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Category: Employment & Unemployment

  • Australia’s Economy Heads Into Election on a Weak Note

    Employment & Unemployment, Macroeconomics

    Australia’s Economy Heads Into Election on a Weak Note

    by Jim Stanford

    Author

    Jim Stanford

    The ABS has released what is likely the last quarterly GDP report before a Commonwealth election expected in May. Coalition leaders were hoping a strong report would underline their standard talking points about being the best “economic managers.”  But they were badly disappointed.

    The headline number was bad: Just a 0.18% increase in GDP for the December quarter, barely above zero. But the details, if anything, were worse.

    Some of the major takeaways from the ABS report include:

    • Real GDP per capita in Australia has now declined for two consecutive quarters: creating a so-called “per capita recession.” This is because the economy is growing more slowly than the population.
    • Consumer spending was the weakest in five years, suppressed by weak wage growth, falling property prices, andhuge consumer debts.
    • Net exports and housing investment both declined.
    • Business capital spending was very weak, despite growing profits. This may be the most damning refutation of the logic of “trickle down” economics: despite strong profits and a favourable policy regime, business is failing to invest more in real projects.
    • Workers’ share of the total GDP pie fell again in the December quarter – and for the 2018 calendar year, shrank to the lowest of any year since the ABS began reporting this data in 1959.
    • A broad measure of wages (total labour compensation per worker) grew just 0.3% in the December quarter, and just 1.9% over the year as a whole. This indicates wage growth is slowing down, not picking up.

    Australia’s economic growth in recent years has been fueled by three unsustainable factors: a property boom, rapid growth in consumer debt, and a spurt in resource exports (especially LNG) that has now leveled off. Those drivers are all shifting into reverse. More sustainable drivers of progress (including public and private investment, rising wages, and domestic demand) have been absent. These weak economic numbers should foster an important debate in the lead-up to the election: let’s get beyond slogans about who are the best “managers,” and start to think big about building an economy that is sustainable and socially beneficial.



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  • What’s a Million, Anyway?

    Employment & Unemployment, Macroeconomics

    What’s a Million, Anyway?

    Australia’s 2013-18 Job Creation in Historical Perspective
    by Jim Stanford, Troy Henderson and Matt Grudnoff

    Authors

    Jim Stanford

    Troy Henderson

    Matt Grudnoff

    Senior Economist

    Media release



    Million jobs not what it used to be: new report

    In the lead-up to the 2013 federal election, then-Opposition Leader Tony Abbott made a high-profile pledge that a Coalition government, if elected, would create 1 million new jobs over the next five years. Abbott was elected (although later ousted by his own party), and total employment in Australia did indeed grow by over 1 million positions between 2013 and 2018.  Current Prime Minister Scott Morrison hopes that this success can resuscitate his party’s flagging fortunes: he has pledged, if elected, to create even more jobs (1.25 million) over the next five years.

    But a new report from the Centre for Future Work takes a closer look at the government’s claims, and finds that Australia’s job-creation record since 2013 has actually been unimpressive.

    Australia’s working age population is over 20 million, and growing rapidly.  The labour market must create well over 1 million new jobs every five years, just to keep up with population growth.  Moreover, it was only due to a surge in part-time jobs (most of them casual, low-wage positions) that Mr. Abbott’s million-job target was met.  If full-time work had retained its previous share of all work, the number of new jobs would have fallen well below the 1 million benchmark.

    The Centre for Future Work has prepared a comprehensive review of Australia’s labour market performance since 2013, on the basis of year-end employment data for 2018 just released by the Australian Bureau of Statistics.

    The report is based on a detailed analysis of official labour market statistics, going back as far as 1958.  Major findings include:

    • 2013-18 was the tenth time Australia created at least 1 million jobs in 5 years.  The first time was 30 years ago.
    • But Australia’s population is much larger now, so 1 million jobs is no longer such an “achievement.” The rate of employment growth since 2013 has been slower than the long-term historical average.
    • Part-time jobs accounted for almost half of all jobs created since 2013.  Most of them are casual jobs, and average wages are much lower.
    • Hours of employment grew more slowly since 2013 than Australia’s population.  That means the amount of work available, on average, to each potential worker declined compared to the previous 5 year-period.
    • Because new work was not keeping up with population growth, total underutilisation of workers (including unemployment, underemployment, and discouraged non-participation) got worse over the last 5 years.
    • In addition to an inadequate quantity of work, the quality of work has also deteriorated by several measures: including more casual jobs, precarious self-employment, and reduced coverage by collective agreements.
    • Since 2013, wage growth has slowed to the slowest sustained rate since the 1930s.  And since nominal wages are not keeping up with inflation, real wages have declined.

    In this broader statistical perspective, Australia’s recent labour market performance has not been stellar. It’s been mediocre, at best.  That explains the growing anger expressed by millions of Australians concerned about stagnant wages, insecure work, and falling living standards.



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  • The Economic Importance of Public Services in Regional Communities in NSW

    Employment & Unemployment, Public Sector, Procurement & Privatisation

    The Economic Importance of Public Services in Regional Communities in NSW

    by Troy Henderson

    Author

    Troy Henderson

    Public sector austerity has become a “policy fad” in Australia, at all levels of government. Its hallmarks are unnecessary public sector wage caps, outsourcing, downsizing, privatisation and the imposition of so-called “efficiency dividends” which allegedly drive productivity growth but in reality cut spending and reduce the quality of public services. These policies of austerity are not justified by economic theory, especially not in conditions of chronic macroeconomic weakness, unemployment, and underemployment (such as characterise most areas of Regional NSW). They may be politically convenient for political leaders positioning themselves as “tough on deficits,” but in reality they impose a wide range of harmful economic and social consequences. At best they represent lazy thinking in policy; at worst they constitute deliberate attempts to erode the public sector and the critical services it provides.



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