ANZ: The unwind in Australian mining sector employment is just getting started

Image: Pablo Blazquez Dominguez / Getty Images.

While there have been some promising signs that Australia’s labour market is strengthening, particularly in the vast services industries, it’s clear not all sectors are benefiting from the nation’s economic transformation.

Mining, in particular, is suffering more than most. In the wake of slumping commodity prices and a sharp unwind in capital expenditure, employment across the sector is falling fast.

According to ANZ, employment across the sector has fallen by nearly 50,000 workers since the peak of the mining infrastructure boom in 2012, leaving total employment in the sector at around 230,000 at present.

The charts below track actual mining sector employment against forecasting models used by ANZ. As it clearly reveals, on top of the 50,000 jobs lost so far, employment is tipped to decrease by around 40,000 positions over the next two years, equating to around 0.3% of total employment in Australia.

“Job shedding will be driven by lower resources investment and further rationalisation of workforces amid high real wages, lower commodity prices and ongoing productivity improvements,” said Justin Fabo, senior economist at ANZ.

“A large share of this job shedding will be accounted for by the completion of several large resource projects – mainly LNG – under construction.”

As the list below compiled by ANZ, reveals there are several large mining developments – either nearing completion or already in production – that will make up a significant proportion of the expected job losses in the years ahead.

  • Gorgon LNG: currently has more than 8,000 workers on the ground
  • Wheatstone LNG: employment will peak at around 7,000 workers
  • Ichthys LNG: currently has about 6,500 employees
  • Roy Hill iron ore: currently has more than 3,500 construction workers
  • Queensland LNG projects: employment on QCLNG, GLNG and APLNG has already fallen significantly as these projects are already shipping, or about to export, LNG. Reports suggest that by December there will only be a few thousand workers left on the three Curtis Island projects, but it will take another year for construction workers to completely leave the projects

While the vast majority who lost their jobs over the past three years have found replacement work – ANZ suggests that just 10,000 unemployed Australians currently identify that they worked in mining in the past two years – it’s debatable whether this can remain the case.

Many former mining sector workers have found work in construction sector as the residential housing boom took off. With that cycle expected to taper off over in the years ahead, it’s likely that other sectors will be required to absorb the expected influx of former mining workers.

Public infrastructure investment seems like an appropriate place to start, but until governments find the political will to break the fiscal shackles, the future for these workers appears to be clouded more than most.

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