Unemployment … Coming to a Suburb Near You

Some local communities and suburbs will be harder hit than others by rising levels of unemployment, and this includes areas not usually associated with disadvantage, writes Charles Darwin University Professor of Economics Bill Mitchell and Griffith University Professor of Urban and Regional Analysis Scott Baum in this piece first published on The Conversation.

Australians are heading into 2014 with job vacancies falling, and Australian Treasury forecasts and monthly labour force data all pointing to rising levels of unemployment in the year ahead.

Some local communities and suburbs will be harder hit than others, and this includes areas not usually associated with disadvantage.

That’s the take home story of the Employment Vulnerability Index (EVI) developed at the Centre of Full Employment and Equity (Charles Darwin University) and the Social and Population Health Research Program (Griffith University).

The index doesn’t account for existing levels of unemployment, but rather it illustrates those places most at risk of unemployment.

The degree of risk for each region depends on its employment characteristics and skill levels. The results from an analysis of the index shows two distinct groups of potential job loss suburbs.

‘Red alert’ suburbs

The first group were identified as red alert suburbs — those places with high job loss potential — and were places that are already witness to high levels of social disadvantage. These areas are usually at the forefront of discussions regarding the negative impacts of social exclusion.

They are often associated with rising and sustained joblessness and include many of the places associated with Australia’s old manufacturing sector, such as Broadmeadows in Melbourne or Elizabeth in outer Adelaide. They also include places in larger regional centres such as Raymond Terrace in Newcastle and Whyalla in South Australia.

Concerns regarding the concentration of jobless households and families dependent on social welfare abound, with many caught up in a revolving door of intergenerational disadvantage.

While this group of suburbs should rightfully be the focus of social and economic policy aimed at reducing social exclusion, a second group of disadvantaged suburbs are likely to emerge as the unemployment rate edges higher.

Housing headache

These are from the the so-called mortgage belt. They’re the places where families have moved to get a foothold in the housing market, often with a requisite two income earners. Faced with rises in unemployment and sudden loss of incomes across households, they will become less aspirational and prosperous than before.

These areas are not usually associated with social disadvantage. While they share the employment characteristics of the other potential job loss suburbs — low formal education levels, higher levels of part-time employment and employment in vulnerable industries — on other indicators of disadvantage they appear as some of Australia’s middle suburbia. Existing levels of joblessness tend to be lower in many of these localities and formal attachment to the paid workforce is strong.

They included places such as Craigieburn in Melbourne, Crestmead in Brisbane and Mandurah in Perth. Outside the metropolitan regions, places such as the suburb of Kelso in Townsville (Queensland) and Latrobe in Devonport (Tasmania) are included. These were once places that may have been characterised by prosperous families and all the trappings of aspirational Australian suburbia.

The final wash-up in terms of increasing unemployment and the way this will be stamped on the social and economic geography of our cities will likely reveal itself as we move further into 2014. For some families in some suburbs the negative impacts will likely be short lived as the economy eventually begins to see job creation. But for others the ability to secure employment is likely to be curtailed as a range of both supply and demand factors come together to reduce the ability of some unemployed to successfully compete in the job market.

For these, and in the short term it is likely to be the majority, direct government action will be required.

Seeking solutions

At present, the labour market policy suite is too focused on supply-side initiatives which cannot insulate our regions from rising unemployment.

The EVI underscores the need for coherent government policy that will minimise the increase in unemployment when economic growth falters.

First, we recommend the Federal government introduce a “job guarantee”, which would involve the unconditional offer of employment at the current national minimum wage to any worker who could not find work elsewhere. The guarantee would work as a buffer stock program with jobs available in the public sector on demand.

The Centre of Full Employment and Equity has identified hundreds and thousands of local government low-skill jobs in areas of unmet community need and environmental care that could be offered if the Federal government was to fund them. This would not only provide a jobs safety net to exposed regions, but would also revitalise private sector employment growth.

Second, a new commitment to national skills development could be integrated into the job guarantee, given research shows training is most effective when conducted within a paid work environment.