The Australian Bureau of Statistics reports Australian unemployment to be 5.5%. Roy Morgan Research in its monthly sample of 330,000 people reports it to be 9.5% plus another 7.8% who do not have enough work. This is a total of 16.3%.
What this data does not say, is that these people (2.1 million) are concentrated in the younger (<30) and older segments (>50) of the labour market, and in geographies where European levels of real unemployment are being experienced today.
It is all very well for the Federal Government and institutions to quote aggregate data which are heavily skewed by the resources industries, but the reality is that there are significant and growing areas of Australia where the social consequences of un- and underemployment are readily apparent.
These organisations are projecting that other industries will somehow fill the economic gaps being left by the tapering off of resource industry investments. This will require entrepreneurial effort and the drive for alpha and will take a decade at least.
I have written extensively in these blogs how, for investors, the search for alpha can drive investment returns in such a volatile macroeconomic climate. I have also written how government debt and market interventions crowd out industries which are able to generate alpha.
In Australia, alpha generation, if it is understood at all by governments, is severely hampered by government policy, including the upfront income taxation of Employee Stock Option Schemes in venture backed investments.
Other jurisdictions, including the United States and the United Kingdom are already more alpha friendly than Australia. As these countries move out of recession, Australia is heading into one, at least a "growth recession".
The next Australian government will need some serious policy incentives to solve the employment problem and retain its entrepreneurs. There are moves in this respect presently in the review of the Corporations Act to accommodate the use of social media for capital raisings ("equity crowd funding") but Australia is behind other jurisdictions.
Unfortunately, given the political uncertainty in Australia, it will be at least a year before investors and entrepreneurs are likely to see real change.
David Millhouse is an international entrepreneur with over 30 years in venture capital and private equity internationally. Based in Brisbane, Australia he is a specialist in venture financing and capitalisation, as well as the management of high growth companies, many of which proceed to IPO. He has conducted business in the UK, Germany, Switzerland, USA, Canada, Singapore, Hong Kong, Australia and New Zealand. A scientist by original profession, with an MBA and LLM from Bond University in Australia. He is a trustee of Bond University, Australia’s premier private University, and was formerly a trustee of the Queensland Art Gallery/Gallery of Modern Art. There are 30 years of publications and media on his professional activities and he has had a stellar career at CEO level since 1983.
For personalised solutions to the issues raised in the blog, please contact CORPbuilders TM at www.corpbuilders.com.au
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