AiG tips 400,000 jobs bonanza

Australian industry leaders believe 2018 could be a defining year for the economy.

Ai Group chief executive Innes Willox. Picture: AAP

Australian industry leaders believe 2018 could be a defining year for the economy, with investment plans and general business conditions set to be stronger than any time in the past five years.

A report to be released today by the Australian Industry Group also forecasts the potential for a further 400,000 jobs to be created in the next 12 months, which would signal a second record year for employment growth amid ­rising optimism from the country’s leading company CEOs.

The buoyant expectations ­follow official data, revealed last week by The Australian, showing employment growth in 2017 had been the strongest in a decade.

However, the Ai Group report came with a warning to the government that policies to curb rising energy prices would be critical to continued growth and profitability in some industry sectors.

Improved conditions would also come at the expense of wage earners, with job growth predicated on wages remaining flat, while further company tax cuts would be critical to coping with increased overseas competition.

The Australian Industry Group 2018 Business Prospects ­report, based on a survey of 269 CEOs predominantly across the manufacturing, construction and services industries, reveals that a majority of companies expect general business conditions, turnover, employment growth and gross margins to be all higher than at any time in the past five years.

“Investment plans and expectations of employment growth are higher than at any time since 2012. If these plans and expectations are realised, 2018 would prove to be a defining year for the Australian economy,” said Ai Group chief executive Innes Willox.

“The renewed optimism from CEOs is built on 2017 delivering much stronger than anticipated general business conditions than they were in the previous year. If these positive expectations can be turned into reality we would see strong business investment and spending on training, R&D and technologies reaching post-GFC highs. And most importantly, we would see a year in which employment growth equalled or even ­exceeded the record jobs growth experienced in 2017.

“Overall, given the strength of CEO expectations on employment, Australia could add more than 400,000 new jobs in 2018. An achievement of this magnitude would make critical inroads into both the rate of unemployment and the naggingly high rate of ­underemployment.”

The key take-out from the report was continuing concern over rising energy costs, ranked as the single biggest impediment for the manufacturing sector, while competition from overseas and online businesses also featured as risk factors for the services industries.

“Services sector businesses consider a lack of customer ­demand to be the largest impediment to growth in 2018, with ­almost half (49 per cent) of ­services CEOs identifying it as their main concern. This was up from 29 per cent of CEOs in 2017,” the report said.

“For construction CEOs, ­energy was also a highly negative issue as was a lack of customer ­demand. Flexibility of industrial relations in 2018 was a primary concern for 19 per cent of ­construction respondents, a substantial increase from 3 per cent in 2017 and 4 per cent in 2016.”

Scott Morrison welcomed the report, saying it reflected better days ahead forecast for the ­Australian economy.

“The predicted pick-up in businesses investment is great news for Australian businesses and workers,” the Treasurer said.