The Australian economy withstood the global financial crisis but a Leftist government is too much for it

It survived the global financial crisis and won acclaim for its strength in adversity. But the Australian economy now finds itself at the crossroads, spooked by a jobs crisis not seen since Paul Keating's "recession we had to have".

Australia's economy shed 100,000 jobs last year, the first time more jobs were lost than created in any year since 1992, The Daily Telegraph reported.

Falls in employment were also seen in 1982, 1990 and 1991. However those years all followed periods of recession when the Australian economy went backwards. By comparison, even at the height of the GFC in 2008, 194,000 jobs were created.

In May last year, Treasurer Wayne Swan made headlines when he pledged his budget would create 500,000 new jobs and drive unemployment to 4.5 per cent. But with 18 months left until the end of the government's term, analysts have questioned whether it can make good on the promise to reduce the number of unemployed people nationally by at least 100,000.

"It's going to be a tough ask to get unemployment that low, unless more people start to give up and not look for jobs any more," one analyst, who declined to be named, said last night.

Acting treasurer Bill Shorten last night admitted global turbulence throughout 2011 had made the government's job harder and caused job creation to slow. "While employment growth has slowed in the face of heightened global uncertainty, we've seen workers pick up a few extra hours of work each week," Mr Shorten said.

The opposition treasury spokesman Joe Hockey last night said the fact that more jobs were lost than created last year made a mockery of Mr Swan's claim to focus on "jobs, jobs, jobs".

NSW bore the brunt of the slump, with total unemployment jumping by 0.4 per cent to 5.6 per cent. But while 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 - a gauge of the population working or looking for work - in fact sunk to 65.2 per cent, its lowest level in almost two years. "This is the first definitive sign that some people have started giving up looking for work, and to be honest the situation in NSW is most likely going to get worse before it gets better," CommSec economist Savanth Sebastian said.

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