EVI update

In March 2008, we released the CofFEE/URP Employment Vulnerability Index (EVI), which provides a risk assessment by suburb of job loss in event of a serious downturn. It was based on an economic model that captured the major risk factors that would predicate job loss at a local spatial scale. Some data is now coming in that provides the capacity to assess the accuracy of our framework.

In the Melbourne Age today, Ben Schneiders wrote that Jobless claims rise 50% in south-east, referring to the fact that “MELBOURNE’S south-east has been hit with increases of nearly 50 per cent in those claiming unemployment payments”.

I spoke with Ben two days ago about the data release and what it meant. His story today contains the following text:

University of Newcastle Professor Bill Mitchell said the big jump was likely due to Victoria’s weak manufacturing sector, where about one in eight jobs have vanished in the past year. Manufacturing remains Victoria’s largest employer and many of the sector’s jobs are in the south-east.

Professor Mitchell, a labour market economist, said the pattern of unemployment in Victoria was being replicated elsewhere, with Australia’s mortgage-belt regions being vulnerable to rapidly increasing unemployment.

An economic model developed by the Centre of Full Employment and Equity at Newcastle University had expected the retail sector and part-time work also to be badly affected by the downturn. But Professor Mitchell said the Federal Government’s stimulus program had helped maintain jobs in those areas.

But it has had ”very little impact on manufacturing”, resulting in what Professor Mitchell described as a ”male recession” while female employment had held up better.

Professor Mitchell believes newer mortgage-belt suburbs, such as Pakenham and Narre Warren, are likely to emerge as areas of disadvantage due to the mix of rising unemployment, high levels of indebtedness and blue-collar workers.

The economic model he referred to was the model that produced our CofFEE/URP Employment Vulnerability Index (EVI). I have written a blog about it – The CofFEE/URP Employment Vulnerability Index – with updates.

At present DEEWR have delayed the release of the Small area labour market data which will allow us to check how accurate our risk assessment framework actually is.

The only data that is available is the Labour Market and Related Payments Monthly Profile, which “presents statistical information for the various types of labour market payments delivered by Centrelink on behalf of the Department of Education, Employment and Workplace Relations (DEEWR)”. The data covers Newstart Allowance and Youth Allowance by Centrelink office.

The analysis of this data so far suggests that our framework is standing up to scrutiny well. The interesting deviations are in my view traceable to the impacts of the fiscal stimulus packages. The risk assessment forecasts were based on a no intervention assumption.

I will write at length about this once we have done more analysis and after the small area labour market data is released by DEEWR (it was due early June but delayed until end of July and still hasn’t see the light of day).

This Post Has 2 Comments

  1. Dear Sean

    I did see the first but not the second of the articles. Thanks. Maps … always interesting.

    best wishes

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