This article is more than 6 years old

This article is more than 6 years old

Australia had its worst 12 months for jobs growth for 17 years in 2013, sparking talk of an interest rate cut and a political blame game.

Employment fell by 22,600 in December but a plunge in participation kept the jobless rate steady at 5.8%.

While Labor blamed the Abbott government for inaction over the economy, the Coalition said the opposition was standing in the way of its economic reform.

The economy added only a net 55,000 jobs over the whole of 2013. The loss of 31,600 full-time jobs last month was partly offset by the addition of 9,000 part-time jobs.

The participation rate fell to 64.6% in December – the lowest it has been since the Howard government was in office in 2006.

The figures saw the Australian dollar fall sharply to its lowest level since 2010. The currency fell from 88.94 US cents before the release of the figures to 88.02 US cents at lunchtime before recovering slightly to 88.13 cents on Thursday evening.

St George chief economist Besa Deda said the soft figures meant a rate cut was not out of the question.

"If jobs growth continues to deteriorate and not begin to reflect the improvement in economic activity, then another rate cut looms large," she said.

The jobless rate is expected to breach 6% in the first half of 2014 and peak below 6.5%.

The worst hit state in December was Victoria, where 12,600 lost their jobs.

Tasmania and South Australia were also hit hard in 2013. SA lost 17,400 jobs and Tasmania lost 5,200.

The federal employment minister, Eric Abetz, said the figures showed the need for Labor and the Greens to allow the Coalition to deliver on its election promises, including abolishing the carbon and mining taxes and reinstating the building industry watchdog.

"The Labor-Green alliance continues to delay legislation which will assist job creation and a stronger economy, which are so desperately needed," Abetz said.

"Having created the economic mess the Labor-Green alliance should at least have the decency of not hindering the economic clean-up operation."

Labor’s employment spokesman, Brendan O'Connor, said it was a wake-up call for the Coalition.

"Since he was elected, all Mr Abbott has done is stand idly by as thousands of workers were told they would lose their jobs," O'Connor said.

The Coalition has promised to deliver at least a million new jobs within five years.

The Australian Chamber of Commerce and Industry’s chief economist, Burchell Wilson, said a bipartisan approach was needed to get the economy back on track.

"Resolution of the political gridlock ... would do much to foster confidence," he said.

The ACTU president, Ged Kearney, said the federal government was undermining the economy.

"As growth softens and unemployment rises, what Australians are looking for is a government with a plan to address job creation and strengthen the economy," she said.

"Instead, the government's answer is to savagely cut public sector jobs, cut skills funding for trade training centres and get rid of the $10bn Clean Energy Finance Corporation that would have created thousands of new high-skilled, innovative local jobs."