The “jobs and growth” distorted delusion

by Crispin Hull on April 7, 2017

THE Government would like us to measure its success on the “jobs and growth” illusion. It points to 103 quarters without a recession (growth). It points to increasing job vacancies and lower unemployment (jobs). And the ministers smile smugly.

But the growth is measured by GDP – a figure hopelessly distorted because it takes no account of increasing population and debt, yet counts financial non-services and the cost of recovering from more and worse weather disasters brought on by climate change – as detailed in this space last week.

And the measure of the other part of the mantra, “jobs”, is equally distorted.

The trouble is that the Australian Bureau of Statistics only records a person as unemployed if they did no paid work in the past week. If someone does just one hour’s paid work, they are “employed”, according to the ABS. But, surely, anyone working less than, say, five hours at the very least, would regard themselves as unemployed.

Roy Morgan Research looks at it another way. It does several thousand face-to-face interviews when it looks at employment.

The latest ABS figure has the unemployment rate at 5.7 per cent. That seems bearable, though it must be said that in the 1960s anything above 3 per cent was seen as unacceptable.

The ABS persists with its unrealistic less-than-one-hour method because it wants to have a consistent measure to compare month-by-month or quarter-by-quarter. Presumably it thinks it is better to be consistently wrong than ultimately right.

The Morgan figures paint a very different picture. It has unemployment at 9.4 percent. Presumably people know when they are unemployed and tell the questioner accordingly.

Morgan also polls for under-employment: people who have some work, but want more. These include contractors as well as wage and salary earners. Underemployment is at 8.5 per cent.

So the total “work-seeker” rate is 17.9 per cent. Nearly one in five people want more paid work and cannot get it. That is serious, unless you can disguise it by referring to the ABS figure of having only one in 18 out of work – a much more palatable figure.

Both the ABS and Morgan have noticed another trend: the growing proportion of part-time jobs.

Even when the unemployment rate falls because of an increase in jobs, the increase in part-time jobs is nearly always higher than full-time jobs.

In the past year, the employment rate has gone up very slightly, but only 87,000 full-time jobs were added against 153,000 part time jobs, according to Morgan.

A little over a third of new jobs were full-time. Yet in the workforce as a whole, two-thirds of all jobs are full-time.

We are seeing a quite rapid move to part-time employment – increasing that pool of “work-seeking” people.

This, of course, is just how employers want it – a pool of desperate work-seeking people who will cop poor pay and bad conditions because there are any number of people to take their place.

And it is, of course, just as the Government would like it – a large pool of work-seekers disguised under an officially low unemployment rate.

These figures explain two features of the Australian economy: low wages growth and increasing insecurity. In the year to February, wages growth was at a record low of 1.9 per cent. It is only slightly higher than inflation at 1.6 per cent. Also, wages are growing higher at the top end, so the wages of those in the bottom half are falling behind inflation. Also, given the distorting weights in the CPI, wages growth is not keeping up with inflation for the sorts of things people in the bottom half buy.

Interestingly, Morgan’s figures show that the “under-employed” figure – those in work who want more work – are more volatile month-to-month than the unemployed figure. These people are the sponge of the economy. They are thrown a bit more work when it is available, but just as quickly lose it when those employing have less work to give.

Bear in mind, this group of people is also increasing as a portion of people in work.

Is it any wonder, therefore, that more people feel more insecure and anxious despite there being (at least technically) more jobs and growth.

So even if you accept that the measures of a government’s or society’s success are “jobs and growth”, Australia’s measurement of them is yielding a distorted picture.

Moreover, even if you accept the number of jobs as a measure of success, Australia’s way of increasing that number results in confidence-sapping insecurity, which is not very good for the economy.

A fair amount of research suggests that in the past governments got re-elected when the economy was going well according to the standard GDP and jobs figures. More recently, however, governments have been tossed out even when those figures on their face look reasonably good.

That phenomenon can be explained by the fact recent changes in the Australian economy has made those figures almost irrelevant. The “growth” in the economy and in employment does not represent an increase in well-being because the employment is insecure and the increase in GDP takes no account of high immigration and high debt, yet includes the unproductive but burgeoning financial sector and the increasing climate repair bill.

So even on its own “jobs and growth” measure, the Government is not measuring up.

If you take into account environmental degradation; congestion; rising inequality; and hopelessly high housing costs, small wonder the vote for the major parties is at a record low.

We should measure overall well-being. We should not look at policies guided purely by the “jobs and growth” mantra, or whether the policies will look after my business or union mates.

It is one thing to have a market economy, but do we have to have a market society?
This article first appeared in The Canberra Times and other Fairfax Media on 8 April 2017.

{ 3 comments… read them below or add one }

Jack Frisch 04.09.17 at 8:15 am

Brilliant! At last – a journalist-commentator who has looked beyond government statistics to explain why citizens are abandoning traditional news outlets and traditional political parties and looking for answers elsewhere. Rising inequality, increased insecurity and political malaise despite beautiful sets of figures – paradox explained. And now – what is to be done. Thanks.

I wonder whether poorer mental health might not be another consequence of weakness in the labour market and whether the poorer quality of new jobs (persuading and peddling while sedentary) might not be another be another negative characteristic leading to malaise.

Tony McIntyre 04.09.17 at 11:52 am

The even bigger sick joke is “innovation and jobs”. In my working career most innovation I have seen has been all about getting rid of jobs. We do not put a robot into a factory to make a better product we put it in to get rid of a few jobs. Even really low paid jobs get replaced. A sign of innovation is the robotic arm on the garbage truck. It was not put there to pick up the garbage in a more innovative way it was just brought in to get rid of the two guys on the back. Innovation does create a few jobs but the reality is that for every few jobs that are created a great deal more are lost. We should face the reality that there will be far less jobs in the future even if we do create so many bullshit jobs.

Michael 04.09.17 at 11:40 pm

This will only be news to the people that are gainfully employed. We the under employed already know the official line is bullshit. Still it is always refreshing when you here someone tell the emperor he is naked.

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