24/08/2015 - 06:46

Big employers not whole story

24/08/2015 - 06:46

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We need successful big companies, but we also need to recognise they started as smaller ones.

We need successful big companies, but we also need to recognise they started as smaller ones.

That staff numbers at many of the state’s biggest employers have shrunk ought not be surprising.

For more than a year, Western Australia’s important resources sector has been hit hard by dramatically falling commodity prices. Coming on top of an expected slowdown in major construction projects related to minerals and petroleum, the impact has been dramatic.

Some big service companies have cut back accordingly, as good managers have to in times of austerity.

But it is not all bad news.

To date, there has not been a rise in unemployment numbers to match the headlines of job losses. That indicates that other businesses have been able to benefit from the changed circumstances, employing people at lower wages than were sought during the boom.

There is certainly an indication that some sectors have grown their employee numbers, especially in retail and similar areas, which could not compete for staff when the resources sector was at its commanding heights.

Other people who have lost jobs have established businesses for themselves, offering their expertise without some of the additional costs of permanent employment. Cost-conscious businesses are likely to have benefited from this.

There are also people who can afford to take time out after a financially rewarding, yet exhausting, decade or more of frantic growth and opportunity. These people have a variety of options outside of returning to similar work for a lower pay packet. They can retire, take a sabbatical, or focus their energies, expertise and wealth into different career choices – new businesses, including startups, directorships or consulting.

So there is a resetting in the economy, with some employees working more productively (for what they cost), while others sit on the sidelines providing the potential for spare capacity if things improve.

There are dangers in this, however.

While much of the new capacity required to build during the boom was imported skills and labour that may have now left the state, there remain many people here for whom (in the medium to long term) unemployment, partial employment, lower-paid employment or self-employment are not sustainable options due to their own lifestyles, committed expenses, skills base or temperament.

Should the current market kick along the bottom for too long or, worryingly, drop further due to some additional economic calamity such as a major crash in China, the current ‘breather’ in WA may start to cause long-term damage.

The challenge for government is to ensure it does not get in the way of economic opportunities that can provide alternatives for those cast aside as the resources sector levels out.

Laws that inhibit investment – foreign or otherwise – in job-creating businesses need to be re-examined. Governments also have a responsibility to ensure proper process is followed and spurious legal challenges avoided in any approvals process.

The ridiculous challenge to ride-sharing service Uber is also stifling progress. Its model has provided about 1,500 contractors in this state with flexible employment opportunities, and reduced transport costs for thousands of Western Australians who have become more cost conscious.

There are dozens of areas like these where red tape, green tape and other government-imposed burdens stand in the way of job creation. Perhaps we could afford that during the peak of the boom when we were travelling at full speed, downhill with a tailwind, but such a brake on the economy as it attempts to climb out of the current trough is harmful.

This is especially the case for thousands of students attempting to enter the workforce, who are perhaps the greatest losers in the current environment. The biggest danger is that the best and brightest will leave this state and those who remain are unproductive in terms of using their new knowledge.

Government needs to lower the barriers of entry for new entrants to the workforce by making employing graduates easier and, for those who can’t get jobs, it needs to ensure startups and self-employment are a simple alternative.

Perhaps some young WA software engineers could be developing the Microsoft of tomorrow right now if they saw a smooth path ahead.


STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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