RESERVE Bank boss Glenn Stevens has issued a chilling warning to workers: job losses are not only a sign of the times, but a signal of worse still to come.
Reeling from a massive unemployment carve up in the manufacturing industry, the RBA governor gave cold comfort to families whose loved ones are now out of work, declaring: "I'm sorry, but that is just the reality."
BlueScope Steel devastated more than 1000 workers when it announced a restructure after posting losses of more than $1 billion. The news followed similar announcements by Qantas, OneSteel and Westpac, and brought the official number of job losses for the month to 9000, although the true figure is likely to be higher.
Mr Stevens warned the global economy had significantly worsened in recent months and that restructuring in various sectors couldn't be helped.
"Some parts of the economy will shrink while others grow. I wish I could say we had a way of avoiding that; I don't think we do . . . We don't have an instrument that can prevent these shifts in the structure of the economy from occurring. I'm sorry but that is just the reality," he said.
Economists claim job losses already announced are just the tip of the iceberg and that the figure could jump drastically - reaching 100,000 by Christmas.
Labor MP for Throsby Stephen Jones, whose constituents are bearing the brunt of the cuts at BlueScope, claimed Australia was experiencing a "hollowing out of manufacturing at a pace we haven't seen before" before asking Mr Stevens what consideration the RBA was giving to regional economies and industries, such as manufacturing.
AMP Capital chief economist Shane Oliver predicts the unemployment rate will rise from 5.1 per cent to 5.5 per cent - equal to 80,000 jobs being shed - by the end of the year. He warned that aside from manufacturing, construction firms not benefiting from the mining boom, such as Leighton Holdings and Stockland, are likely to cut workers.
Retailers are also expected to shed staff. Electronics have been hit hard with Dick Smith's owner Woolworths reporting electronics sales were down almost 30 per cent across Australia and New Zealand.
Harvey Norman has already announced the closure of seven stores.
Food and drink processors such as Coca-Cola Amatil are closing factories to slash costs as the strong Aussie dollar means certain product lines are not competitive in many export markets. Others are expected to follow suit, causing the disappearance of further jobs.
Steve Keen, Professor of Economics at the University of Western Sydney, said consumers paying down debts and saving were causing retailers and other discretionary businesses to "suffer terribly". "They are already shedding jobs, and then you have the high dollar, which is being held up in part by the possibility that rates in Australia still have further to rise," he said. "That is crushing manufacturers and will cause more jobs to be lost over the coming months."
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