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Posted: September 07, 2006 Employment growth too low! Today's ABS Labour Force data for the month of August has been hailed by the Government as a vindication of their decision to introduce WorkChoices, the largest deregulation of the wages system to date which virtually has undid the gains made by workers since the famous 1907 Harvester decision. That decision enshrined the notion of a fair wage which underpinned nearly a century of wage outcomes designed to protect the weakest of the workforce. The LFS seasonally-adjusted employment rose by around 23,000. As more workers entered the labour force looking for work, a strong economy would be able to absorb them easily and prevent the total pool of unemployment from expanding. A strong economy would be continually reducing that pool of unemployment until we reached true full employment (currently consistent with an unemployment rate of around 2 per cent). Well not the Australian economy - employment growth in August was too weak to absorb the new willing workers and as a consequence unemployment rose and the unemployment rate rose to 4.9 per cent. So if we apply the rough rule of thumb and double that to accommodate underemployment and hidden unemployment then we are once again approaching double-digit levels of labour wastage in this country. Hardly a strong economy which deserves praise. This is what the Employment Minister Kevin Andrews said:
This is more great news for Australian workers ... The figures show that seasonally-adjusted, employment increased strongly in August by 23,400 people but what's most significant in that is that full-time employment in that period increased by 22,600 ... He then went on to draw the longest bow you can imagine that the WorkChoices legislation had created more than 100,000 extra jobs in its first few months.
It once again puts paid to this argument from the union movement that the introduction of WorkChoices would, to use the expression of one union leader in Australia, be a green light for slashing jobs ... That has totally been proven wrong.While thinking about this I also was reminded of yesterday's National Accounts data which I blogged about yesterday. What I did not say yesterday and it came after some closer examination is that productivity growth in Australia has collapsed in the last quarter. So perhaps these jobs that are being created are also taking us further along in the race to the bottom that will emerge as a result of the incentive structures embedded in WorkChoices. Australia is hardly looking like a high-wage, high-productivity growth economy. We are heavily indebted (household sector) and living of the extractive industries which after all is said and done leave holes in the ground when the activity is finished. Unless we invest that wealth in our people and get everyone who wants a job back into work then we will not enjoy the benefits of this growth, albeit muted. The other worrying trend I only marginally commented on yesterday was the continuing decline in the household saving ratio. Still negative! It cannot go on for long at this rate. Blog entry posted by bill |