Trends in the Northern Ireland labour market – Part 1

The article in the Socialist Worker Review (No. 89, July/August 1986, pp. 19-21), by Eammon McCann – The protestant working class – has kept me thinking for some years. I recalled it the other day when I was updating my Northern Ireland labour market data and working on some text. As a result of reading this article many years ago, I became very interested in the labour market dynamics in Northern Ireland, in particular, as they impact on the debate about unification and EU membership (yes, I have always been anti-EU). In that vein, I have been following the trends over time rather closely. More recently, the central place of the North Ireland Protocol in the Brexit discussions has increased the relevance of this research. I also benefitted from some very interesting conversations a few years ago with my host in Galway (forever thankful Niall), while I was visiting the Republic of Ireland on a speaking trip. These conversations filled in many gaps in my understanding of some of nuances of the issues involved. These trends provide some good background to what has been happening in a region that is undergoing significant change and how we might assess the Northern Ireland Protocol in a post-Brexit world. It also helps us understand the demise of the DUP as a relevant political force. They represent a different era. From my understanding, it is also the major economic changes that have been taking place in Northern Ireland that are more likely to influence the trend away from identifying as either unionist or nationalist or proceeding along ‘religious’ lines. A working class impoverished by austerity is a powerful solidifying force. The labour market has changed dramatically over the last several decades. In this multi-part series, I provide some reflections on these issues. This is part of a book project I am working on (more about which later).

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The ideology of neoliberal ‘freedom’ ends up damaging all of us – NSW Covid outbreak

It has been a while since I updated my commentary on the new bi-weekly dataset using Australian Tax Office payroll data that the Australian Bureau of Statistics started publishing in March 2020, in order to provide more updated information on the state of the labour market during the pandemic. The Monthly Labour Force survey comes out in the third week of each month and relates to data collected around the second week of the previous month. With ongoing state government lockdowns being imposed with little warning having a significant impact on employment, this more frequent dataset was welcome. We are now in a situation where around 13 millions Australians are in tight lockdowns (over half the population), principally in Melbourne and Sydney. The latter, due to the incompetence of the conservative state government in NSW, has been in lockdown for weeks now and as the largest state, the reverberations are clearly going to be felt across the nation. Last week (August 5, 2021), the ABS released the – Weekly Payroll Jobs and Wages in Australia, Week ending 17 July 2021 – which provides the first glimpse of what the impact of the extended lockdown in Sydney (in particular) is having on the labour market. Employment in NSW shrunk by 5.1 per cent in the 3 weeks since June 26, 2021 (the start of the restrictions). Overall, employment has slumped by 2.4 per cent nationally. And the virus is spreading into regional NSW and things will get worse. The damage is being borne largely by our youth, given the occupation segregation in the ‘closed down’ sectors. The Federal government is demanding we all get vaccinated but due to its trying to ‘save money’ last year, there is insufficient vaccine available to supply the demand. Both the NSW and Federal governments have demonstrated their incompetence in the decisions they have taken in the name of ‘freedom’ and ‘fiscal surpluses’.

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The Weekend Quiz – July 31-August 1, 2021 – answers and discussion

Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

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Inflation rises in Australia – but transitory factors and natural disasters are the reason

Today, my on-going inflation watch turns to Australia, given the release today (July 28, 2021) of the latest – Consumer Price Index, Australia – for the June-quarter 2021. The data is consistent with what we are seeing across many nations as supply chains are disrupted by the pandemic. Energy prices are adjusting back upwards and because the base from which we are judging these quarterly rises was lower as a result of price suppression during the downturn, the recovery in the pre-pandemic price levels deliver larger than usual price increases (when the base is higher). In Australia’s case, a major recent flood and a long drought before that have also complicated matters by driving up food prices. All these impacts are transitory. The CPI rose by 0.8 per cent in the June-quarter 2021 and over the 12-months to June 2021 it rose 3.8 per cent. But the key to understanding the trends in the data is to appreciate that the less volatile series were still rising at rates below the RBAs inflation targetting range – the Trimmed Mean rose just 0.5 per cent and the Weighted Median rose 0.5 per cent. So nothing to see here. The most reliable measure of inflationary expectations are flat and below the RBA’s target policy range.

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The Weekend Quiz – July 24-25, 2021 – answers and discussion

Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

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The Weekend Quiz – July 3-4, 2021 – answers and discussion

Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

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Culture of austerity distorts business decision-making and we all lose

It is Wednesday and so a few snippets and some Afrobeat. Today, I briefly discuss a rather extraordinary claim by the Governor of the Reserve Bank of Australia that Australian employers refuse to pay higher wages in an environment where the federal government is biases aggregate policy towards surplus creation, even though that strategy was temporarily disabled during the first year of the pandemic. The overall austerity environment has distorted business decision-making to such an extent that firms are now obsessed with cost control and have forgotten that spending equals income and by encouraging a high wage, high productivity culture, their profits rise as well. Win-Win. At present it is lose-lose.

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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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Rising prices equal an inflation outbreak (apparently) but then the prices start falling again

In my daily data life, I check out movements in commodity prices just to see what is going on. As I wrote recently in my UK Guardian article (June 7, 2021) – Price rises should be short-lived – so let’s not resurrect inflation as a bogeyman – the inflation hysteria has really set in. I provided more detail in this blog post – Price rises should be short-lived – so let’s not resurrect inflation as a bogeyman (June 9, 2021). Yes, I stole the title of my article for the blog post if you are confused. The inflation hysteria really reflects the fact that mainstream economists are ‘lost at sea’ at present given the dissonance between the real world data and the errant predictions from their economic framework. They cannot really understand what is happening so when they see a graph rising it must be inflation and that soothes them because rising deficits and central bank bond purchases have to be inflationary according to their perverted theoretical logic. The financial market press then just repeats the nonsense with very little scrutiny. But given many graphs are falling again, this Pavlovian-type response behaviour must be really doing their heads in. I have no sympathy.

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The Weekend Quiz – June 12-13, 2021 – answers and discussion

Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

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The Weekend Quiz – June 5-6, 2021 – answers and discussion

Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

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The aftermath from my recent podcast on the Job Guarantee and UBI

Given I provided a detailed National Account analysis yesterday, I am using today as a blog lite day with just some snippets and then a musical offering – as per my usual Wednesday practice. I did an interview for Real Progressives last week and some of the social media reaction has been hysterical – claims that Modern Monetary Theory (MMT) has gone political and that MMT advocates abandoning the capitalist system and so on so forth. Some of this stuff is coming from self-identified ‘progressives’, which makes me wonder how much meaning term retains. In some cases, the attacks were really Trojan horses for the dislike of my Brexit stance or my attacks on the British Labour Party for pushing an unworkable and neo-liberal inspired fiscal credibility rule, which they had to change just before the election anyway because it was unworkable in its original form. So the resentment of those who hang onto the ‘European dream’ for the UK manifests as stupid, lying attacks on anything I say. Fine. More importantly, Switzerland is having a little ‘Brexit’ sort of move itesel, that has angered the European Union and is another chink in the now very depleted European ‘dream’. And if all that is a bit much, we can finish with some Jazz.

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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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Don’t say its over until its over – MMT is not close to dominating the narrative

Don’t say its over until its over. There has been progress in the macroeconomics narrative since the GFC, which accelerated during the pandemic. Governments have certainly expanded fiscal deficits and taken on more debt and the usual hysteria, which many of those same governments helped to ferment in the public debate, has fallen away. Obviously, for political reasons, a government that has previously been terrorising the population about the dangers of deficits and rising debt as a cover for ideologically-driven austerity programs, has no incentive in continuing those narratives while they have been dragged into maintaining capitalism on life support. The question has been whether these narratives will return once the health emergency starts to fade a little. There is clear evidence emerging that the lessons that the pandemic has taught us are not being absorbed by the economics commentariat, who dominate the public space with their opinions. Two clear examples of this came out this week (already) in the Australian press, which replicates the sort of commentary I am increasingly seeing around the globe. Deeply sad.

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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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MMT and Power – Part 1

I often read that Modern Monetary Theory (MMT) is defective because it has no theory of power relations. Some critics link this in their narrative to their claim that MMT also has no theory of inflation. They then proceed to attack concepts such as employment buffers, on the grounds, that MMT cannot propose a solution to inflation if it has no understanding of how power relations cause inflation. These criticisms don’t come from the conservative side of the policy debate but rather from the so-called Left, although I wonder just how ‘left’ some of the commentators who cast these aspersions actually are. The problem with these criticisms is that they have clearly adopted a partial approach to their understanding of what MMT is, presumably through not reading the literature widely enough, but also because of the way, some MMT proponents choose to represent our work. In this two part series, I propose to interrogate this issue and demonstrate that power and class is central to any contribution I have made to the development of the MMT literature. Part 1 sets the context and illustrates why some people might be confused.

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The IMF is all at sea, stuck in its ways, and sending conflicting signals

Last week, I wrote about how the IMF is presenting a somewhat nuanced view these days. See – IMF now claiming continued inequality risks opening a “social and political seismic crack” (April 21, 2021). But, there was a warning for those who might think this suggests the institution is leaving its mainstream macroeconomics past behind them though. Rather, I think what is going on is a series of ad hoc responses to the growing anomalies that the institution faces between the observed reality and the sort of predictions it has been making based on its core paradigmatic approach. We are observing a specific form of dissonance in many of the current contributions coming out of mainstream economics. This takes two forms: (a) an incomplete response to the current situation (pandemic, GFC aftermath, climate change) where there are conflicting signals being sent; and (b) a tortured attempt to absorb pragmatic narratives within a theoretical structure that cannot consistently accept that absorption. The IMF’s latest blog post (April 20, 2021) – A Future with High Public Debt: Low-for-Long Is Not Low Forever – is a good example of both forms of this dissonance.

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IMF now claiming continued inequality risks opening a “social and political seismic crack”

It is Wednesday and I have had lots of unscheduled commitments (that just come out of the blue) to attend to today. So not much writing. I did have time to read the latest IMF – Fiscal Monitor, April 2021 : A Fair Shot – which was published on April 7, 2021. The schizoid nature of this institution continues to evolve and it will be hard for the austerity mavens to unambiguously use it as a cover for their arguments when they resume their call for public sector spending cuts etc. Music follows.

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