Jobwatch: Job losses, who's to blame?

Jobwatch: Job losses, who's to blame?

Summary: The finance industry can take full credit for bringing the world economy to its knees, but should it take the full blame for the drop in demand for jobs.


First, an admission: I hate banks. From where I sit, their speculative lending overstretched debt around the world to a tipping point, and the people suffering the consequences are those lower down the economic food chain.

Secondly, I love technology. It continues to deliver productivity gains that means, in theory, more people can be gainfully employed, irrespective of where they live. Investment in the sector would see economy growth and, hopefully, greater social benefits, too.

So, when I was presented with the six years of job vacancy statistics from Australia's DEEWR (the Department of Education, Employment and Workplace Relations) I expected to see ICT taking a hit and finance holding ground. After all, finance was the wrecking ball and they didn't feel the consequences, right?

The facts tell a different story. Both sectors have been hit hard. In fact, across all sectors, jobs advertised in the year to January 2013 are 40 percent down on where they were five years ago. Demand for ICT managers has dropped 67 percent. But there's been an even bigger drop (80 percent) in demand for financial dealers. Jobs for bank workers have fallen 73 percent, and the finance industry has been slugged just as hard, if not harder, than ICT.

(Credit: Phil Dobbie/ZDNet)

What is interesting is where the cuts are being made. In both industries, it's happening closest to the coalface (not literally, of course — there's plenty of jobs there). ICT business analysts and finance managers have been steering companies through the economic downturn, driving efficiencies and productivity gains to improve business fitness. Relative to the overall decline in jobs, they've held their own. In other words, the drop in advertised jobs for these roles is in line with the reduction across all sectors.

Lower down the pecking order, the fall in advertised jobs is disproportionately high. We need far fewer ICT managers and systems administrators, just as we can apparently get by with less bank workers and financial advisers.

In general, it seems that the more administrative the function, the less we need it. That probably applies across all sectors, and it's hard to blame the finance industry for it. It's more likely to be the result of technological innovation. We need fewer systems administrators because the cloud and virtualisation have reduced the need for in-house maintenance. We need fewer bank workers because we're all banking online.

This creates a real problem for entry-level workers. There simply aren't the jobs there for them to do — the roles that give them the experience to go on to bigger and better things. Perhaps that's why the unemployment rate for 16-19 year olds is hovering around 17 percent, four points higher than it was five years ago when there was also a much higher participation rate.

At the other end of the scale, CEOs and managing directors don't seem to be struggling. They've increased their share of total jobs advertised by almost 60 percent since 2008.

As the finance sector ignored the vagaries of capitalism and we all suffered, it is technology that is the real driving force behind structural change.

I fear that part of that change is the creation of fewer jobs for those starting out. The travesty is that nobody seems to know how to fix the problem.

Topics: IT Employment, Australia


Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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  • Demand for ICT managers has dropped 67 percent.

    ask Microsoft why this has accured.................
    Over and Out
  • Government is responsible, not banks

    The Finance industry absolutely does *not* get "credit" for bringing the economy to its knees in 2008. The United States Government gets full credit. The Finance industry did not create Fannie Mae and Freddie Mac, and the Finance industry did not tell HUD to tell Fannie Mae and Freddie Mac to start buying sub-prime mortgages. The Finance industry did not create the FDIC, which spreads the risk of bank default over the entire country. The Finance industry did not create the "too big to fail" notion that government should bail out banks that make bad decisions, leading banks to take higher risks than are prudent.

    Not that the Finance industry isn't happy with what the government is doing and isn't complicit to some degree, but without the intervention in the Finance industry that our government has been undertaking for the past 80 or so years, there would have been no financial crisis of 2008.
    • No

      Sorry, but the land of the "Smartest Guys in the Room" deserve all the blame that they've relieved and then some. If hackers deserve to be blamed for exploiting weaknesses and vulnerabilities in computer systems, then financiers deserve as much blame for exploiting weaknesses and vulnerabilities in the financial system. Your "points" about Fannie Mae and Freddie Mac are just regurgitated and long dismissed right wing rubbish.

      The real roots of the financial crisis started with the Salomon Brothers investment firm back in the "Greed is Good" 80's -- they were known to be very "inventive" in coming up with new financial instruments, including mortgage-backed securities. Their inventiveness crossed over the line then they got caught trying to gain control of the U.S. securities market. Other investment firms admired the "Liar's Poker" attitude of Salomon Brothers, but the regulatory environment at the time made engaging in similar shenanigans a bit too risky.

      That all changed first in 1999 when Republicans controlled both Houses of Congress: Sen. Phil Gramm of Texas, who was on the Senate Budget Committee, wrote and was able to push through Congress a 1999 repeal of the long-standing Glass-Steagall Act, aka the "Banking Act of 1933." That 1933 law also established the FDIC, and there were provisions to restrict overly risk and speculative behavior by banks, which included separating regular commercial banks from Wall Street-type investment firms. This created long time stability in the U.S. banking and financial systems.

      Fast forward to the 90's and 00's, when the average IQ of Congress had apparently dropped a couple of dozen points or so: besides pushing through repealing the Glass-Steagall Act, Gramm was also a co-sponsor of 2000 Commodity Futures Modernization Act that exempted derivatives like CDS's (aka "credit default swaps") from regulation by the Commodity Futures Trading Commission. All of this amounted to opening the gates for the Hounds of Hell (aka the Financial Industry). If this wasn't enough, in 2004, the SEC changed what's called the "Net Capital Rule" that ended up allowing the largest investment banks to increase their leverage -- how much money they borrowed or have at risk relative to what money they have in assets -- to basically whatever unsafe levels they think they can get away with.

      The government was at fault in how it stupidly deregulated things and in not having better security against bad behavior, as well as for not paying attention until it was too late, but the outright crooks who exploited all this were the people in the financial industry.

      There, feel smarter now?
  • As far as jobs go

    A major economic shake-up usually ends up with some long term infrastructural changes in a country's economy. I don't really know the case in Australia, but in the U.S., since there was already a lot of "fluidity" in how people were employed prior to the crisis (my dad for instance was magically turned into a "contractor" from being an employee when his company was purchased by another company, even though he did the exact same work as he had always done. This had become a common practice, if rather borderline in legality), this apparently got magnified after the worst part of the economic crisis had passed. During the height of he crisis, lot of people I personally know resorted to piecemeal and part-time work, including being paid under the table. All of this evidently greatly reduced expenses for companies, which allowed them to recover pretty steadily. But even as their profits and stock values began to rebound, there has been apparently a lot of reluctance to got back to pre-crisis employment methods of having full-time employees with benefits. U.S. companies have become very, very systematic and reptilian in how they maximize profits and market share in regards to how they employ people, and I suspect this not exactly just a U.S. thing....