Illawarra's shock jobless rate for January revealed

The unemployment rate for January 2024 was 8.7 per cent, the highest it has been since January 2016.

The result is a shock turnaround from figures over the past 18 months where the Illawarra has led the state-wide unemployment rate.

Robert Servine, CEO of Berkeley social enterprise Green Connect, said cost of living pressures were having a clear effect on the business, with subdued demand for veggie boxes but higher take up of the service's op-shop.

The business also operates a supported pathway into employment program and Mr Servine said it was becoming harder to find placements for graduates of the program.

"For a while it seemed like everyone was hiring and unemployment was quite low," he said. "This seems to have slowed down and businesses are not providing as many opportunities as they may have done previously."

While the small sample sizes of month-to-month figures can be skewed by seasonal employment patterns, the high result in January suggests the successive interest rate rises in 2023, along with an inflation crunch, have had an effect on the region's labour market.

Business Illawarra chief executive Adam Zarth said the Illawarra was an outlier compared to the state and similar regional areas and was in response to the rising cost of doing business.

"With the Illawarra region's unemployment rate for January reported as 8.7 percent, more than twice the NSW average for January and twice the average over the past 12 months in the region, it seems that we are potentially seeing staff cuts emerge as a response to the cost increases for business."

Businesses in the Illawarra were feeling the pinch of increased wage costs, reduced customer demand and cash flow disruptions, he said.

"Increased wage expectations are affecting 61 per cent of respondents in the region, compared to only 51 per cent across NSW. In such an environment, Illawarra businesses will continue to remain cautious about taking on more staff with 59 per cent of respondents saying they intended to maintain the current headcount in the next 3 months, and only 22 per cent intending on hiring new staff."

Illawarra businesses were generally pessimistic about the past and current quarter, however were expecting an uplift in the second quarter of this year.

In recent months, Green Connect has launched Strive for Success, a program targeted at barriers to employment for young people, and Mr Servine said there was already significant demand.

"We are seeing an increase in referrals to that."

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