JEROME K Jerome wrote in 1889: “I love work. It fascinates me. I could sit and watch it for hours.” 
Pollster Gary Morgan could have said the same thing. He has been watching work for decades.
Every month he publishes the results of his polling about unemployment in Australia and invariably he comes up with a result quite different from that of the Australian Bureau of Statistics.
Figures he published this week followed the pattern. Morgan’s unemployment figure (8.6 per cent) remained much higher than the ABS’s figure of 5.3 per cent.
How can this be? Is Morgan wrong? After all the ABS is notoriously reliable and diligent.
Well, they are both right. And the reason is that they have different definitions of unemployment.
The ABS takes its definition from the International Labour Organisation which defines unemployment as completely without work. So if someone has done just one hour of paid work in the past week they are deemed to be “employed” or at least not “unemployed”.
Morgan, on the other hand, asks in face-to-face interviews whether the person has a job or is self-employed. He asks further whether the person would like more work.
His latest result is alarming. When you add the nearly one million Australians looking for more work to the more than one million without a job, it means that more than two million Australian are either looking for a job or looking for more work – 16.8 per cent of the workforce. It is the first time the figure has hit two million since Morgan began watching work.
Overall, 1,034,000 are looking for work and 978,000 are looking for more work.
Which is the better measure – ABS or Morgan? The difficulty with the ABS measure is that someone who only does a couple of hours work in a week is not measured. Nor does it measure people who want more work. So that large capacity – two million willing hands and minds – is not measured. Or at least it has to be measured another way.
Worse, government and industry take the ABS figures and draw unwarranted conclusions from them. So, even though the measure is accurate for what it measures it can result in misleading conclusions.
At present one might well conclude that the labour market is fairly tight with only 5.3 per cent unemployment. That level suggests almost full employment given that a few per cent would be between jobs and another few per cent are almost unemployable given their lack of skills and location. In short, that there is a labour shortage.
But Morgan’s figures suggest that far from there being a labour shortage, it is in abundance – provided we can match those willing to work with those who might provide it.
The ABS has to persist with its method because it provides information for international comparisons and the measures have to be consistent. Also, both measures show rates of change within the employment market.
But if people use the ABS figures – guilelessly or malevolently – to paint a misleading picture we are in trouble.
A tight labour market suggests policy makers should increase interest rates or at least not lower them. But if the labour market is loose, interest rates should go down to stimulate economic activity.
Right now inflation is under control and the labor market is not tight, so interest rates should come down.
Industry has argued for higher immigration because of the tight labour market. This is ridiculous when so many Australians are seeking work. It is silly in any case even with a tight labour market for all sorts of other reasons, but in a market where two million are seeking work we should be seeking other ways to increase skills and labour mobility to get these people the work they want.
That would be much more efficient than the easy option of higher immigration which has long-term economic damagers.
The media fuss this week over egregious Opposition comments concerning migrants without deodorant on buses would have been better directed on levels of migration and the dangers of the work visa system.
More fuss should be made over the way big industry promotes immigration and high population for short-term gains.
Those pointing to wage pressures as evidence of a tight labour market have missed the target. It is more likely that changes in the industrial-relations regime since Labor came to office are the cause. Greater union power has resulted in more pushes for higher wages.
It may also be that those changes have contributed to higher unemployment and under-employment. Employers are more reluctant to hand out work in an environment of greater regulation and higher penalty rates.
Morgan said, “Economists and government advisers who use ABS unemployment estimate as a key economic indicator are misleading the Government, business and the Australian population . . . .
“The danger is that very wrong decisions are made — wrong government policy, wrong investment decisions (like moving businesses offshore under the misguided view there is a more plentiful low-cost skilled workforce).”
The ABS figure tells us – with now doubt a great degree of accuracy – how many people in Australia had no work at all in a given week. It does not show (and is not intended to show) spare labour capacity in the economy.
Overall, the importance of accurate measurements and drawing sensible conclusions from them is obvious.
Morgan’s findings are here: http://www.roymorgan.com/news/polls/2012/4732/.
CRISPIN HULL
This article first appeared in The Canberra Times on 14 January 2012.
It is so heartening to see more and more intelligent (and non xenophobic) arguments to challenge the notion that Australia is facing ongoing chronic skill shortages. When one also considers the skill drain that host countries suffer when they lose their professionals to countries such as Australia, in addition to the extra challenges faced by Australians in securing more expensive training of lessening quality for a decreasing pool of available jobs due to the spiralling compeition…and it seems as though no-one wins in the long run.
Recently, I have become friends with with several guest workers and their families who have since returned to their host countries due to the isolation they feel living in the outer suburb of both, far from facilitaties, social networks and culture, as a net result of infrastructure being completely incapable of accomodating an exploding population affected by irresonsible skilled immigration policies as well as the baby bonus
The ACT government are a good example of higher immigration rather than fund skills training. And, this is especially so in construction. For example the Cotter Dam and ASIO construction sites have not and did not offer any apprenticeships or skills training to what are know as the sub-trades in construction or Concrete Trades .i.e Steelfixers, Concreters and Formworkers. Considering that “The Concrete Trade” employ over 70% of all construction workers this is a great example of importing workers rather than training workers. Currently the ACT construction industry only employ around 20%-30% local labour opting to source the rest from NSW, and overseas. ACT Centrelink RTO’s do not, (apart from the White card) offer any skills training in construction skills like the Concrete Trades. Its a shame when you consider jobs like the Canberra Airport use intersate workers while local unemployed workers miss out on valuable life skills and incomes in access of 100K per year.