Commentary and analysis of labour force data releases.

“There is plenty of stimulus” – but I am struggling to see it

“The economy is not weak enough that there needs to be more fiscal stimulus … there’s plenty of stimulus from the Reserve bank with record low interest rates” (Source). That comment came from an Australian private sector investment bank economist. It is an extraordinary comment to make and still claim status as a professional economist. What is the measure of a weak economy? Rising unemployment and underemployment, now well above 15 per cent? Negative real net national disposable income for two consecutive quarters? Real GDP growth barely a 1/3 of it previous trend rate? Because that is the reality in Australia right now and it is getting worse. Further, the RBA has cut the short-term interest rate 14 times since October 2011 and has held the rate at 2.5 per cent (a record low) since September 2013. The unemployment rate has risen by 1.1 per cent since October 2011 and 0.5 per cent since September 2013. When will these clowns in the financial markets finally realise that monetary policy is an ineffective tool for increasing aggregate demand?

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Australia Labour Force – weak and no signs of improvement

Today’s release of the – Labour Force data – for October 2014 by the Australian Bureau of Statistics is the since it made extraordinary admissions about the breakdown of seasonally adjustment methodology, which had made the last three months’ data largely unbelievable. See below for comment on that. Today’s major revision shows that employment growth was modest in October after two consecutive months of negative growth. Unemployment edged up again this month although the unemployment rate remained stable (when rounded to one decimal place – it actually rose a little in unrounded terms). The participation rate edged up a little but remains well below recent peaks. Monthly hours of work rose but that was due to the fact that full-time employment growth dominated the overall tepid employment expansion. The teenage labour market deteriorated further and has been signalling a state of emergency for several years now – a crisis ignored by the policy makers.

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ABS revises labour force methodology – things are much worse than we thought

Yesterday, the Australian Bureau of Statistics released an extraordinary press notice – Statement from the Australian Statistician on the Labour Force estimates – which aimed to help everyone understand why the Labour Force data has been so weird lately. A lot of readers E-mail me seeking help understanding what seasonal adjustment is all about. It is a dry topic and not one I relish even though I have a background in statistics and econometrics. But given yesterday’s announcement and the disarray that people have sensed with the official labour force data in Australia recently, I thought I might try a non-technical explanation of what has been going on. Here goes! And for those who like attacks on austerity etc, underpinning this whole discussion is the mindlessness of neo-liberalism. That should get you reading!

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US labour market beset by massive job shortages

There was an interesting piece of analysis presented on the US Economic Policy Institute (EPI) site a few weeks ago – Labor Market Weakness Is Still not due to Workers Lacking the Right Skills – which showed the “the number of unemployed workers and the number of job openings by industry” as a means of evaluating the nature of the job cycle in the US. The conservatives, who want to build arguments against any fiscal activism, try to explain the massive and persistent unemployment in the US and elsewhere in terms of structural constraints including skill shortages and mismatches. The EPI analysis showed that “unemployed workers dramatically outnumber job openings across the board” and in the individual industries. The conclusion – “the main problem in the labor market is a broad-based lack of demand for workers”. I had been working on a similar story myself since the latest Job Openings and Labor Turnover Survey (JOLTS) data came out on October 7, 2014. Here is what I found, which is a little different to the EPI outcomes but similar and doesn’t alter the facts.

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Rising long-term unemployment a sign of policy failure

While the Australian government ramps up its war on terror rhetoric and sending our armed forces to Iraq again, thus providing a major political diversion from their virtually complete policy failure on the socio-economic front, the data keeps coming which highlights the failure of successive federal governments in this regard, the current regime included. The latest – Poverty in Australia report, published by the Australian Council of Social Service (ACOSS) – shows that poverty is rising in Australia with 13.9 per cent of all people living below the poverty line (17.7 per cent of children). The poverty rate has risen by 0.9 per cent since 2010.

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Australian labour market – deteriorating

Today’s release of the – Labour Force data – for September 2014 by the Australian Bureau of Statistics provides a major revision to the data set, which corrects for the extraordinary (and unbelievable) rise in part-time employment and the decline in unemployment that was published in the August release. For more explanation see below. Today’s more realistic results confirm what we have known for some time – the labour market continues to be in a weak state. Total employment fell by 29,700 this month and unemployment rose by 11,000. The rise in unemployment would have been worse had not the participation rate fell by 0.2 percentage points, which just means that hidden unemployment has risen. To complete the story, total hours worked fell by nearly 1 per cent. The revisions to the data confirm that claims last month that the economy was improving and the that the Government’s strategy (what strategy you may ask!) is working are false. The sudden jump in employment published last month was a statistical artifact and has vanished into the reality of the situation.

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Australia labour force data – now a million underemployed

Today’s release of the – Labour Force data – for August 2014 by the Australian Bureau of Statistics revealed an extraordinary rise in part-time employment and a decline in unemployment. The results are suspicious as the ABS themselves acknowledge. Despite the massive increase in part-time employment, total working hours barely rose and the upshot was the underemployment jumped sharply. There are now more than 1 million workers in Australia who are underemployment. The broad labour underutilisation rate jumped from 13.5 to 14.6 per cent. Teenagers gained some of the part-time employment growth but full-time employment slumped further. The Government will be claiming the employment reversal is a vindication of their economic policy – but we will have to see if the sudden jump is sustained or is a statistical artifact.

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Why we should close the ‘unemployment industry’

This morning I gave a Keynote presentation to the Jobs Australia conference in Melbourne, which is a gathering of people who work in what I call the extra industry – the ‘unemployment industry’ – which has sprung up in the neo-liberal period to manage the unemployment that the government has deliberately created as a result of its obsession with fiscal austerity (trying to run surpluses when increased and on-going deficits are required). I take no umbrage with individuals who work in the ‘industry’ but its productivity is close to zero (you cannot search for jobs that are not there) and they have become co-opted servants of the pernicious government policy regime. The facts are clear – we have erected a massive corporate sector funded by government to manage the fiscal failure. The problem is that all these job service providers are not just shunting inanimate widgets around into so-called training schemes etc but are dealing with very disadvantaged people, which the capitalist system is excluding from the opportunity to engage in paid and productive work. The ‘unemployment sector’ is the Government’s front-line attack dog on the victims of the policy failure.

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Australian labour force data – policy failure now stark

Today’s release of the – Labour Force data – for July 2014 by the Australian Bureau of Statistics shows a deteriorating situation. The Australian labour market is weakening. While the participation rate rose by 0.1 points, which pushed extra workers into the labour force,the negative employment growth was well below the underlying population growth and so unemployment would have risen without the participation rate rise. In fact, unemployment rose sharply in July to 6.4 per cent. This is a terrible outcome. There are now 789 thousand officially counted as unemployed. Overall, the labour market is scudding along a very flat path and unemployment continues to eke its way up. The teenage labour market also weakened and in my view represents a national emergency. Overall, the policy failure at the federal level is now stark.

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Information is dangerous for neo-liberals

On Friday, I reported that a senior psychologist working in the off-shore detention centres was alarmed at the growing mental health problems of children of refugee-seeking parents who are detained with their families in these hell-hole prisons that Federal Government has set up in PNG and elsewhere. I noted the doctor had admitted to a National Inquiry that he was told by the Department of Immigration to take out some of the damaging research evidence covering the incidence of mental illness in the off-shore refugee prisons. Here is a followup of how systematic the government is in using its power to repress the release of information that might alter the public perception of its competence and desirability.

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