The jobless rise is Australia’s wake-up call

Last week’s rise in Australia’s jobless figures was a shock. Whether it was a rogue one off or heralds a shift to future employment rises, let’s take it as a big wake-up call just in case – in particular the data showing  youth unemployment has risen above 20 per cent for the first time in 20 years.

As usual the finger pointing about who and what is responsible has begun with everyone in furious agreement job creation is a key priority and the right environment to enable that is essential. We know confidence has been low, the fiscal situation is a mess and the economy is in a stage of transformation, disrupted by a once in a century technological tsunami caused by the internet.

So can we actually move the conversation on to something more meaningful? Like who is it who creates the jobs? And are they creating the jobs of tomorrow in enough numbers to ensure the productivity focussed outsourcing, downsizing and restructuring taking place today does not allow unemployment to grow unsustainably higher.

In Australia we urgently need to focus on creating an enterprising and entrepreneurial nation. We need to reverse the fall in start-ups and build a pipeline of fast growing businesses that turn into super job creators. We need to change the conversation to talk about job creation instead of job entitlement.

And we need to start employing schemes that are working overseas such as tax incentives to invest in high potential start-ups and employee share schemes that encourage highly skilled people to work for young companies to ensure they keep growing fast and employ lots of workers. These schemes are not handouts. They are investments in future jobs and insurance against rising unemployment.

Here is what we know. A small number of entrepreneurs and companies create the vast number of new jobs. In fact 5 per cent of companies create 67 per cent of jobs, according to research by Stanford University which surveyed 380,000 companies across ten countries. 

Kosmas Smyrnios, professor of entrepreneurship at RMIT University, who has been researching fast growth companies for many years, points out most of the two million small business operators keep their businesses small. But there are a small group of entrepreneurs who land on a great idea and then, as they watch revenue take off, need to employ huge waves of people to sustain the growth.

Many of these super growth companies that create hundreds and thousands of jobs are start-ups or quite young companies – many under 10 years old. 

As BlueNotes revealed recently, a huge area of concern is  there has been a 30 per cent decrease in the number of start-ups in the last three years. Overall start-up numbers have fallen from 342,753 in 2009-10 to 239,229 in 2012-13.

And for the first time in four years, there was a decrease in operating firms with 2,079,666 in operation, a decrease of 61,614 (-2.9 per cent) from the previous year. 

While this in itself might not affect the super job creators, it does start to paint a disturbing picture. Start-up numbers are rapidly declining, the number of businesses in operation are falling and unemployment is rising… this is not where Australia wants to be as the world starts on the recovery road post GFC.

How do we change the conversation to job creation? And what are your ideas on how to create jobs?

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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