Chapter 1: What is the main topic discussed in this episode?
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Chapter 2: What economic data suggests Australians are feeling stuck?
New economic data suggests people are staying put, foregoing job changes or starting new businesses or even moving interstate. So what's keeping people feeling stuck? And what are the bigger costs that this might have for the Australian economy?
And meanwhile, according to a Commonwealth Bank commodity report, Chinese steel production has dipped while US production is undergoing something of a resurgence. Welcome to ABC Business Daily. I'm Daniel Ziver. And I'm the ABC News business editor, Michael Yander. Mike, Australians always get very offended when the Harvard Atlas of Economic Complexity says that we have a simple or dumb economy.
I've been really interested in the personal dynamism of Australians. And I've been looking into it and I'm glad we're going to chat about this today. Essentially, the data in all these different ways suggests that Australians are staying put. They're staying put in their jobs. They're staying put in their homes, in their states, a kind of economic stuckness that is solidifying across the country.
Are you surprised by this data or does it give sense given what you've been seeing over the past few years?
Look, it is something that economists have been talking about for a while. I know you spoke to E61 and they've done a fair bit of research about this issue since that think tank was set up a few years ago. And, you know, it's such a big problem for the economy because economics is all about putting resources to their most efficient use.
And so when you have the rate of job switching, for instance, falling to the lowest levels it's been in like four decades, Well, people aren't necessarily moving to a better job that their skills are more suited for, which is bad for them because it means they're probably missing out on promotions and pay rises.
But it's also bad for the economy because they could be much more productive and contributing a lot more, but they're too scared to move for some reason.
So the most recent data for the year to February 2025 shows just over 1.1 million people changed jobs in that year. Now, that sounds like a lot, right? But... Job switching back in like 1989 was almost one in five people. Now that that mobility rate is down to 7.7%, we're talking about one in 13 people. switching their jobs in a year.
That's a really big shift in our economy and in people's mobility.
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Chapter 3: What are the reasons behind low job mobility in Australia?
It's a fairly substantial plummet.
I still think we should bring the 1980s settings back
There's a huge fall between 1990 and 1992. And the scary thing, though, is since then, job mobility has not recovered. So we've not even got back to the bottom of that plummet with the 90s recession. We've just kept trending lower from there. And that's what economists are worried about.
There's lots of things in this. We're going to unpack some of these elements. A huge one has to be housing. As the housing costs have increased relative to income, that surely is keeping a lot more people tied to their jobs, less willing to take a risk of not even just going into self-employment, which has also plummeted, but just even taking on a new role in a new company.
I don't know about you, Dan, but I've got a Sydney-sized mortgage. You know, it's like I've been at the ABC 18 years. You know, if for some reason the ABC restructured and decided, hey, we don't need a business editor anymore because there's nothing happening in business. And they got rid of me. Like, you know, I'd get a big redundancy payout.
If I switch to a new job, I lose all of those protections. And when you've got a big mortgage and a family, you know, it would take an insanely good offer to get me to trade all that to go somewhere else and take that risk. And it seems from this data that there's an increasing number of people in a similar boat. And I think you're right.
Housing is such a huge part of it because people have such big mortgages. And because inflation has been low in the past, those mortgages are staying big for longer, which wasn't the case in the 1980s and early 90s. And so people saddled with all these debts just don't feel like they can take that leap of faith to go and try something new.
Stamp duty is also an issue, literally a transaction cost. So you can find a fantastic job that's on the other side of town, it'll take you an hour and a half to drive, but selling your house and moving there or moving to a different city to take on a new role becomes far less attractive when there are these immense transaction costs that make the risk essentially higher.
Yeah, exactly. And also, I think all of these things around housing are feeding into fertility. So Alan Cole has had a couple of goes at this issue recently. We're now down below one and a half births per woman, well below the replacement rate, which is about 2.1. We've been topping that up with migration. But it's just indicative, I think, that people find housing so expensive that
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Chapter 4: How do housing costs affect job changes in Australia?
There's usually exclusions as well for the first year that you're with a new employer where you don't get access to the full parental leave entitlements. So there's all these factors that are really pushing people to stay where they are and not try something new.
And essentially the attractiveness of wage employment over self-employment or small business owning has changed.
All of these leave entitlements, all of these things that have built up, changes in the national employment standards, which I think in the last term of the Albanese government were done, they occurred in full view, but people probably didn't understand over time the cumulative effect of lifting these minimum standards. It has over time made it more attractive and
to become a wage employee, to receive income, than it is to become an entrepreneur, to go out on your own. We're seeing this impact as that kind of small business number falls, as the self-employment starts keep going down. I think we do have this emerging issue with dynamism. And I think probably what we've seen with the federal budget is some little tweaks recently to try and unstick that.
Obviously, we've focused massively on housing investment and some of the taxes around that, some of the settings. But did you see some things in there, Michael, the same things I did, that in that federal budget that might look to be kind of ungluing in this situation?
Oh, look, clearly there was some sweetness for business in making things like the instant asset write-off permanent loss carry back for businesses so that they have access to past losses to reduce their current income tax bills when they finally do start to make a profit. Whether those are enough, I mean, one of the issues you raised in your article, Dan, is red tape.
You know, business keeps complaining about it. And as the analyst you spoke to pointed out, it's almost an advantage of incumbency, and it's certainly an advantage for big business over small business. To be fair, there are a lot of specific carve-outs in the employment laws and tax laws and other laws
that protect very small businesses from having to go through some of the more onerous compliance than big businesses do. But certainly it's a lot easier, or it should be. I mean, some of the big employers have been hit by underpayment scandals and so on. But it should be a lot easier for big business who have
dozens, if not hundreds of HR professionals, tax professionals, legal professionals, accounting professionals on their books, plus all these consultants to take care of any new regulations than it is for someone trying to start up from scratch who before they can even, you know, open a shop front has to go through, I think the oft-cited example is 20 or 30 approvals just to get their coffee shop open.
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Chapter 5: What impact does self-employment decline have on the economy?
You know, there are all these elements that they are being worked on. And I think if some of them can come together, you are going to see an improvement in that flexibility where people say, you know what, there's a big infrastructure project going on in Brisbane. It's called the Olympics. Let's move up there. Let's do that.
We're going to see probably a flexibility in the Australian economy that we haven't had in some time. as these restrictions have built up. And like we said, these things aren't all happening for a reason or for a purpose. Things like housing kind of occurred over time at the same time as wage earning became with increased benefits and national employment standards improved.
So sometimes these things kind of work in concert, even though what occurs wasn't the eventual
Yeah, and sometimes these things are inevitable results of positive changes in society. So like two-income households, it does make it, for instance, harder to move interstate for those job opportunities because you not only need to find one great job opportunity for one partner, but you need to find a great job opportunity for the other partner. Or...
find arrangements where they can work remotely, which is becoming more common, but we need more creative solutions to allow mobility when you need to factor in the interests of two people plus their family, not just one.
Look, let's swivel to steel, and namely Chinese steel. A recent report from the Commonwealth Bank says that global crude steel output fell by 1.9% in April, led by a contraction in Chinese production. Now, China is by far the world's largest steel producer, obviously one of our major trading partners. So what did you make of the CBA note and that data?
Well, there was some positive in it, which is that the rate of decline was much worse in March than it was in April. So it's a less bad number. But that fall in global steel output, and particularly the Chinese contribution to it, a 2.8% year-on-year decline in Chinese steel output, is worrying for Australia because iron ore is our biggest export.
If you like, we are the global player in iron ore to compare to China as the global player in steel. And it's no coincidence that we have this symbiotic relationship because we're about 54% of the global iron ore trade and China is more than 50% of global steel output. So biggest producer on both elements, iron ore and steel. I call them our magic rocks.
It's astonishing the more you dig into the Australian economy, just our absolute reliance on what has been in recent years, a really difficult trade partnership with the exception of steel, where we have, that has kind of sailed through. You'll recall us talking a lot about barley.
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Chapter 6: How are employment protections influencing job choices?
So to put it in context, iron ore exports last year, last financial year, were worth $116 billion to Australia, right? I think we'd miss that if it was gone. Yes, exactly. It's a big hole to fill, excuse the pun, but there's a few threats. So as I said, China takes the vast bulk of that iron ore. the other countries that produce steel, much less so.
There is some moves to diversify our exports, but a lot of those other countries have their own domestic sources of iron ore, which they can use for their steel making. So China, South Korea, Japan are still the big ones for Australia in terms of, and China is by far the biggest. Now,
The thing that's happening in the US with those electric arc furnaces and using recycled steel, that's happening in China too, because they want to reduce pollution and reduce greenhouse gas emissions and also de-choke their cities, which is one reason why steel output fell so much there in March, because as the analysts point out, they had a big conference going on the Communist Party.
And they wanted to clear a sky around Beijing for the period of that conference. So, you know, they do things like that over there. It is a controlled economy. But in the longer term, the more of this recycled steel industry, production that takes place, the less reliance on you still.
And then of course, big iron ore mine in Guinea has just opened in West Africa, which is half owned by Australia's Rio Tinto, but also owned by Chinese interests as well. And so that has started production late last year and the quality of the iron ore is actually higher than what Australia is now churning out of the Pilbara because we've taken a lot of the good stuff already.
And the grades are actually falling for the quality of our iron ore. And this- That mega project. This green steel needs high quality iron ore. So this is a threat to Australia's industry.
If we can't find better grades of iron ore, we risk falling, you know, behind and becoming less competitive with countries like Guinea and the West African mine, Simundu, the Brazilian mines, which some of which have high grades of iron ore. So Australia is under threat in our competitive position.
A journalist I know posted the news of that development of the first end-to-end shipment with the words, party's over. It certainly has been something that has powered our economy and it is under some substantial threat into the future. But look, as we wrap up Steel Chat, big changes afoot at Fortescue. What's happening?
Yeah, so Elizabeth Gaines is leaving the company after more than 13 years there, most of which has been spent as a director. She was the chief financial officer for a time. She was also the chief executive for a bit under five years, I think. But Since then, she's been a director on the board.
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