SA likely to witness a sharp increase in unemployment with BHP Billiton’s job cuts, warns an economist

As mining giant BHP Billiton announced it would be cutting as many as 380 jobs, an economist has warned that it could raise South Australia’s unemployment rate to 9 percent within six months.

In the wake of bringing operational changes to the company, BHP Billiton is all set to axe almost one tenth of its workforce at its Olympic Dam mine in SA. It has previously announced about the existing redundancies at the Olympic Dam, which came with the dismissal of 140 SA employees. BHP Billiton has reportedly told the Australian Workers Union that 143 technicians, 137 scientists and engineers and 27 supervisors were likely to lose their jobs.

Associate Professor John Spoehr from University of Adelaide said that the sudden shedding of jobs was highly dangerous for the state. He said the importance of the recent announcements to increase employment with the building of Navy’s frigates in Adelaide was downplayed by BHP’s job cuts.

Disappointed with BHP’s move, he said the effects of the minerals and energy sector of the company, which hasn’t been doing very well at the moment, would be reflected on the unemployment rate soon.

"So we had great hopes of course that the minerals sector in South Australia would expand significantly but now what we're seeing is the opposite occur," he said. He harped on bigger infrastructural projects along with proper funding as a perfect solution to eradicate unemployment from the society, while saying that building Navy frigates was only a part of the solution.

Although unemployment rate has plummeted to 7.9 percent from 8.2 percent in July, yet it is believed to be the highest compared to other cities in the country. It is ahead of Tasmania as well, which witnesses about 6.7 percent unemployment rate.

Olympic Dam asset president Jacqui McGill said increasing global challenges has led to job cuts in resources sector. She said that it was a part of an ongoing review and not a reflection of any policy settings in South Australia .

On Monday, acting Treasurer Jack Snelling accused BHP Billiton of not being open about its plans and asked it to outline its plans for the future of the Olympic Dam mine site, while saying that South Australians have always encouraged BHP to invest more in state projects

“I really think it's time BHP levelled with South Australia about their future intentions," Snelling said.

Chamber of Mines and Energy chief executive Jason Kuchel said the company's decision to cut down its workforce could make it easier to revive future expansion plans at the site. In a bid to respond more quickly to the market conditions, cutting on jobs actually improve units costs and help the company to restore itself, he said. However, he also said some managerial positions were also being cut.

State Opposition Leader Steven Marshall accused the State Government of being unresponsive towards the rising unemployment and said that urgent actions were needed to restore confidence in business, which would in turn help in creating more jobs in the country.

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