Reserve Bank has job on hands

Professor William Mitchell, a leading voice on the jobless from the University of Newcastle, has said the proof was plain to see that the Reserve Bank wasn't living up to its duty of "maintaining full employment in Australia".

"I definitely believe the unemployed should take a class action against the central bank," Prof Mitchell said.

"They've certainly failed in this part of their requirements, because they claim to have managed the current unemployment rate, yet it's clearly on the rise."

After ANZ announced on Monday it would axe 1000 jobs, speculation is mounting that Qantas will be the next company to announce mass job losses. The airline is due to unveil its half-yearly financial results tomorrow, when it is feared engineering job cuts may also be announced.

Australian Licensed Aircraft Engineers Association federal secretary Steve Purvinas said the rumours were building that the airline was planning to slash jobs.

"It wouldn't surprise me that Qantas would shed hundreds of jobs which seems to be their style of management rather than harnessing the quality product that we produce here in Australia," Mr Purvinas said.

Qantas denied the claim, saying in a statement that "any suggestion that Qantas is sending jobs offshore is totally incorrect".

While last month's overall unemployment remained steady at a respectable 5.2 per cent for December, analysts suggest the official figure could have been much more dire.

"If the participation rate remained at 65.5 per cent, then the unemployment rate would have risen to 5.6 per cent," TD Securities head of Asian-Pacific research Annette Beacher said. However the participation rate sank to 65.2 per cent, its lowest level in almost two years.

Former Reserve Bank board member Warwick McKibbon yesterday said the bank would now be finding it difficult to balance keeping inflation in check with managing unemployment levels.

"We know from the '80s that if you let inflation get out of control and then stomp on it like they did in '89 and '91, the unemployment will spike dramatically. That's the trade-off right now, between inflation and unemployment," Mr McKibbon said.