Monthly Media Brief
Employment | The Economy | Contract Workforce
A CXC Global Knowledge Initiative
The following summary of media coverage relating to the economic outlook
for Australia, covers the period:
Dec 2016-Feb 2017
Dated: 17 February, 2017
Australia’s Economic Outlook
But in terms of the past 2 weeks, there’s been an overall
upswing in business & consumer sentiment. Business
survey out this week (Access Economics), shows a more
Retail sales continued to slow in November, while
the labor market showed signs of moderation, with
the unemployment rate ticking up a couple of
notches to close out the year. This had a knock-on
effect on consumer sentiment, which ended 2016
on a low note and remained broadly stable at the
start of the year.
The Australian economy posted its worst performance
since the global financial crisis in the September
quarter 2016. While economists expect the economy
to avoid two consecutive quarters of negative growth
and a technical recession, it is a threat hanging over
the nation until the next set of national accounts
figures in early March. At an annual rate of 1.8% it is
running well below a long-run average of just under
three per cent, which will keep pressure on the
jobless rate. The government does not expect a three
per cent growth rate until the start of 2018.
The RBA has been reluctant to trim cash rate again, after
cutting to a record low of 1.5% in August 2016.
However, growth figures were weaker than the RBA had been
expecting, causing some economists to believe a cut will be on
the cards after the Feb meeting last week - this didn’t end up
Australia’s AAA credit rating survived the pre-Xmas
and Mid Year Economic Fiscal Outlook (MYEFO).
It’s not expected to survive the May Budget. Many
analysts believe S&P will strip Australia of its rating -
some speculating that it’s a matter of ‘when’ not
‘if’. But this is up for debate.
If this does happen, it could be an indication of the
Fed Govt’s limited capacity to respond to economic
challenges, amidst increased spending. And it has
the real potential to undermine Australia’s position
as a sound economic market, which will result in
foreign investment dollars pouring out of our
country. A tough position for the many businesses,
that rely on foreign investment.
This will also see an increase in the cost of offshore
funding for Australian banks, because of downgraded
The biggest threat for Australia currently, is the
economic health of our biggest trading partner.
China’s private debt is up there as one of the
highest in the world (along with Australia’s).
Beyond a full-scale financial meltdown, there are
indications China will shift its economic focus, away
from heavy industry & construction to services.
Last year, China boosted commodity prices by
increasing infrastructure spending, relaxing
restrictions on real estate investment, and cutting
coal production. Even moderate moves to limit
growth in these sectors will see a backflip in the
commodity price gains, and with it, any potential
boost to Australia’s national income.
Houses in Sydney & Melbourne have never been
less affordable, relative to most measures, but
in particular relative to incomes & rents. Having
said that, there isn’t a housing shortage, in fact
with the proliferation of construction in
Australia, we’re likely to very soon, be seeing a
glut (especially of apartments).
The expectation is that there will be a drop in
investor demand: banks are under pressure to
uphold lending standards; global interest rates are
on the rise; there’s new taxes on foreign buyers;
and a crackdown on money leaving China - all of
which points to a drop in investor demand.
Hence, declining demand, increasing supply, an
already expensive product all point to a likely
price drop in property by the end of 2017 - an
expectation of many analysts.
Over the past few years,
Australia has embarked on
the most epic apartment
construction boom in our
history. With this likely
softening (thanks to the
glut), and knowing the
accounts for almost 10% of
employment, this poses
another economic risk for
Australia this year.
Morgan Stanley predicts up
to 200,000 jobs could go, as
a result of the construction
downturn over the next
year. This could lead to an
unemployment rate of 6.5%.
THE TRUMP FACTOR:
Despite the positive sharemarket response to Trump’s
surprise win in November, there’s real concern about
ongoing positive impact, given his policy platform.
If he fails to deliver on his stimulus promises, the US
sharemarket will suffer, with inevitable global fallout.
Having said that, if Trump delivers on his promise to
boost infrastructure spending, the stimulus to the US
economy could see the Federal Reserve increase
interest rates faster than expected.
This will cause unease in developing markets, as
money is redirected back to the US. It will also
increase the cost of debt, which is largely dominated
by the $US.
Rising $US & interest rates could also undermine the
very economic recovery that is prompting them
Keep in mind, there will be significant fallout if
Trump delivers on his promises to roll back various
free trade agreements and impose new tariffs on
many major trading partners.
Brexit was the shock of 2016, until Trump took
over the Whitehouse. This year, attention in
Europe will be on France & Germany who both
In France, the right-wing candidate (a euro
sceptic) looks likely to win. In Germany, Angela
Merkel is under pressure mainly due to her policies
of welcoming Syrian refugees.
Italy will likely go to elections this year instead of
2018, after it lost its Prime Minister in 2016 whose
constitutional referendum was rejected.
In summary: if any of these nations pull out of the
common currency, there’s great risk the whole
Union will collapse. Which will make the Greek
debt crisis look minor.
Consumer sentiment rose by 0.3% in
September compared to August,
when it increased 2%. Hence the
index was up a healthy 8% on the
same quarter, YOY.
Wage growth will
remain weak in
Budget deficit will
Adjustment to the
mining slowdown still
GDP is expected to
grow 2.8% this year,
rising to 2.9 in 2018.
The RBA is expected to
lift rates 3 times in
Australia’s shock economic contraction in the
September quarter, was likely a one-off - this means
we’ll likely surpass the Netherlands in having the
world’s longest-run without recession.
Most economists believe Australia has the potential
to continue growth throughout 2017. Having said
that, there seems to be a deep divide in the
expectations of analysts.
If there’s an ongoing slump in business investment,
this will be exacerbated by the likely slowdown in
housing construction. Couple this with a sluggish
consumption growth due to a negligible rise in real
wages and a weakening labour market, and we have
the grounds for a potentially shaky 2017.
The following summary of media coverage relating to the jobs outlook for
Australia, covers the period:
Dec 2016-Feb 2017
Dated: 17 February, 2017
• Australia’s jobless rate fell in January 2017, after a
significant surge in part-time work
• Unemployment rate fell to 5.7% from 5.8%, beating
expectations for a steady rate at 5.8%
• Part-time work increased by 58,300 jobs
• Decline of 44,800 full-time roles
• The number of people working full-time is no higher than it
was August 2015
• Wage growth is low, as people are working fewer hours,
and there’s an excess supply of labour
• Full-time job creation in the December quarter was the
strongest in 6 years, so the drop in Jan not surprising
• Total employment rose by 13,500
• Steady labour market supports the Reserve Bank’s take
that a gradual improvement in employment will take place
• There are improvements in forward looking indicators for
the jobs market, according to NAB’s latest survey
• Labour force participation rate (measures proportion
of working age population either in a job or looking for
one), declined slightly in January to 64.6% from 64.7%,
helping push the unemployment rate lower
• Under-employment is increasing which is a concern,
whereby people aren’t getting the employment hours
they want or need
With Ford shutting down at
the end of 2016, 600 jobs
were lost. When Holden &
Toyota follow suit, as it
expected this year,
automotive industry groups
estimate up to 40k jobs will
be lost: if none of these auto-
workers found new jobs, the
unemployment rate will rise
above 6%, it’s expected.
The risk posed by the auto
industry is potentially far-
reaching for both
unemployment and under-
manufacturing jobs will be
likely replaced with lower-
paid, part-time & casual
service sector jobs.
INDUSTRY SPOTLIGHT AUTOMOTIVE:
Over the past 12 months, employment
increased by 163,134, the smallest
annual gain recorded since April last
year. In percentage terms, employment
grew by 1.38% over the past year, also
the slowest pace since April 2015
Part-time employment has grown by
5.4% over the past year, the fastest pace
seen since January 2010. On the other
hand, full-time employment has fallen
by 0.4%, the first decline registered
since April 2014. It now sits at the
lowest level since February 2013
Unemployment Rate in Australia
averaged 6.93% from 1978 until 2016,
reaching an all time high of 11.10% in
October of 1992 and a record low of 4%
in February 2008 (unemployment Rate in
Australia as reported by the Australian
Bureau of Statistics)
A similar risk to that of the
auto industry, faced with a
continuing downturn, rising
unemployment will result.
The RBA estimates at least
3/4 of the decline in mining
construction has passed. BIS
believes Aus is only half way
through the resources
The difference in estimates
is worth $10’s of billions &
10’s of thousands of jobs.
Mining related construction
employs far more during
operation, at an estimated
ratio of 10 or 20:1.
INDUSTRY SPOTLIGHT: MINING
The following summary of media coverage relating to Contingent Workforces,
covers the period:
Dec 2016-Feb 2017
Dated: 17 February, 2017
The exploding number of ‘gig’ or contingent workers, globally,
continues to dominate the workforce & HR media news.
This classification of worker is the fastest growing in the US
and is expected to continue into the foreseeable future.
We’re seeing a lot of coverage on how to manage contingent
workers, a sign that their credibility & importance in the
business environment is growing.
We’re also seeing significant coverage on the technology side
of managing contractors & gig workers.
Overall, the sentiment we’re seeing in the media is largely
positive. Mostly, the expectation is that the developments &
trends in the contingent workforce market that we saw taking
shape in 2016 (increased usage of contractors, technology
growth, increased usage of services procurement), will
continue in 2017.
There’s a firm belief that the majority of the
workforce, cobbling together to do ‘gigs’ is
overblown. Not everyone is going to freelance, but
technology is certainly gaining exposure, especially in
how we interface with and schedule work, including
‘support’ work and highly specialised skills.
Gigwalk is a software platform that’s a good example.
It provides mobile tools that help companies manage
their own distributed teams, and enable them to
seamlessly engage talent pools outside of their
Said their CEO, David Hale: “The on-demand model
won’t disrupt & replace most companies, but
companies will definitely adopt on-demand
technology to provide schedule flexibility options for
Performance metrics of gig and contingent
workers is becoming increasing important. In
particular, costs are monitored more closely, as
they are directly tied to operating margins, and
time to fill is being noted as a crucial metric.
For an organisation that hires thousands of
contractors each year, analysis & improvement
will have a significant
impact on the bottom line.
A broader coverage of the online tools
used to manage contingent workers.
Over 30k professionals registered for on-demand
work. Companies use Catalant to access
professionals on an as-needs basis. “We help
companies find exactly what they need, when they
need it, whether that expertise is a highly skilled
freelancer, a large or small consulting firm, a
retiree from your firm, or a skilled expert”.
Helps procurement professionals drive better
adherence to corporate standards and improve their
leverage of the supplier ecosystem - using a simple
algorithmic cloud-based software. It provides
quality supplier hygiene via the powerful software
which automates how labour is vetted, provisioned
& sourced. This is a progressive procurement
An on-demand staffing network, able to predict
whether jobs are going to be filled, whether there
will be no-shows, or reliability issues.
Fundamentally changing the way companies are
finding workers and getting their jobs filled.
A natural language processing software of job
descriptions for services procurement, to
automatically structure & summarise the
unstructured text of SOW contracts. Effectively, it
reads all the key elements of a contract into a
series of fields. Provides rapid visibility to services
procurement spending segments, spending
behaviours and potential savings.
EY study, released at the end of January 2017, found:
- One in two employers reported increasing their use of
gig workers over the last five years
- The number of workers engaged in alternative work
arrangements rose by 66% in the 10 years to 2015
- There are several reasons for this rapid increase in the
use of contingent workers, not the least of which is the
lasting effects of the 2008-9 global recession. This
period created a sharp focus on cost control, which
ultimately resulted in a contraction of full-time
- Behavioural, regulatory and policy shifts, and changes in
expectations meant that both workers and organisations
adjusted to and embraced the flexibility that contingent
work arrangements provided, while technology served
to facilitate a more seamless interaction
- If part- time workers are included, a wider definition of
contingent work used that captures a range of
“alternative work arrangements”, as much as 40% to
50% of the workforce could be in non-permanent
employment by 2020
- In the UK, the number of self-employed has touched record
highs at 4.8 million, growing 28% over the 10 years to 2016,
against only 6% growth in UK employees in the same time
- There are similar stories of rapid growth in the self- employed
workforce in the Netherlands, Belgium, France and Australia.
The rise of the gig economy is increasingly a global
- There is also a more strategic and change management
element to drawing on contingent workers: organisations are
using contingent workers to overcome resistance to change
within legacy workforces
- When it comes to managing the contingent workforce, many
organisations currently suffer from fragmented governance
models, and manual systems and processes. In many cases,
organisations are using basic tools to measure contingent
workforce performance rather than data analytics
- While there are major opportunities to gain efficiencies from
the flexibility that embracing the gig economy offers,
organisations need to fix the lack of leadership accountability
and governance over their contingent workforce
- By working together and collaborating on ways to overcome
the potential risks, organisations and giggers alike can ride a
rising tide that will lift all boats to economic prosperity and
EY study, released at the end of January 2017, found: