South Australia’s labour market woes

labour_YiMing

The unemployment rate reached 8.0% in South Australia in September, according to the latest labour force data released last week (trend data). This was the highest level of unemployment rate for South Australia since 2000 and the highest of any Australian state (see chart below).

South Australia has been the only state to suffer a decline in employment (-0.1% p.a. or 1,100 people) over the past 12 months (to September 2015). The progressive closure of automotive assembly, declining demand for businesses servicing the mining industry and uncertainties around future defence industry activity are weighing heavily on South Australia’s industrial sectors and on the wider labour market.

Chart: Monthly employment growth and unemployment rate, Australia vs. South Australia (Source: ABS)

Chart: Monthly employment growth and unemployment rate, Australia vs. South Australia (Source: ABS)

Looking ahead, the latest SEEK data release showed that the number of new online jobs advertised across Australia rose by 9.1% over the year to September. However, the number of new jobs advertised declined by 0.2% p.a. in South Australia, suggesting further weakness in SA’s labour demand in coming months.

This decline in employment has been exacerbated somewhat by South Australia’s labour force participation rate (the proportion of the adult population who are working or actively seeking work), which has always been lower than other mainland states due to SA’s relatively older population profile (SA is the second ‘oldest’ state behind Tasmania, and by quite a big margin).

The effects of this older demographic profile are also reflected in SA’s industry and employment mix. For example, SA has a relatively large share of employment centred on the healthcare industry, which accounts for 15% of all employment in SA, compared to 11% nationally.

South Australia’s labour force participation has deteriorated since 2012, reaching 62.3% of the adult population in September (compared to 65.0% nationally). This decline in participation includes an unknown (but possibly increasing) number of ‘discouraged’ working-age people dropping out of the job market altogether. As a result, South Australia’s ‘employment-to-population ratio’ dropped to 57.0% of the adult population in September, the lowest for SA since August 2002 and currently the lowest of any state.

South Australia’s labour market woes stand in sharp contrast to the rest of Australia, which recorded an increase of 233,500 new jobs (excluding South Australia) over the year to September. In particular, New South Wales (+119,500 or +3.3% p.a.) and Victoria (+58,000 or +2.0% p.a.) achieved the strongest increases in employment over the year to September, likely benefitting from increased residential building activity in Sydney and Melbourne this year.

Elsewhere, employment growth was modest in Queensland (+35,000 or +1.5% p.a.) and Western Australia (+9,900, or 0.7% p.a.) despite ongoing decline in mining related investment and jobs, while Tasmania (+3,000 or +1.2% p.a.) also recorded moderate increase in employment over the year to September.

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Yi Ming Hu
Yi Ming joined Ai Group as an Economist in 2013. He has broad experience covering economics and financial markets, having previously worked as an economist for the Reserve Bank. Yi Ming holds a first-class Honours Degree in Commerce from the University of Melbourne and is a CFA charterholder and a CPA.
Yi Ming Hu

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1 Comment

  1. Mark

    I am an electrician and have been unable to find full time employment since September 2015. I have worked 14 weeks in fact on small projects to date. I am finding it even harder now to find any employ. I know for a fact some jobs advertised on seek never employ. I believe the unemployment rate in south Australia must be much higher than the “statistics” posted. But no body really cares as most others in the community have their heads in the clouds.

    Reply

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