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Employer confidence hits new low -

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Reporter: Sue Lannin

ELEANOR HALL: As the world's leaders meet in London, back home employer confidence has hit a new
low.

A survey by the recruitment company, Hudson, shows that confidence fell for the fifth quarter in a
row to the lowest level in 10 years. The survey of more than 6,000 employers found that 18 per cent
of them plan to lay off staff over the next few months.

While another survey of chief executives says that more than half think the economy will return to
normal next year, Federal Treasurer Wayne Swan says that unemployment will rise beyond the
Government's previous estimate of 7 per cent in 2010.

Hudson's chief executive for Australia and New Zealand, Mark Steyn told finance reporter, Sue
Lannin, that he thinks unemployment could rise to 9 per cent next year.

MARK STEYN: The great uncertainty that we are seeing in the marketplace is driving the declining
confidence. This is a forward-looking projection - it is looking out to Q2 this year so basically
from April through to June this year and it is the uncertainty about, you know, the forward
projection about what is going to happen there.

SUE LANNIN: Which states are the worst?

MARK STEYN: The biggest decline we've seen this quarter has been in the two resources states and
really that has brought Queensland and WA back into line with the rest of the country. For the
confidence in Queensland and WA has dropped 14 per cent this quarter. Year on year, Queensland is
down 37 per cent in line with the national average. Year on year Western Australia is down 48 per
cent.

These two states with the lowest confidence overall are our two biggest states. New South Wales
with negative hiring intentions of 1.1 per cent overall and Victoria which has moved into the
negative territory for the first time at -2.7 per cent.

SUE LANNIN: Now the Federal Treasurer Wayne Swan says unemployment will rise above the Government's
latest forecast of 7 per cent next year. How high do you think it will go?

MARK STEYN: I think, you know, what you are seeing in the unemployment figures actually masks what
is happening in the permanent space. I would say at this stage we are predicting unemployment to be
somewhere between seven-and-a-half and nine-and-a-half per cent by the end of the year.

SUE LANNIN: In the latest job figures we saw a rise in part-time jobs but a fall in full-time jobs
so do you expect that trend to continue?

MARK STEYN: Absolutely and there is a couple of things driving it. It is obviously, people who have
lost their jobs are taking any work they can and more often than not that is contracting or
temporary work.

We have also seen a return to the workforce of our aging population and those that have been
impacted by the decline in their superannuation balances.

In addition we are seeing partners in a relationship returning to the workforce in a part-time
capacity given the uncertainty about the primary income-earners' job security.

SUE LANNIN: You say that sacking workers is not the only choice in a downturn. Do you think that
too many employers see redundancies as an easier option?

MARK STEYN: I think, you know given the uncertainty and the volatility in the market, it is a very
fine balancing act.

On the one hand organisations are absolutely looking to reduce costs to reflect what is happening
in terms of their forward outlook, what is happening in terms of the orders. You know, they have
got to right-size their business. A primary responsibility is to maintain the health of the
organisation that they are responsible for. They are also looking at driving productivity.

On the other hand retaining talented employees is an absolutely key challenge for them. Building
the leadership capability they need to see them through these tough times and maintaining the
morale and focus of their staff to get through these difficult and uncertain times is a key
challenge.

What we can say and what we're absolutely sure of is that the fundamentals underpinning Australia's
long-term talent shortage haven't gone away.

SUE LANNIN: There are reports today of a third stimulus package as well as a plan to help small
business in the Federal Budget. Will that give employers more confidence?

MARK STEYN: People are being very cautious at the moment. They are adopting a wait-and-see
approach. They are waiting to see what happens in the interbank lending market and once credit
starts to free up.

Once that happens then you will start to see potentially more investment but I don't see that
necessarily happening through the short-term stimulus package.

ELEANOR HALL: That is Mark Steyn, the chief executive of Hudson Australia New Zealand. He was
speaking to Sue Lannin.