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Unemployment up, but existing jobs stable

13/02/2009

The number of employed Australians rose by about 1,200 in January, but it was still not enough to keep the unemployment rate from rising to 4.8%.

The discrepancy in the directions of these two figures was explained by experts as relating to a growing Australian population finding it harder to get new jobs, yet an employment rate buoyed by businesses reluctant to let go of current employees.

While an increasing rate of Australians losing their jobs could likely bump up the number of foreclosures and damage house prices, CommSec Equities Economist Savanth Sebastian said the situation was not as gloomy as some had predicted.

Even with a 'hiring-strike' environment throughout Australian businesses, he said employers were reluctant to sack existing staff.

"After crying out for skilled staff over the last few years, businesses are much more willing to wait and see how weak the economy is likely get before making any drastic job cuts," he stated.

Nonetheless, he concedes unemployment will still continue on a steady upward trend this year, perhaps hitting 6% by the end of the year. Jonathan Rivera of PRDnationwide said some experts have predicted that, in 2010, the rate could reach as high as 9%.

He went on to say that the latest figure of 4.8% unemployment was slightly lower than he expected, and it should rise in the coming months. What's holding it back in part, he added, is the crowds of Baby Boomers desperate to keep their jobs after the recent financial investment losses. Many who planned retirements have put them off for now.

At least one media analyst linked the additional jobs to a possible statistical error, based on the small size of the sample conducted by the Australian Bureau of Statistics. The January population survey is based on a sample of 0.45% of the whole of Australia.

Still, Sebastian says, the numbers were an indication that Australia would stay strong during the current global economic struggles.

"There is no doubt that 2009 will be a tough year and Australia is not immune to the sufferings on the rest of the globe, but we are in a much better position to weather the storm," he stated.

Fiscal stimulus and further rate cuts would be a good response, he added.

Only Tasmania saw its unemployment rate fall in January, from 4.8% to 4.5%. The ACT remained steady at 2.6%. The highest rate was South Australia, at 5.6%, followed by New South Wales at 5.4%.

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