Merrill Lynch strategist Tim Rocks has told clients to expect a further 100,000 job losses in light of BlueScope steel’s decision to axe 1,000 jobs.

With its last reported loss totalling $1.05bn, the steel manufacturer said it was left with no choice but to make staff cuts, citing the battle with the strong Australian dollar and higher labour costs compared to emerging markets such as China, as contributing factors.
But the news has come with condemnation from politicians, with Independent Senator Nick Xenophon blasting BlueScope executives for pocketing $3m in pay bonuses over the past year, whilst sacking 1,000 full time employees, and 400 contractors.

“This company is laying off 1,000 workers and it has it hands out for taxpayer support to the tune of $100m, yet it still has the gall to pay its executives these obscene bonuses,'' Senator Xenophon said.

Xenophon called on BlueScope executives to explain to their workers why they needed the money more than the sacked workers.
Treasurer Wayne Swan said the decision by the manufacturer is part of the “painful adjustment” of the Australian economy, with the Australian Industry Group adding the job losses was “chilling news” for all Australians employed in Manufacturing.

Tim Piper, AIG Victorian director predicted more layoffs are likely to come, noting: “Unfortunately there will be more redundancies as stressed businesses look to cut costs by shedding staff.”

Westpac has weighed in on the speculation, and warned the decline in the manufacturing, retail and construction sectors would lift the unemployment rate from where it stands at 5.1% to 5.5%, by as soon as the middle of next year. The major bank estimated a further 36,000 jobs will be lost.

Westpac chief economist Bill Evans said the economic slowdown would result in interest rates being cut to 3.75% by September 2012 as the RBA will be under pressure to boost growth and generate jobs.

However, Merrill Lynch analysts were more pessimistic, tipping up to 100,000 job losses by March as the global economy falls into recession.

“We have tallied 7,000 announced job losses since June, which are unlikely to be in the official numbers yet,” Rocks said.

He added that the RBA would ease rates once it becomes aware of the new trend in the labour market. “We expect this by its November meeting but financial dislocation could force a more immediate response,” he added.

ANZ economist Ivan Colhoun said the latest jobs data released by the ABS in July, showed the economy was only creating about 3,000 new jobs a month - well below the 10,000 level needed to stop unemployment rising.

The most recent data from the treasury in Canberra tips unemployment to fall back to 4.75%, where it sat for the first half of this year.