Australia’s mining boom, which is directly affecting around 20 per cent of the economy, is the new challenge for banks and the economy as a whole.
Breaking news overnight of the BHP strike over conditions of employment has been long predicted by commentators as people can not be treated as ciphers on a long term basis and this represents a crumbling at the edges of the much vaunted FIFO system. Australian CEO’s take note you need a new approach to talent management that involves listening to the market place. A cheque book alone won’t buy you recruitment success and without people you can produce nothing.
The boom has brought a strong Australian dollar along, and the gulf between booming mining states like Western Australia and Queensland and the more populous regions in the east and south has widened as the voracious natural resource sector mops up available talent by offering inflationary employment packages creating skills shortages elsewhere.
“Conditions continue to vary significantly across the business sector,” the Reserve Bank of Australia said. “These divergent experiences help explain why banks’ non-performing business loans and business failure rates are somewhat higher than average,” it said. Where there is mining, business conditions are strong, it said. But industries like retail, manufacturing, construction and tourism, which dominate the east, are facing “headwinds” as the disposable income of ordinary Australians comes under pressure and visiting Australia becomes too expensive.
The RBA recently warned about the potential for an “overshoot” by the strong Australian dollar, and said it would watch the unemployment rate for signs that financial conditions were too tight. The central bank left interest rates on hold at 4.25 per cent in March, but it has kept the door open to more rate cuts, following the two successive cuts in November and December of 2011.
Australia’s manufacturing sector is in crisis as a result of the high currency. Andrew Liveris, the chief executive officer of US manufacturing giant Dow Chemical, said yesterday that manufacturing was nearing a “tipping point”, and the economy as a whole was at risk of a downturn.
The warnings come as more and more non-mining firms relocate production overseas and pursue job cuts in a bid to restore sagging competitiveness and lost productivity. Australia, as Europe has discovered that, once lost, these jobs will not return as the local skills will go with them.
While bank profits have been strong, the RBA said sluggish credit growth might constrain their earnings performance in the future. It warned banks against excessive cost-cutting and risk-taking designed to maintain profits. “It would therefore be unhelpful if banks were to chase unrealistic profit expectations by taking on more risk, through lowering credit standards or expanding too quickly into new or unfamiliar markets – or by pursuing cost cutting in a way that weakens their risk management capabilities,” it said.
The overnight results from Queensland state elections with Labour being trounced and a strong move to a conservative outlook will ultimately bring a change of direction but nothing will happen quickly and managing skills shortages will remain Australia’s primary challenge but until bureaucracy is tackled it will be a few drip from the tap rather than the needed and planned trickle from around the globe.
Author: Chris Slay
Skills Provision will allow our articles/quotes to be reproduced on other formats as long as full accreditation is given.
Before you fill out our registration form, we feel it necessary to pass on some important information.
After completing our registration process your details are checked over by our Validation Team. Their task is to upload suitable submissions or delete.
Registrations that pass validation automatically produce an online CV Profile. Due to the popularity of our website profiles are widely seen by prospective employers. On a daily basis we receive many Profile enquiries.
By following our guidelines your profile will pass our validation process.
Key points to note
Your aim should be to produce a fantastic online CV Profile.
Our task is to find you meaningful employment.