The Royal Commission inquiry has caused many issues to occur in Australia, from executives losing their roles to dips in profit margins and non-cyclical mortgage rate hikes, but the job market for those lower in the chain had yet to experience severe problems.
However, new research from the Sunsuper Australian Job Index revealed that the finance sector is seeing negative effects.
This is at odds with the rest of the nation’s employment possibilities, where the trend continues to point upward. The index saw December deliver a 2.1% increase, and the permanent job market rose by 11.4% across the last year. This boom shows that Australia itself is not struggling with jobs right now and that specific issues lie with the banks.
With profit margins getting hammered and the banks lambasted by Commissioner Kenneth Hayne’s interim report as well as politicians, their scope for expansion is lower at this time. The problem is that when the banks do poorly, it does not usually take long before other sectors start to feel the pinch. When lending patterns drop below normal and liquidity is no longer as readily available, it becomes harder for other companies to carry out their hiring intentions.
One of the few markets to buck Australia’s overall growth trend is temporary and contract jobs, which fell by 0.3% year-on-year. This occurred while full-time work rose by 6.5% and part-time work increased by 20.2%, suggesting that more people are taking on stable employment. This can only be good news for the Australian economy, as the average disposable income may creep upward.
Some sectors saw huge rises in employment, according to the index. Healthcare and social work was at the top of the pile with a 34.2% increase, closely followed by community and personal service work, which was up 30.6%.
Career opportunities in the finance sector dropped by 9.6% over the last year, flying in the face of nearly every other indicator. It is difficult to point at anything other than the Royal Commission inquiry as the reason for this development. With the banks needing to sort out the culture that has led to many major lenders prioritizing sales over customer needs, a series of events unfolded throughout the last few years that have left the economy more vulnerable than it should be.
Brian Parker, Chief Economist at Sunsuper, said that he was not surprised by the index’s findings in regard to financial services, adding that the Royal Commission inquiry has led to ‘an ongoing impact on employment demand and career opportunities in the sector.’ While this may not hurt the industry in the immediate term, a lack of growth in the finance sector is likely to affect expansion and development in the coming months. If fewer people can get these types of jobs, then they could well move elsewhere, which limits the talent that Australian banks can attract.
Given that many other sectors appear to be thriving, there is no immediate cause for concern. However, this may well dissipate once the Hayne report fallout settles. If the banks can show that they have learned from their mistakes and can achieve stable levels of growth and lending again, then there may not be too much of a problem in the end.