industry approaches closure and the minerals and energy sector takes a dive, many of us are asking how we can fill the jobs hole this will create.

The reality is that the forces driving this are largely out of the control of the State Government. Strong Federal Government support is needed to mitigate the negative impacts of these shocks and to help lay the foundations for the industries and jobs of the future. To prevent unemployment rising exponentially over the next two years, a much larger scale Federal/State jobs and infrastructure package needs to be put in place soon. We know from past experience that recovering from major economic shocks can take many years, particularly if it takes place during a period of slow employment growth and relatively high unemployment – a combination that exists in South Australia at the moment. What we learnt from the Great Recession was that early and bold intervention – designed to boost investment in job-rich projects – played a key role in containing unemployment. Australia avoided recession because of this. Now, similar policies can help South Australia avoid escalating unemployment. Announcements like the Northern Connector road project have sent a signal that the Federal Government is a willing partner with the State Government in major infrastructure projects. This is a very welcome development but we need more projects like this to offset the shocks we are facing. While unemployment has declined to 7.2 percent it is set to rise on the back of recent job losses. We need to look closely at other measures of labour market exclusion to understand the scale of the challenge. The ABS now provides a measure, which combines unemployment with those who would prefer to work more hours, the so-called labour underutlisiation rate. This is currently around 17.3 percent in South Australia compared to 14.5 percent for Australia. South Australian job growth is too slow to absorb the job losses we are experiencing to provide opportunities to new entrants into the labour market arising from population growth. Total employment has fluctuated around 800,000 since January 2010. Reflecting continued losses in manufacturing and mining, full-time employment is in decline, particularly for males. While the short-term outlook is bleak for manufacturing, the sector can be successfully transformed and rebuilt on the back of a lower Australian dollar and fast-tracking the roll out of national innovation programs. Expansion of mining will require higher commodity prices and significant improvements in productivity. The lower dollar provides a much-needed boost for domestic tourism, horticulture, education, health and professional services. Eventually commodity prices will drive a new wave of investment in the South Australian minerals sector including expansion of Olympic Dam. The jobs being generated at the moment often require vastly different knowledge and skill sets to those that are being lost. Significant retraining is required to assist workers in the automotive supply chain to transition into the rapidly growing areas of health, social assistance and education. Many will want to but others will find it a bridge too far. One of the great advantages of increasing investment in infrastructure and urban modernisation projects at a time like this is that they generate jobs quickly – jobs that are often well suited to manufacturing workers. All of this is happening at a time when new technologies and business models are having disruptive impacts on workplaces and entire industry sectors. We must better understand the implications of new technologies and business models, and shape rather than be shaped by them. While many occupations are susceptible to displacement by new technologies, those same technologies are giving rise to new occupations and industries. A debate now rages about whether job creation will be outpaced by job destruction. We have long been told that technology will generate more jobs than it displaces but globalisation makes this much less certain at the local level. Over the next few months I will examine both sides of this debate. What is necessary in the short-term is some degree of pragmatism. It is easy to be bewildered by the complexity of the problems we face, over-examine them and fail to act with haste. We no longer have the luxury of a relatively long lead-time to the closure of the automotive industry. The wind-down has begun and so has the countdown to the federal election. We need a robust jobs debate in the lead up to the federal election. What more needs to be done to offset the job and company losses caused by the automotive closure? How can we accelerate industrial transformation in South Australia to help build the industries and jobs of the future? John Spoehr is Director of the Australian Industrial Transformation Institute at Flinders University @JohnSpoehr

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