Yahoo Finance The Aussie jobs at risk amid Ukraine crisis
The conflict in Ukraine has been impossible to avoid over the past few weeks, as scenes of the devastation caused by Russia’s invasion have filled our screens.
The impact on the Ukrainian people is clearly immense, but the economic ramifications for the rest of the world, including Australia, are only now becoming clear.
As we reported last week, the dramatic increase in the price of petrol has been the most obvious outcome seen locally, with prices tipped to reach more than $2.70 per litre in major cities.
The longer the fighting rages, the more likely it is that other impacts will be felt on our shores, with one example being the local job market. But how, exactly?
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Trade restrictions
One of the first things to impact Australian jobs as a result of the conflict will be the sanctions imposed on Russia by the Australian Government, which joined many other nations in responding to the military aggression with a raft of new restrictions on trade with Vladimir Putin’s regime.
Although primarily aimed at damaging the Russian economy, these sanctions will undoubtedly affect any Australian businesses who import Russian products or export to the country.
While this is not an overly significant market for Australia, it is still a trade relationship worth $655 million per year. As a result of these developments, expect to see a softening of demand for labour in logistics companies with exposure to Eastern Europe in the short term.
In addition, many companies have also curtailed their operations in Russia and with Russian-owned entities, as Yahoo Finance reported last week.
From an Australian perspective, it is likely that resources companies will be hardest hit by this sudden halt in operations.
Any resources business or project with an element of Russian ownership, such as Queensland Aluminium Limited - Rio Tinto’s joint venture with commodities giant Rusal - should also expect interruption and a potential pause in hiring in the short term.
Petrol price woes
Another factor to consider is the effect rising petrol prices may have on the Australian economy, and the knock-on effects this may have on the labour market.
It’s been well documented that Russia is a leading supplier to the global oil market, and imposition of trade sanctions is going to cause increased oil prices for the foreseeable future due to reduced supply.
For Australia, this doesn’t just mean higher prices at the bowser, but also a significant increase in the cost of everyday items, as higher transport and logistics costs are passed onto the consumer.
For shoppers who are already dealing with increased inflation due to COVID-related supply chain issues, this could be a significant blow to consumer sentiment.
As a result, it is highly likely discretionary consumer spending on items such as white goods, cars, travel and entertainment will fall.
The outcome on jobs is often swift in this scenario, with the retail sector in particular requiring fewer resources due to falling sales revenues.
An opportunity for growth?
Despite the disruption to world trade caused by the hostilities in Ukraine, the changing economic environment could provide some potential opportunities for Australian business, and these could have a positive impact on the local labour market over time.
As well as being a major global oil supplier, Russia is also a significant exporter of other commodities such as Liquified Natural Gas (LNG) and wheat - products Australia has a significant capability to export.
Up until recently, one of the largest consumers of Russian LNG exports was the European Union (EU), who in recent days have announced a major push to reduce their dependency on this energy source.
The sanctions on Russia will also affect its ability to continue to trade wheat at the volumes it is used to, opening the door to Australian supplies.
There is no doubt the conflict in Ukraine is causing massive disruption across parts of the global economy, and the Australian labour market will not be immune from this turmoil.
However, given the relatively strong labour market that we have seen in Australia prior to war breaking out, Australian workers should be relatively well insulated from the worst of the fallout.
Those in the LNG and agriculture sectors may even benefit from increased demand for their services in the longer term, should their industries capitalise on the opportunity to secure an increased market share.
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