Looking Up Down Under: an Aussie Bounce
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Workers like Tony Loughry find Australia's new vitality tough going.Skip to next paragraph
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Because while government efforts to restructure and reenergize a slow-moving economy have brought impressive gains, they've also brought higher unemployment.
Mr. Loughry, of Wellington Point, Queensland, is among the "restructured." He says he has answered at least 50 ads but landed fewer than five interviews.
"There are so many unemployed that the personnel agencies say they have received 100 odd applicants and are not able to interview you," says Loughry, an experienced computer operator and clerk.
He's far from alone. Australia's unemployment rate ranks among the highest for English-speaking countries, 8.8 percent. In Queensland it approaches 10 percent. And in Tasmania, an island off the southeastern coast of Australia, it is 11 percent.
High unemployment is one of the few blemishes in the economy Down Under. Rising mineral prices have pulled mining exports out of a hole. And tourism is bustling as the nation prepares to host the Olympic Games in the year 2000. Surveys show improved business confidence, and inflation sits at a four-year low.
These bright spots are beginning to give the once slow-moving economy a kangaroo-like bounce. "We think the economy will build up momentum with 1998 as the strong year," says Nigel Stapledon, chief economist at Westpac Banking in Sydney. By next year, Mr. Stapledon predicts, Australian gross domestic product (GDP) should grow by 4.75 percent.
And that should take the pressure off unemployment. Prime Minister John Howard recently said the economy would have to grow by 4 to 4.5 percent a year to reduce unemployment. The current growth rate is about 3.5 percent.
In the meantime, 135,700 manufacturing jobs have disappeared so far this decade - 1,300 of them last year.
The Australian economy is caged, in part, by its trading partners.
In a major change of course, the country shifted focus, early in the '90s, from Europe to Asia. And when Asia's tiger economies were booming, the strategy paid off.
But Asia has slowed, and Japan especially is limping along. "We don't expect great exports until Japan picks up," says Annette Beacher, an economist at Citibank in Sydney.
Instead, growth areas include housing, tourism, and mining.
Government has also rolled out the red carpet, successfully, for multinational corporations.
So far, 280 companies have set up regional headquarters in Australia - US computer giant Digital Equipment and Hong Kong airline Cathay Pacific among them.
Finding such new business is critical for growth as Australian manufacturers struggle to stay competitive. They recently lost some import tariffs that protected them against foreign competitors. The country's automobile manufacturers are pressuring the Howard government to maintain the tariffs, but Mr. Howard, a conservative who favors a market economy, is resisting.
Economists and government officials talk about a fundamental restructuring of the economy: more free market, less government protection and subsidies.
Loughry sees such changes from a different level. He worked for an oil company, Caltex, as a senior clerk and accountant. But Caltex merged with Ampol, another oil company. The newly merged company offered him a job at a grease manufacturing plant. "I had no experience with it and would not know what to do," says Loughry, who turned it down.
The restructuring trend shows little sign of easing. On May 1, BHP Ltd., the nation's largest company, said it would close its Newcastle steelmaking facility by 1999 and lay off 2,900 workers.
The BHP announcement brought the threat of a strike by the Australian Workers Union in Newcastle, and, lately, Australian unions are flexing some long-dormant muscle.
The former Labor governments of Prime Ministers Bob Hawke and Paul Keating developed a close relationship with militant and powerful unions.
They developed "national accords," which set national wage rates and conditions. In return, the unions agreed to workplace changes that allowed flexibility in work assignments.
Under Prime Minister Howard's Liberal government, considered pro-business, that relationship has changed.
The Liberals, elected last year by a wide margin, say the "national accords" make Australia uncompetitive, loading it with high labor costs in a part of the world where low wages are the norm.
"It's part of the government's agenda to remove the influence of unions," says Jennie George, president of the Australian Council of Trade Unions.
She won't get much argument from government officials, who describe the Australian labor force as too rigid.
The unions have their own way talking.
On April 29, Western Australia was virtually cut off from the nation as airline, rail, and sea transport were shut down by strikes over proposed work rule changes.
In April, the Howard government announced that individuals could negotiate their own contracts with employers - without relying on union representation.
Although most companies are unionized, Ms. George expects some companies to begin this process. "The majority will ignore the law and continue to reach workplace agreements with unions," she predicts. She expects the new change to mainly affect the hospitality business - the strongest segment in the country.
But the shift signals what some consider an anti-union sentiment that pervades not only government, but business.
That's why, when he fills out his rsum, Loughry won't include his position as shop steward for his union.
It's tough enough just trying to get a job interview.