Bottom to fall out of high-flying job sectors

Jobs in property and finance, construction, retail and the 118,000 businesses serving the ubiquitous tourism sector are likely big losers as the recession continues to bite next year.

These are sectors where job growth has been strongest since 2003 when the good times really started to roll, so it is no coincidence economists are picking the coming job crunch to impact hardest there.

The Bank of New Zealand is predicting the crunch will cost 32,000 jobs over the next year as the unemployment rate rises from 4.2% now, to 6% by the end of 2009. That means twice as many people will lose their jobs in the coming year compared to last year.

"That's the size of a small city of New Zealanders, and unlike the headlines which greeted the loss of 200 jobs at Air NZ last week, many of the coming losses will slip quietly under the radar screen," said senior BNZ economist Stephen Topliss.

Figures from the latest (September quarter) Household Labour Force Survey show that is already happening in the key areas of property, finance, construction, retail and tourism.

For example, new jobs created in the finance and insurance sector over the past five years have totalled 11,000, just under a 20% rise over the period. Yet last year alone, that sector has lost 4600 jobs which, in large measure, reflects the fallout among finance companies.

Since then, ANZ National has signalled the loss of up to 500 back-office jobs and 130 voluntary redundancies.

Andrew Campbell, of the New Zealand bank workers union Finsec, said no other big bank had announced similar cuts. "That gives us some hope, but other Australian-based banks are warning of cuts across the Tasman, and that makes us very nervous."

The tourism sector employs about 400,000 people, and businesses range from Air NZ to the operator of the bungy jumps on the Kawerau River.

It also includes all sorts of accommodation businesses, and restaurants and cafes, a category in the Labour Force Survey which lost 10,500 jobs in the past year alone.

That dwarfs the five-year gain of 3300 jobs, and also the 200 redundancies announced by Air NZ.

Tim Cosser, chief executive of the Tourism Industry Association, said the Air NZ announcement, and an indication from Tourism Holdings Ltd the week before that its staff and management would "not be immune" from the further job losses, were the "public face" of what tourism was facing.

"Even so, the storm will hit different parts of the industry in different ways," said Cosser.

Bus and cab companies were likely to feel the pinch, but not necessarily the inter-island ferry services which depended more on local than overseas traffic.

Backpacking operations and camping grounds might do better than hotels and motels.

Topliss said it was likely anything to do with the housing market would be under great pressure in the coming year, and that included the property and construction sectors, also big job growth areas in the past five years.

Real estate agents have already taken a huge hit.

"I wouldn't be surprised if we have seen more than 1000 jobs lost there already," said Topliss. Real Estate Institute president Mike Elford said job losses could now amount to 10-15% of the country's 16,000 registered estate agents.

Topliss said the building industry was facing many thousands of job losses, mainly among the typically small Kiwi building firms.

Also under pressure would be housing companies such as Lockwood, Signature and Jennian Homes, as well as mortgage brokers, valuers and housing financiers, although not necessarily big businesses like Fletcher Building which had non-residential construction jobs in its portfolio.

In the retail sector, it would be the small guys hardest hit. Typically, small shops which may have run for 10 years with 10 people, did not have the capacity and processes to manage a downturn as easily as larger chains.

Retailers Association chief executive John Albertson said retail staff turnover was usually high, and employers were able not to rehire instead of make large-scale redundancies.

"The word I'm getting is many employers are looking carefully at rehiring."

UBS economist Robin Clements said employers would be wanting to hold on to skilled staff, and retailers would not want to let staff numbers run down to the extent they could not get the best out of Christmas sales.

The next crunch would come in the new year if employers found holding on to skilled staff imperilled their businesses. "It's then we may find unemployment rising to 7.5%, even beyond," he said. 

- © Fairfax NZ News