The monthly wait for the Labour Force data is over and we now know that how all the confusing messages coming from various indicators in the last few weeks are playing out in the labour market. Today’s data suggests that the labour market is starting to now turn for the worse. While today’s 5.8 per cent headline unemployment rate was less than the prediction by most economists (5.9 per cent), employment growth has fallen 3 out of the last 4 months and the in last month this descent quickened. The broader rate of labour underutilisation (sum of unemployment plus underemployment) is now worse at a comparable point in the cycle than it was in 1991 or 1982. That is a sign that things are sick and the employment growth slowdown is a sign that the situation will become sicker.

Sometimes in public policy a poor decision is made. Other times you conclude a very bad decision has been made. Then there are times when you witness one of the worst decisions that could be made. Today’s Australian Fair Pay (Not) Commission decision falls into this latter category. It was a decision made by highly-paid officials in secure employment which will impacts disastrously on the lowest paid workers and their families. in the context of a demand-deficient (that is, spending failure) downturn, the FPC has denied the low-paid workers a pay rise. The decision consolidates the triple whammy attack against the poor which is the Government is largely turning a blind eye too while it swans around preaching social inclusion.

While all the green shooters out there are constantly searching for signs that things are improving the fact is they are typically focusing on financial variables. So they feel good that the share market is recovering a bit (for the time being). But I almost always focus on real variables and then more usually on the labour market. Employment is the connection that the vast majority of us have with the economy and the distribution system and the quality and quantity of employment is a crucial indicator of how well things are travelling. The latest data out today reinforces the data from last week and shows one thing and one thing only – the labour market is sick. It also points to the urgent need for a third stimulus package which unlike its predecessors should be “job laden”. If the Government fails to take responsibility in the coming weeks and funds direct job creation projects on a massive scale then the situation will worsen and we will be stuck with high rates of labour underutilisation for the next several years.