Business wary of Rudd’s policies on IR, climate change

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Business wary of Rudd’s policies on IR, climate change

New executive positions have declined for the third month in a row as business adopts a ‘wait and see’ approach on both the global warming and industrial relations policies of the new Rudd Labor Government.

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New executive positions have declined for the third month in a row as business adopts a ‘wait and see’ approach on both the global warming and industrial relations policies of the new Rudd Labor Government.

The E.L Executive Demand index has fallen a further 5% in November compared with the previous month, resulting in the lowest level in 2007.
 
Grant Montgomery, Managing Director of the executive search firm E.L Consult which researches and publishes the E.L Index, said that while the election of the Labor Federal Government was widely expected, the business community has yet to see how this may affect them and any future investment decisions.

Economic costs of climate change

‘Ratifying the Kyoto Protocol is a sound decision on ideological grounds but many companies, particularly those in resources and infrastructure are unable to predict with any certainty how Labor’s climate change agenda will effect their business models,’ Montgomery said.

‘This is unsettling and is causing a cautious outlook particularly for the trend-leading executive employment sector.
 
Sign up AWAs

‘Added to this the promised changes to the workplace are adding to uncertainty right across the economy.

‘Some employers might be trying to sign up AWAs before changes occur, but most are adopting a wait and see attitude to employment in general until they see how any mooted changes will affect their business costs and cash flows.’
 
Montgomery said that executive employment trends are an indicator of employer confidence and always lead changes in skilled and unskilled employment.
 
Clear indications

‘It is [therefore] very important that the new Rudd government gives some clear indications on what changes are planned for the employment sector as soon as possible,’ he said.
 
‘Employers are generally very cautious when making investment decisions that may have unpredictable outcomes. The possible return to the employee loaded unfair dismissal laws, in particular, is holding back new employment investment.

International uncertainty

‘But it is not only local factors that are causing the falling employment trends. It is a widely held view that an international downturn, led by US secondary mortgage, is in the wings.  It’s just a question of when and how big.’

In a statement issued this month, the Reserve Bank said sentiment in global credit markets has deteriorated recently after an earlier improvement, and prospects for growth in the major economies appear to be weakening.

‘Just how this will affect the booming Australia economy is unknown, but at the very least it is increasing the uncertainty and compounding an increase in borrowing costs generally,’ Montgomery said.
 
‘Retail sales in October were up only 0.2 % from September, so higher petrol prices and the August rate rise from 6.25 % to 6.5 % appear to have bitten, and last month’s quarter of a percentage point rise is also feeding into the economy.’

All sectors
 
Montgomery said all sectors except for management fell in November. Engineering, which leads capital expenditure, registered the largest decline. The financial, information technology and marketing sectors recorded minor falls, the retraction coming out of both the business and government sectors.
 
Among the states, Western Australia was the weakest large state, perhaps affected by the prospect of likely employment  changes. The other large states of Queensland and Victoria also registered moderate falls. New South Wales stood out, rising marginally due to significant gains in management sector appointments.


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