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Category: Macroeconomics

  • 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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  • Four Views on Basic Income, Job Guarantees, and the Future of Work

    Macroeconomics

    Four Views on Basic Income, Job Guarantees, and the Future of Work

    by Frances Flanagan, Troy Henderson, Ben Spies-Butcher and Jim Stanford

    Authors

    Frances Flanagan

    Troy Henderson

    Ben Spies-Butcher

    Jim Stanford

    The unprecedented insecurity of work in Australia’s economy – with the labour market buffeted by technology, globalisation, and new digital business models – has sparked big thinking about policies for addressing this insecurity and enhancing the incomes and well-being of working people. Two ideas which have generated much discussion and debate are proposals for a basic income (through which all adults would receive an unconditional minimum level of income whether they were employed or not) and a job guarantee (whereby government would ensure that every willing worker could be employed in some job, such as public works or public services, thus eliminating involuntary unemployment).

    Progressives have campaigned for generations for stronger income security programs and for a commitment to full employment by government. So these ideas have a long pedigree. However, there is great discussion over both the implementation and cost of these proposals, and their broader (and perhaps unintended) economic and political consequences.

    To shed some additional, constructive perspective on these proposals, we are pleased to present four short commentaries on basic income, job guarantees, and the future of work by four leading Australian experts on the economics and politics of work.

    The four commentaries are posted below in alphabetical order of their authors:

    • Dr. Frances Flanagan, Research Director, United Voice: The Policy and Politics of Basic Income: A Few Concerns
    • Troy Henderson, Economist, Centre for Future Work: Situating Basic Income and a Job Guarantee in a Hierarchy of Pragmatic-Utopian Reform
    • Dr. Ben Spies-Butcher, Dept. of Sociology, Macquarie University: Basic Income as a Progressive Priority
    • Dr. Jim Stanford, Economist and Director, Centre for Future Work: Work, Technology, and Basic Income: Issues to Consider

    Three of the commentaries (by Flanagan, Henderson, and Spies-Butcher) were initially presented to the recent “Reboot the Future” conference in Sydney, hosted by Greens NSW Political Education Trust. The authors expanded and edited their remarks for the purposes of this symposium. We thank the organisers for their cooperation. The fourth commentary (by Stanford) arose from recent discussions within the Centre for Future Work’s voluntary Advisory Committee.  Together, we think these nuanced commentaries add valuable perspective to these important but complex policy debates.

    Our publication of these commentaries coincides with this week’s annual General Assembly of the Basic Income Earth Network (BIEN), being held this year at the University of Tampere in Finland.  In a personal capacity, Centre for Future Work economist Troy Henderson is presenting at the Assembly on his Ph.D. research regarding the fiscal and labour market impacts of basic income.

    We will continue to consider the advantages and disadvantages of both these important policy proposals in future research and commentary. We thank the authors for their contributions to this discussion, and welcome further feedback!



    Frances Flanagan



    Troy Henderson



    Ben Spies-Butcher



    Jim Stanford

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  • Exploring the Decline in the Labour Share of GDP

    Macroeconomics, Wages & Entitlements

    Exploring the Decline in the Labour Share of GDP

    by Frances Flanagan, Frank Stilwell, Jim Stanford, David Peetz, Margaret McKenzie and Shaun Wilson

    Authors

    Frances Flanagan

    Frank Stilwell

    Jim Stanford

    David Peetz

    Laurie Carmichael Distinguished Research Fellow

    Margaret McKenzie

    Shaun Wilson

    Media releases



    Workers’ Share of Economic Pie Shrinks Again



    Workers’ slice of Australian economic pie gets smaller

    The share of total economic output in Australia that is paid to workers (in the form of wages, salaries, and superannuation contributions) has been declining for decades. Workers produce more real output with each hour of labour (thanks to ongoing efficiency improvements and productivity growth), but growth in real wages has been much slower – and recently, real wages haven’t been growing at all. The result is that labour’s slice of the economic pie has been getting smaller. In fact, a recent Centre for Future Work report showed that in early 2017 the labour share of GDP hit its lowest level since the Australian Bureau of Statistics began collecting quarterly GDP data.

    To explore the causes and consequences of this decline in workers’ share of national income, the Centre for Future Work convened a special panel of experts at the Society for Heterodox Economists conference at UNSW in Sydney last December. The papers presented at that panel have been peer-reviewed and just published in the Journal of Australian Political Economy. We are very pleased to co-publish the 4 papers here.

    • In addition to further documenting the long erosion of workers’ share of Australian GDP, the symposium sheds additional light on the trend, including the following aspects:
    • The shifting distribution of income from labour to capital contributes to widening inequality in personal incomes (since financial wealth, and income from that wealth, is so tightly concentrated among the richest Australians).
    • The decline in the labour share in Australia has been among the worst third of all OECD economies; and some countries have experienced stable or even rising labour shares, proving this trend is neither universal nor inevitable.
    • The growing power of finance, and the financialisation of business practices even by non-financial firms, have been key factors in the relative fall of labour compensation.
    • New business models involving the fragmentation of work and the outsourcing of direct employment responsibilities by lead companies (what participating author David Peetz terms “not-there capitalism”) have also contributed to the trend.
    • Australia’s minimum wage once established a strong foundation for a healthy labour share of national income, but its influence has eroded over the last 30 years as minimum wages have failed to keep up with overall wage trends and productivity growth.
    • Despite the erosion of union density and collective bargaining, Australian unions still possess an impressive capacity to mobilise working people to demand a better share of the economic pie (including through the political process).

    The long decline in the labour share is a powerful, telling indicator of the regressive shifts in the power balances of Australian society over the last generation.  These articles help us understand what has happened – and how to achieve a better distribution of income between factors of production in the future.

    Links to the 4 articles, and a rich introduction to the symposium (by Dr. Frances Flanagan of United Voice and Prof. Frank Stilwell of the University of Sydney) are provided below. Please visit the Journal of Australian Political Economy to learn more about the symposium, and to subscribe.

    • Introduction: Frances Flanagan and Frank Stilwell.
    • The Declining Labour Share in Australia: Definition, Measurement, and International Comparisons: Jim Stanford (Director, Centre for Future Work)
    • The Labour Share, Power and Financialisation: David Peetz (Professor of Employment Relations, Griffith University)
    • The Erosion of Minimum Wage Policy in Australia and Labour’s Shrinking Share of Total Income: Margaret McKenzie (Economist, Australian Council of Trade Unions)
    • The Declining Labour Share and the Return of Democratic Class Conflict in Australia: Shaun Wilson (Associate Professor Sociology, Macquarie University)



    Frances Flanagan & Frank Stilwell



    Jim Stanford



    David Peetz



    Margaret McKenzie



    Shaun Wilson

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  • June GDP Numbers Confirm Lopsided Economy

    Macroeconomics, Wages & Entitlements

    June GDP Numbers Confirm Lopsided Economy

    by Jim Stanford

    Author

    Jim Stanford

    This week the ABS released new GDP data, covering the June quarter, which confirm the continuing structural shift away labour toward capital in the distribution of income.

    We have prepared a short briefing note, contrasting the strong growth in corporate profits over the past year with the stagnation of labour incomes. 

    Workers simply do not have the bargaining power to demand and win wage increases that reflect steady productivity growth.  This reflects the erosion of the structures and regulations that once supported wages (including minimum wages, awards, and collective bargaining).  Those who advise workers to simply be patient, wage gains will come as a result of normal supply-and-demand forces, are ignoring this fundamental structural change in Australia’s economy.



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  • Labour Share of Australian GDP Hits All-Time Record Low

    Inequality, Macroeconomics, Wages & Entitlements

    Labour Share of Australian GDP Hits All-Time Record Low

    by Jim Stanford

    Author

    Jim Stanford

    Amidst increasing concerns among economists and budget forecasters about the historic stagnation of Australian wages, the latest GDP statistics from the Australian Bureau of Statistics have confirmed that the proportion of national economic output that is paid to workers has reached an all-time low.



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  • Economic Management by PM

    Macroeconomics

    Economic Management by PM

    by Jim Stanford

    Author

    Jim Stanford

    Selected media impact

    New report from the Centre for Future Work ranks Prime Ministerships by 10 key economic performance indicators.

    In this report Jim Stanford digs beneath vague claims about economic competence and friendliness to business, and considers more concrete indicators of economic progress. The paper asks: is there any correlation between the policy outlook of those respective governments, and in particular its “business credentials,” and Australia’s real economic progress?

    This paper identifies a dozen standard indicators of economic performance: covering work, production, incomes, and debt. Consistent historical data is gathered for the twelve indicators, going back to the 1950s. Then the actual historical record is compared between the various postwar Prime Ministers (any who served in office for at least a full year). This analysis should assist voters to consider more concretely what the economy actually means to them, and evaluate the economic promises of competing parties accordingly.



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