IA #3 top story of 2016: The truth about jobs in Australia — that you won't read in the newspapers

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Don't believe the tripe...

Well before the term "post-truth" became fashionable, the Coalition was constructing a false narrative about its economic record, which Alan Austin has been expertly debunking in the pages of IA. 

The truth about jobs in Australia — that you won't read in the newspapers

Almost everything the mass media and the Coalition Government say about employment in Australia is wrong, writes Alan Austin. Here are the facts.

NEARLY EVERYTHING the mass media and the Coalition Government say about employment in Australia is false. As with virtually every other aspect of the economy.

For instance, Employment Minister Senator Michaelia Cash declared in a press release on Thursday:

'... the underlying trend of the Australian labour market continues to demonstrate encouraging resilience, despite facing international headwinds.'

She went on to say that

'.. seasonally adjusted employment stands at 298,300 higher than it was this time last year.'

Treasurer Scott Morrison told the National Press Club last Wednesday:

"Our labour market is strong, over 300,000 jobs created last year."

These assertions – and similar by Prime Minister Turnbull, Finance Minister Cormann and others – are designed to deceive. They either leave out vital data or are simply false. Australia’s mendacious mass media are perfectly happy to repeat them uncritically.

‘This time last year’

Cash compared figures released last week with January one year ago. Morrison boasted about "jobs created last year". They did not admit that the level one year ago was disastrously low — due to the damage inflicted on the economy over the preceding 16 months by the failed Abbott/Hockey regime.

Had they compared the numbers with those during the Labor administration – while Australia struggled with the worst global downturn in 80 years – Cash and Morrison would have had nothing whatsoever to brag about.

Last week’s jobless rate was 6.0%. Over the last full year of the Gillard/Rudd administration, it fluctuated between 5.2% and 5.6% [Table 1, column BN. All ABS data used here are seasonally adjusted.]

Problems with the ABS jobs count

The definition of a part-time job used by the Australian Bureau of Statistics (ABS) and equivalent bodies worldwide is

‘... one or more hours of work during the reference period.'

So, imagine this...

A company employs 100 part timers on 30 hours a week. That’s 3,000 hours paid work contributing to the economy. Suppose, then, in a restructure, those 100 are sacked and replaced by 200 part timers working ten hours a week. What happens to actual hours worked? Down from 3000 to 2000 hours per week.

But what happens to the ABS job numbers? Doubled!

This is part of what has happened over the last two years. How can we tell? The ABS reveals the number of working age people for each month. (Table 1, column DI) In another document, it shows the total number of hours worked each month (Table 19, column C). Hence, we can calculate hours worked per adult person in the population.

This shows a definite decline over the period of the Abbott/Turnbull Government.

In September 2013, after nearly six years of Labor’s economic management, 88.25 hours were worked per month per adult. By the end of 2014, after the first disastrous Coalition budget and other inept decisions, this had fallen to 86.67.

By January 2016, after a second bungled budget and a change of treasurer, it had fallen even further to 85.28 — the lowest level since July 2002.
The nadir during the Labor years was 87.26, at the depths of the global financial crisis in 2009.

This analysis is bolstered by the figures in another ABS document, which show that full time job numbers have increased over the full year to January 2016 by 1.96% (Table 1, column L), but part time jobs have grown by 3.94% (Table 1, column U).

The problems with just one month

The ABS has come under fire for problems with its methodology.

Job figures, according to a former ABS director, no less,

“... aren't worth the paper they're written on."

To ameliorate this problem, we should always look at averages over at least six months.

When we do this with the above comparisons, the hours worked per month for the last six months under Labor averaged 88.55. For the last six months of 2014, the average was 86.91. A dismal decline. For the last six months on record, up to January 2016, the average was down to 85.56. An appalling result. So when Cash, Morrison or Turnbull say they are creating employment, they are lying.

Australia missing out on the global recovery

Morrison told the Press Club last Wednesday:

"We are battling strong headwinds but the good news and the hope is that this country is battling those headwinds, I'd argue, better than any."

This is blatantly false. There are in fact strong global tailwinds. Australia is conspicuously failing to catch them.

In February 2013, Malcolm Turnbull bemoaned to a Kickstarter conference that Australia’s labour market had been “rendered by the Labor Government more rigid once more”. He was critical of Labor’s jobs performance and promised the Coalition would do better. At that time, Australia’s jobless rate was 5.4% [Table 1, column BN.]

But here’s the thing. Relative to the rest of the developed world at that time, 5.4% was pretty damned fantastic. Iceland was at 5.7%. Denmark and Chile were at 6.0%. Israel was at 6.5%. New Zealand was at 6.8%. The United Kingdom and the USA were at 7.8% and 7.9% respectively. [January 2013 tradingeconomics.com figures.]

The whole of the Organisation for Economic Cooperation and Development (OECD) – the club of 34 wealthy developed democracies comparable to Australia – averaged 9.34%. Australia’s 2013 level was impressive.

In the four years since, the global recovery has lifted nearly all boats. Hours worked per person have increased and the jobless rate decreased in all well-managed economies. But not in Australia.

Australia’s January jobless rate of 6.0% is now higher than all those countries listed. Iceland is now down to 2.3%. Denmark down to 4.5%. Israel is at 5.2%, New Zealand 5.3%, the USA 4.9% and the United Kingdom 5.1%. Chile is at 5.8%.

These countries are taking full advantage of low fuel costs, buoyant global trade, continuing strong demand from China and other booming economies, even if China has slowed slightly.

(We do not have all OECD job figures for December and January. The average for the 30 we do is down to 7.31%.)

Most well-managed countries are now reducing their government debt, cutting interest payments and building infrastructure for the future. Australia is going further into debt, sending more millions overseas every day in interest payments. Construction has ground almost to a halt.

Australians are clearly missing the global recovery. They are missing out on jobs and income. More seriously, they are missing out on accurate information on how badly they are now being governed.

You can follow Alan Austin on Twitter @AlanTheAmazing.

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