Study Forecasts Australia's Loss of Over 118,000 Retail Jobs in 3 Years

Jobs in Australia's retail sector appear to be in a worse situation compared to the banking sector. While a report in January warned of the loss of 7,500 banking jobs over the next two years, another study forecasts 118,000 retail jobs could be axed in the next three years across the country.

The jobs to be lost would affect over 200 shops including popular brands in Australia such as Colorado, Katies, Just Jeans, Sleep City and Dick Smith.

According to a 52-page report that the National Retail Association (NRA) commissioned Ernst & Young to conduct, one in 11 retail jobs will be lost as foreign online retailers capture 75 per cent of the non-food online sales by 2015. Within the same period, Australia's gross domestic product is expected to fall by $6.5 billion. The report was released on Friday.

Of the 118,000 jobs forecast to be lost, about 33,000 jobs to be axed will be because of the $1,000 threshold for sales tax exemption for goods purchased online or imported, while the rest would be due to the weak retail environment.

To avert that grim scenario, NRA Executive Director Gary Black sought the abolition of the Low Value Threshold. The law exempts from the general sales tax or import duties goods valued at less than $1,000 when purchased overseas from online retailers.

Other countries have addressed the situation by lowering the threshold to tax foreign goods compared to local produces such as New Zealand which placed a $170 limit, the US $191, Canada $19 and Britain £15.

"Almost 10 per cent of Australian retail jobs will disappear over the next three years unless the government removes the unfair advantage it is giving to foreign-based online retailers," Mr Black said.

The federal government has expressed earlier that it is not in favour of lowering the GST-free threshold due to higher cost to be incurred compared to additional revenue such a move would generate. If the threshold would bring the threshold down to $100, it would cost the government $1.2 billion but would only collect $500 million taxes for the extra effort.

However, Mr Black insisted the cost would be higher if the government does not adjust the threshold. He estimated the 33,000 jobs to be lost would cost the Australian economy $6 billion.

"When you factor that into the numbers there's an overpowering case for the removal of the threshold," Mr Black insisted.

"The jobs crisis unfolding in retail dwarfs the predicament and dilemmas that are confronted by the demise of the Australian manufacturing sector," he told ABC.

To counter the growing share of foreign online retailers on the Australian consumer, some local retailers such as Harvey Norman, Myer and JB Hi-Fi rolled out their own Web sites where Aussies could buy directly from their offshore distributors which allow them to avail of the $1,000 GST exemption.

Myer Chief Executive Bernie Brookes explained the slower shift of the Australian retail industry to e-commerce due to its being stuck on an environment of catalogue shopping, similar to what happened in the U.S. and U.K. However, Myer has started the online shift.

"We're embracing the Internet, we're going to be flogging online as well... who knows, we might be a threat to English or American retailers one day when we start to sell over there," Mr Brookes said.

However, what could work for the retail sector may not for the manufacturing sector which could not offer online solutions for production jobs.

The latest manufacturer that will axe jobs in the manufacturing sector is OneSteel which announced on Friday the closure of its oil and gas pipe mill at Kembia Grange. The firm will shutter the mill in May which would result in 56 people becoming unemployed.

OneSteel explained the decision to losses caused by the strong Australian dollar and a decline in demand for steel. To help the affected workers, OneSteel said it would offer them redundancies and provide career advisory services to help the employees seek other job opportunities.

However, Throsby MP Stephen Jones debunked the claim by OneSteel of low demand for its products. He said pipemaking for the resources sector is booming, but the pipes specified in the big resource projects have diameters that OneSteel and other Australian manufacturers are not making.

OnesSteel produces up to 50,000 tonnes of pressure pipe yearly for the oil and gas steel distribution markets in Australia. It also purchases steel from a competitor, BlueScope Steel. However, BlueScope said the OneSteel announcement will not impact the company because its current sales to OneSteel's Kembia Grange facility is less than 1 per cent of BlueScope's total steel production capacity in Australia.

OneSteel said it would write down its $13 million assets, pay a $5 million restructuring charge and sell the OGP plant, equipment and related land to reduce the net loss on the closure.

The 56 jobs to be lost in OneSteel bring to 145 the total number of work axed by the company since February and to 950 jobs if reckoned the past six months.