Interest rate rise could impact jobs

Rate rise pain

By Kate Southam

The Reserve Bank’s shock interest hike on Melbourne Cup Day could impact Australia’s employment growth warn retailers and business commentators.

Stunned retailers in Queensland have called the rise "economic terrorism" and say it will “kill” Christmas spending and impact jobs.

The United Retail Federation national president Scott Driscoll told The Courier-Mail the organisation was preparing a "name and shame" campaign against the banks.

The Reserve Bank announced yesterday afternoon that it would increase rates by 25 basis points, taking the official cash rate to 4.75 per cent. The Commonwealth Bank was the first bank to react by raising interest rates by 45 basis points.

The NSW Business Chamber of Commerce Chief Executive Stephen Cartwright has warned that the interest rate increase could see small businesses lay off staff.

Speaking to ABC Radio, Cartwright said the increase would make it costly and difficult for businesses to get finance at a time when they were already doing it tough which would inturn “reduce their enthusiasm for employment".

Recruitment giant Manpower released results of its hiring intentions report a week ago after surveying 2,200 employers. Manpower found that 87 per cent of employers claim to have the headcount they need right now.

Lincoln Crawley, Managing Director of Manpower Australia & New Zealand says while the employment market was still slow he believes skill shortages were a danger.

 “Australian employers are still thinking in the short term. Yes, they have the talent they need now, but we’re coming off the back of a downturn and there are still displaced candidates looking for work, so it’s not a stretch to say that hiring in the present environment is relatively easy,” Mr Crawley says.

“However, employers are mistaken if they think this ‘sweet spot’ is going to last. The booming resources sector, tightening immigration policies and rapidly returning skills shortages are all going to take their toll on the employment market, and employers can’t afford to be complacent with their talent management strategy.”

Earlier this year, Manpower’s 2010 Talent Shortage Survey reported 45 percent of employers were having difficulty filling key positions, while the quarterly Manpower Employment Outlook Survey indicated employers will continue to increase hiring into the new year.

The survey also found that just 60 percent of companies surveyed said they were agile enough to cope with quick changes to the employment market.

“Employers need to ask themselves ‘do our current workforce strategies support our plans for long term growth in this changing environment?’ Many employers would have to answer ‘no’ to that question,” says Mr Crawley.
“They should also look at which work models will produce the best results – contingent workers and virtual work arrangements will increase flexibility, but they need to be planned and become an integrated part of the workforce mix,” he says.

A survey released the day before the RBA’s interest rate rise showed employment in Queensland was growing. The research by business advisory firm BDO found only 8 per cent of the 400 companies surveyed were forecasting a downturn in hiring in the 2010/2011 financial year.

“The challenge is to develop a competitive edge so they can attract the right people,” BDO partner Rolf Larsen warns.

The Treasurer is due to release updated budget forecasts within weeks that are expected to show both the economy and employment are growing faster than forecast., November 3, 2010

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