Massive wastage of labour in the European Union

I have been updating my databases in the last few days and getting up to speed on the latest trends. In the past, I developed a set of broad labour market indicators for Australia with colleagues at the – Centre of Full Employment and Equity (CofFEE). Our quarterly measures of underemployment were precursors to the Australian Bureau of Statistics measures which are now published on a monthly basis. I was doing some calculations this morning using Eurostat data as part of some research I am doing to assess the inflationary potential that exists in various labour markets. As regular readers will know, my assessment of inflation risk starts in the labour market. Rarely do we encounter a situation where nominal spending outstrips the productive capacity of the economy (a demand-pull inflationary environment). That can occur is specific product segments but rarely overall. History tells us that there has to be some distributional struggle between labour and capital to drive an inflationary spiral. I am out there looking for any evidence of such a struggle. I am not having much success!

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Restricting population growth is good for local workers

In the aftermath of the 1991 recession, which was the worst economic downturn in Australia since the Great Depression of the 1930s, I wrote a series of articles that we published in academic journals. In part, they were theoretical pieces that conjectured about the impact of rapid population growth on the labour market, which at the time was characterised by persistently high unemployment and rising underemployment (the recession had replaced full-time with part-time work). My conjecture was that high rates of immigration at a time of slow employment growth would lock unemployed workers into long-term unemployment. Of course, I could not test that proposition because the government maintained the relatively high immigration levels and other factors might have been responsible for the rising long-term unemployment. Last week’s Australian Labour Force data showed that unemployment and the unemployment rate has fallen rather quickly in recent months as the economy recovers slowly from the pandemic recession. Historical comparisons show the unemployment response this time has been much larger than in the previous recessions. The other key point is that the working age population has grown at historically low rates as a result of the border closures. It seems that my conjectures in the early 1990s were correct, despite getting flack at the time from mainstream economists who were pushing the line that immigration is always good for the labour market.

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Australian labour market – stronger as working age population flattens out

Today (June 17, 2021), the Australian Bureau of Statistics put out the latest – Labour Force, Australia – for May 2021. The data shows that employment increased by 115,200 (which is strong), monthly hours worked increased by 1.4 per cent, unemployment fell by 53,000 (which is excellent), the unemployment rate fell 0.4 points to 5.1 per cent, the participation rate rose 0.3 points (good) and underemployment fell by 0.4 points to 7.4 per cent (excellent). It is hard not to see all these results in a positive light. More jobs are being created, more people are coming back into the labour force and fewer people are being underutilised relative to their desired work intentions. This reverses to some extent the backward step the labour market took last month. The labour market is still 237.1 thousand jobs of where it would have been if employment had continued to grow according to the average growth rate between 2015 and February 2020.

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US labour market recovery continues but still 7,629 thousand jobs short from February 2020

Last Friday (June 4, 2021), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – May 2021 – which showed that the recovery since the catastrophic labour market collapse in March and April 2020, continues after a moderate month in April 2021. Payroll employment rose by 559,000 in May 2021 after rising by only 266 thousand last month. The slight rise in unemployment last month gave way to a fall in the unemployment rate by 0.3 percentage points to 5.8 per cent. edged up slightly to 6.1 per cent. The broader labour wastage captured by the BLS U6 measure fell by 0.2 points to 10.2 per cent. The US labour market is still 7,629 thousand jobs short from where it was at the end of February 2020.

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Plenty left behind in a national economy that the Government claims is ‘roaring back’

Today, we have a guest blogger in the guise of Professor Scott Baum from Griffith University who has been one of my regular research colleagues over a long period of time. Today he is continuing his discussions around the uneven regional impacts of job losses since the start of the COVID-19 pandemic. So while I am tied up today it is over to Scott …

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Australian labour market goes backwards in April

Yesterday, the Australian Bureau of Statistics released the latest – Wage Price Index, Australia – for the March-quarter 2021, which showed that wages growth remains low in Australia. I will analyse that next week separately because there are some interesting policy principles involved. Today, the ABS put out the latest – Labour Force, Australia – for April 2021 and while unemployment fell by 0.3 points, this was all down to the decline in participation as employment plunged by 30,600. Unemployment rate would have been 70.3 thousand higher had not the participation rate fallen (that is the rise in hidden unemployment) and the unemployment rate would have been 6 per cent rather than the official 5.5 per cent. Monthly hours of work declined by 13 million hours (0.7 per cent). The design of fiscal stimulus packages requires a careful assessment of when it is right to taper them and/or withdraw them altogether. In this neoliberal era, governments who reluctantly provide stimulus during bad times, tend to withdraw the support too early. The current evidence suggests that is once again the case here. Further, uncertainty has now reached new heights as a result of the vaccination bungling by the federal government. Overall, the recovery is still too slow and more government support by way of large-scale job creation is needed.

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Australian labour market struggling with significant sectoral disparities

Tonight, the Federal Treasurer releases the annual ‘fiscal statement’ (aka ‘The Budget’) and we already know that the Government is now in a period of fiscal contraction despite all the big expenditure numbers being touted in the press. I will write more about that tomorrow. But it is now 6 weeks since the Government abandoned the JobKeeper wage subsidy program and today’s ABS release of the – Weekly Payroll Jobs and Wages in Australia, Week ending 24 April 2021 – might give us some guidance as to the impact of the fiscal withdrawal in terms of job loss. The problem though is that the period in question was also a school holiday period, which confounds things somewhat. Suffice to say that the labour market is definitely not booming. It has gone backwards since the end of March but how much of that is due to the withdrawal of the wage subsidy is difficult to say at this stage. Some sectors are still enduring major job losses with Accommodation and hospitality sector 10.3 points below its March 14, 2020 employment level. Manufacturing is still 2.1 points down, Transport, postal & warehousing is down 6.8 points, and Information media & telecommunications is down 6.7 points. The sectors that have gained the most employment are Electricity, gas, water & waste services (up 3.3 points), Financial & insurance services (up 7.7 per cent), Public Administration (up 10.4 per cent) and Health care & social assistance up 4.9 per cent. Anyway, I have been using my spare time to get up to speed on all the various data trends so I can better understand what tonight’s statement is likely to do.

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US labour market goes backwards with mixed signals – but significant slack remains

Last Friday (May 7, 2021), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – April 2021 – which showed that the recovery since the catastrophic labour market collapse in March and April 2020, has substantially slowed after signs in March that the revovery was accelerating. The change in payroll employment fell from 770 thousand in March 2021 to a miserly 266 thousand and unemployment edged up slightly to 6.1 per cent. The broader labour wastage captured by the BLS U6 measure fell by 0.4 points to 10.7 per cent. The US labour market is still 8,215 thousand jobs short from where it was at the end of February 2020 and the unemployment to job openings ratio also suggests significant slack remains.

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Australian labour market – recovery continues but storm clouds on the immediate horizon

The latest data from the Australian Bureau of Statistics – Labour Force, Australia, March 2021 – released today (April 15, 2021), shows that the Australian labour market continues to recover – and while the recovery had stalled a bit over the latter part of 2020, the March result builds on the strong February result. Employment increased by 0.5 per cent (70,700) in the month and unemployment fell by 27,100 to 778,100 persons. As a result the unemployment rate fell by 0.2 points to 5.6 per cent, even though participation rose by 0.2 points. Overall, a good outcome. The main uncertainty now is that the recovery to this point has been dependent on government fiscal support, which ended in March 2021. Given the labour market is still quite a margin from where it was in March 2020, the idea that the government would withdraw its fiscal support is not a compelling option. We will see the first results of the fiscal withdrawal in the next month’s data and I expect things to not look as rosy as they are this month. Further, undertainty has now entered the equation as a result of the vaccination bungling by the federal government. We will see how that plays out in the coming months. Overall, the recovery is still too slow and more government support by way of large-scale job creation is needed.

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US labour market – strong improvement but for how long?

Last Friday (April 2, 2021), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – March 2021 – which showed that the recovery since the catastrophic labour market collapse in March and April 2020, which had stalled in recent months, has got back on track as States open up their economies. Payroll employment growth was very strong and the unemployment rate fell by 0.2 points to 6 per cent. The broader labour wastage captured by the BLS U6 measure fell by 0.4 points to 10.7 per cent. Whether the vaccination process in train allows businesses to remain open is an unknown at present. Time will tell.

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