Australia is asleep on the jobs

As unemployment rises, it's likely to swamp other political issues such as bank profits and immigration. But will a re-engineering of business operations help or hinder employment?

Just as the Greeks have agreed to put themselves through a few more turns of the wringer, Australia has received a chilling warning – up to 400,000 Australians are in danger of losing their jobs during 2012.

Dick Warburton heads Manufacturing Australia and many will say he is crying wolf. But Dick has been around for a long time and he would not make a statement like that unless he believed it. I urge you to read the full transcript of his KGB interview.

We have already seen that, according to Roy Morgan Research, unemployment jumped sharply in January, although in part that was a result of seasonal factors. I would expect that the trend Roy Morgan has picked up will be reflected in official figures either this month or next (Driving into rocky jobs terrain, February 6).

So in the political and banking arenas, issues like boats and bank profits are going to be swamped by what to do about the huge rise in the jobless in our capital cities. The winner of the next election may be the party that appears most credible in tackling the unemployment problem. The joblessness will tend to be highest in outer suburban areas and so the softness in the real estate market that we are seeing in those areas will be multiplied and bad bank debts are going to rise, although not to catastrophic levels.

So what can we do about it? At the political level, Warburton cannot see anyone on the Coalition side who has any idea of what might need to be done. And on the government side they are almost as threadbare, except that among the cabinet members Bill Shorten has the potential to grasp the issues.

But apart from making industrial relations legislation more attractive for businesses to employ, and handing out a few dollars, there is limited scope for the politicians to fix a crisis as big as this one. However, Warburton says that during this time of a high dollar there are several industries that we need to make sure are not wiped out – including steel making, car manufacturing and oil refining.

Warburton says that a significant part of the problem has been created by management and workers. Whereas in decades gone by workers and management worked together to make businesses more productive to secure jobs, that is no longer happening.

As readers know, I believe that in the next one to two years most service and manufacturing enterprises will re-engineer their operations to cope with the new environment. American companies have been doing this for four years while we have been sitting back (Productivity problems? Call IT February 7).

Our danger is that we repeat what happened in the food processing industry, where management agreed to work rules in Australian plants that stopped companies investing. Instead they invested in New Zealand and other places. Now, one by one, most Australian food processing plants have become too old and one by one they are closing. Both managers and workers lose their jobs and it's their own fault.

Unless there is a wake-up call, we will see what happened in the food industry happening across the board in non-mining Australia, and not just in manufacturing.

Dick Warburton has given us all a wake-up call – but will we listen?