Ex-pat Aussies returning from UK likely to boost local markets

Posted on 1/09/2008  

Perhaps it's the spectre of an imminent UK recession which is inspiring Australian expats to pack up and go home, as recent research seems to indicate is happening. Recent economic signals suggesting the UK economy is stagnating and on the brink of recession is perhaps the strongest ‘go home' motivator for Australians working in the UK.

Research by financial services recruitment firm Link Recruitment found the numbers of Australians looking for work in the "City" (London's finance sector) fell 14% in the first four months of 2008. (They might not be able to find work in Australia's finance sector either, but that's a risk some seem prepared to take).

The economic signals coming out of the UK are not unlike that negative equity period in the early 1990s when home lenders were walking into banks and dumping their keys on the counter, seeing little point in making repayments on a house which was worth less than what they owed. In recent times, home lending has crashed in the UK, unemployment is up (5.3% at last count) and inflation, at 3.8%, is 1.4% higher than it was 12 months ago.

The Recruitment and Employment Confederation says a new report shows the credit crunch has now started to reach the jobs market. The REC/KPMG report on UK jobs showed the lowest number of people placed in permanent jobs since the post 9/11 market slump in 2001. The July 2008 report also notes a slowing in the growth of temporary jobs - the first fall in temporary job vacancies since KPMG began the report in 1997. KPMG director Alan Nolan says the construction sector, traditionally relied upon for a steady take-up of temporary labour, weakened dramatically over the first six months of 2008.

Low demand for staff and a glut of candidates translated to weaker growth in wages and salaries. And the numbers of UK residents signing on for the dole continued to rise, for the fifth month in succession, according to a recent Reuters report.

"Overall, cost reduction programmes remain at the top of any boardroom agenda with business leaders remaining extremely cautious about taking on permanent staff", Nolan says. "At the same time the increased cost of living and pressure on take home pay continues to fuel an increase in (job) candidate availability."

By contrast, Australia's still-booming resources sector is attracting many back home to well-paid jobs, sunshine and family. Nearly two-thirds of Australians returning home from working abroad cited a job offer or the prospect of employment as their main reason for moving. Link Recruitment says career opportunities and the sun-and-surf lifestyle at home are the main factors motivating ex-pats to return home.

There is also some evidence that the traditional "OE" or gap-year in the UK favoured by young Aussies may no longer appeal, with a 56% decline in the numbers of Australians applying to work in the UK over the past 12 months.

Australia still has record low unemployment and a skills shortage described as critical in many areas. Although many economists believe Australia is starting to show slowing trends, the July jobs data from the Australian Bureau of Statistics showed 10,900 new jobs were created, most of them full-time. This was more than expected and helped keep the unemployment rate at 4.3%.

There is also a perception that Australia is the least adversely affected by the global credit crisis. General Manager of LINK Global Jason Cartwright says "Many expats have commented that Australia is a safer bet to ride out the "Credit Crunch" and looming slowdowns, than overseas markets. Couple that with the Reserve Bank's optimistic view that it may be able to ease monetary policy and it is not hard to see why young expats are planning to return home, timing their run to take advantage of a weakening in most capital city residential property markets, perhaps?

The exchange rate is still heavily in favour of the Aussie expat coming home. The value of the pound dropped from about $A 2.45 in June 2007 to about $A2.05 in July this year but has since regained lost ground against a weaker Australian dollar. The pound has also weakened dramatically against the $US, dropping from about $US 2.1 at the start of 2008 to a recent low of $US 1.85. Sterling earnings are therefore worth less than they were, say, four years ago, but are still generally favourable to the returning expat.

The increase in Aussies making Australia their home again might even have been influenced by Prime Minister Kevin Rudd's half-joking appeal to Aussie expats' loyalties during an aside at a lecture to the London School of Economics. He was quoted as saying, "I know it's great being here (in London) but we need you back home too: there's a lot of things to do, big challenges."

Whatever the reasons, more Australians are returning home from the UK than any other expatriate nationality. 2,600 Australians are resigning from their roles in the UK each month (compared with only 1,700 a month in 2005). The Department of Immigration has also recorded a 50% increase in Aussies returning home, since July last year.

ENDS

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