- The Global Financial Crisis (GFC) negatively impacted young professionals in Tasmania through tighter labor markets. Unemployment rose faster for youth than older workers as firms froze hiring and wages. - Professionals experienced higher unemployment than average during recessions but were unemployed for shorter periods than other workers. Tasmanian professionals faced similar unemployment rates as nationally but spent less time unemployed when jobless. - The effects of the GFC were delayed in Tasmania, which typically lags the national economy. By the time impacts were felt, broader recoveries may have begun, lessening the downturn's severity through increased demand for local products.

1. Young Professional Network of
Tasmania
Dr Paul Blacklow
President
Tasmanian Branch of the
Economic Society of
Tasmania
Lecturer in Microeconomics and
Econometrics,
School of Economics and Finance,
University of Tasmania

2. Introduction
• GFC - Global Financial Crisis
• Examine the effect of the GFC on Young
Tasmanian Professionals, via the labour
market.
• All data and figures are derived from ABS
statistics (cat no.s: 6202.0, 6291.0,
6291.0.55) unless otherwise stated.

3. Introduction
Australia
0%
4%
26%
16%
18%
19%
9%
8%
Professionals nfd
Arts and Media Professionals
Business, Human Resource and Marketing Professionals
Design, Engineering, Science and Transport Professionals
Education Professionals
Health Professionals
ICT Professionals
Legal, Social and Welfare Professionals
Tasmania
0%
4%
18%
13%
24%
22%
8%
11%

4. GFC and the Labour Market
• The decline in the confidence of business and to
a lesser extent consumers, has led to…
• A fall in sales for and projected future sales for
businesses.
• They need to cut back the scale of their
operations to match the lower sales and in order
to cut costs.
• It is often difficult to dispose of capital
equipment and so cuts are often made to the
workforce.

5. GFC and the Labour Market
• Although costs need to be cut, firms are
reluctant lose many of their employees.
– It may be expensive to sack long serving employees
due to termination payouts.
– Firms often have invested a lot money in training their
employees improving their skills and productivity.
– Employees are also likely to improved their skills and
productivity by observing and operating within the
business overtime.

6. GFC and the Labour Market
• Firms are reluctant to lose employees who
contribute more value to the firm than they cost
in labour expenses.
• It may be difficult for firms to find such good
workers again.
• The first workers to be considered for the sack
will be those who’s labour cost is greater then
the $ of their contribution to the firm.

7. GFC and the Labour Market
• Often the easiest way for businesses to cut costs
is to freeze wages and/or not hire any workers.
• So there will be less jobs available and
unemployment will rise.
• In particular this means that school leavers and
university graduates will find that there are not
many beginner level jobs available, and youth
unemployment will rise faster and by more.

8. Unemployment (Seasonally Adjusted) by Age
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Mar-07
Apr-07
May-07
Jun-07
Jul-07
Aug-07
Sep-07
Oct-07
Nov-07
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Aged 15-19
Aged 20-24
Aged 24+

9. Unemployment(Seasonally Adjusted) by Age
0%
5%
10%
15%
20%
25%
30%
Feb-78
Feb-79
Feb-80
Feb-81
Feb-82
Feb-83
Feb-84
Feb-85
Feb-86
Feb-87
Feb-88
Feb-89
Feb-90
Feb-91
Feb-92
Feb-93
Feb-94
Feb-95
Feb-96
Feb-97
Feb-98
Feb-99
Feb-00
Feb-01
Feb-02
Feb-03
Feb-04
Feb-05
Feb-06
Feb-07
Feb-08
Feb-09
Aged 15-19
Aged 20-24
Aged 24+

10. GFC and Professionals
• Unfortunately, the labour market for
professionals is also effected by economic
downturns and the GFC

11. Employed Persons in Australia
6,000
7,000
8,000
9,000
10,000
11,000
12,000
Aug-96
Aug-97
Aug-98
Aug-99
Aug-00
Aug-01
Aug-02
Aug-03
Aug-04
Aug-05
Aug-06
Aug-07
Aug-08
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
3,000
All Occupations
Professionals

13. GFC and Professionals
• However professionals are less frequently
unemployed.
• When they are they spend less time
unemployed than other worker types.

14. Unemployment Rate: Professionals v All Occupations
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Nov-96M
ay-97Nov-97M
ay-98Nov-98M
ay-99Nov-99M
ay-00Nov-00M
ay-01Nov-01M
ay-02Nov-02M
ay-03Nov-03M
ay-04Nov-04M
ay-05Nov-05M
ay-06Nov-06M
ay-07Nov-07M
ay-08Nov-08
All Occupations
Professionals

15. Tasmanian Unemployment Rate: Professionals v All Occupations
0%
2%
4%
6%
8%
10%
12%
Nov-96
May-97
Nov-97
May-98
Nov-98
May-99
Nov-99
May-00
Nov-00
May-01
Nov-01
May-02
Nov-02
May-03
Nov-03
May-04
Nov-04
May-05
Nov-05
May-06
Nov-06
May-07
Nov-07
May-08
Nov-08
Professionals
All Occupations

16. Average Weeks Unemployed when Unemployed
0
10
20
30
40
50
60
70
Nov-96
May-97
Nov-97
May-98
Nov-98
May-99
Nov-99
May-00
Nov-00
May-01
Nov-01
May-02
Nov-02
May-03
Nov-03
May-04
Nov-04
May-05
Nov-05
May-06
Nov-06
May-07
Nov-07
May-08
Nov-08
All Occupations
Professionals

17. Tasmania vs Australian
Labour Market for Professionals
• The demand per capita for professionals is less
in Tasmania than Australia as very few large
companies establish their head quarters in TAS.
• But the supply is lower too.
– Tasmania has relatively less young people than
Australia
– Some Young Tasmania’s leave:
• To study on the mainland
• To find work
• By choice
– Although they frequently see there error of their ways
and return to raise families.

18. Tasmania vs Australian Labour
Market for Professionals
• Tasmanian Professionals experience the
same unemployment rates than Australia
as a whole.
• Tasmanian Professionals spend less time
unemployed when unemployed than
Australia as a whole.

19. Professional Unemployment Rate: Tasmania vs Australia
0%
1%
1%
2%
2%
3%
3%
4%
Nov-96M
ay-97Nov-97M
ay-98Nov-98M
ay-99Nov-99M
ay-00Nov-00M
ay-01Nov-01M
ay-02Nov-02M
ay-03Nov-03M
ay-04Nov-04M
ay-05Nov-05M
ay-06Nov-06M
ay-07Nov-07M
ay-08Nov-08
Australia
Tasmania

20. Professional Average Weeks Unemployed: Tasmania vs Australia
0
5
10
15
20
25
30
Nov-96
May-97
Nov-97
May-98
Nov-98
May-99
Nov-99
May-00
Nov-00
May-01
Nov-01
May-02
Nov-02
May-03
Nov-03
May-04
Nov-04
May-05
Nov-05
May-06
Nov-06
May-07
Nov-07
May-08
Nov-08
Australia
Tasmania

21. Tasmania and the GFC
• The Tasmanian Economy tends to lag the
national economy by 1-2 quarters.
• The effect of monetary policy also has a
lagged effect in Tasmania.
• So we are probably yet to feel the impact
of the GFC, compared to the rest of
Australia.

22. Trend GDP/GSP Quarterly Growth
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
Dec-85
Dec-86
Dec-87
Dec-88
Dec-89
Dec-90
Dec-91
Dec-92
Dec-93
Dec-94
Dec-95
Dec-96
Dec-97
Dec-98
Dec-99
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Tasmania
Australia

23. Unemployment Rate: Hobart v Sydney
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Nov-07
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Hobart (Greater)
Sydney (Greater)
Sydney (inner)

24. Tasmania and the GFC
• The positive from this is that by the time
the GFC hits Tasmania, it may well be that
– the World and Australian economies are
starting to recover.
– The effects of monetary policy starts to filter
down to Tasmania.
• Providing a stimulus to the demand for
Tasmanian products, to help mitigate the
effects of the GFC on Tasmania.

25. Positives of the GFC
• If you have or can keep your job, these
are fantastic economic times for the
young.
– Interest Rates at record lows!
– House Prices flattening or falling!
– Prices of G&S flattening or falling!
– Given $ from the Govt and told to spend it!

26. Lessons to be learnt
• Be productive as possible to ensure you
contribute more in $ than you cost.
• If you happen to be made unemployed,
being a professional you are likely to only
spend about 12 weeks unemployed
(compared to the average of 72 weeks)

27. When will the GFC End? - US
Federal Reserve Chairman Ben Bernanke,
5th May 2009
“We continue to expect to bottom out, then
to turn up later this year.”
“We expect that the recovery will only
gradually gain momentum and that
economic slack will diminish slowly.”
“In particular, businesses are likely to be cautious about hiring,
implying that the unemployment rate could remain high for a
time, even after economic growth resumes.”

28. When will the GFC End? - Oz
Governor of the RBA Glen Stevens, 5th May
2009
“While the near-term outlook remains weak,
there are further signs of stabilisation in
several countries.”
“The Chinese economy in particular has
picked up speed in recent months and many
commodity prices have firmed a little.”
“The considerable economic policy stimulus in train in most
countries should help contain the downturn and support an
eventual recovery.”