September 23rd 2017

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Articles from this issue:

COVER STORY Labor's vision for a transgender world

EDITORIAL Liddell closure: acid test for Turnbull

EUTHANASIA We risk turning our doctors into death dealers

DOCUMENTARY Harvested Alive: killing Falung Gong in China

AGENDA FOR AUSTRALIA Distorted jobless stats defeat planning efforts

ENVIRONMENT Hurricane Harvey: don't let a good disaster go to waste

AFL GRAND FINAL Bob Santamaria predicted the sunset of Aussie Rules

HISTORY After 500 years, is sugar going sour?

IDEOLOGY OF TRANSGENDERISM Reshaping our identities and relationships

MUSIC The Sequence: it's elementary

CINEMA The Hitman's Bodyguard: 'Eighties' action with popcorn

BOOK REVIEW One of globalisation's dwindling band




SAME-SEX MARRIAGE For bullying, look left, look left, and then look left again

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Distorted jobless stats defeat planning efforts

by Jeremy Barth

News Weekly, September 23, 2017

The third Thursday of every month should be re-named “Full Employment Day”, complete with bells ringing (or champagne corks popping) at 11.30am, when the Australian Bureau of Statistics (ABS) releases the monthly unemployment statistics.

It is the day when smiling politicians, market experts and economists employed at the major banks address a credulous media about how Australia’s low unemployment rate, which has hovered around 5 or 6 per cent for three years, is proof of the continued strength of the Australian economy, which has not experienced a recession since 1991.

The problem is that the voting public is not buying it. The experts’ and journalists’ enthusiasm does not square with the same experts’ and journalists’ grim expressions and sotto voce when discussing the “battlers” who are “doing it tough”.

Neither does it square with the lived reality that most workers in the private sector have had minor, if any, wage rises over the last five years, while their costs of housing and living have skyrocketed.

While a situation of low unemployment should lead to rising wages, this has not been the case in recent years in Australia, where wage growth has been falling despite low unemployment. As David Uren pointed out in The Australian in June, the slow rate of wage growth would more usually reflect an economy with an unemployment rate of 8 or 9 per cent, not 5 or 6 per cent.

Uren’s estimate is consistent with that calculated by Roy Morgan Research, whose measurement of unemployment for April this year was 9.3 per cent. Furthermore, its unemployment calculation has not dipped below 8.5 per cent at any time in the last three years. Roy Morgan classifies someone as unemployed if he or she is looking for work, irrespective of when.

Economist Adam Creighton is more pessimistic, and calculated Australia’s true unemployment rate in April to be 15.6 per cent, more than double that of the ABS figure of 5.7 per cent for that month.

Creighton attributes the difference between his measurement and that of the ABS to the latter’s complex methodology, which he believes understates the real employment environment.

Meant to calculate the rate of people out of work who have been actively looking for employment in the four weeks leading up to the survey (and if they were available for work immediately), Creighton points out the ABS excludes anyone working for as little as one hour a week. This employment includes work that is free or in kind.

Furthermore, the ABS also excludes from the unemployment measure a large group of people who do not meet its strict definition mentioned above. These people, approximately 22 per cent of people not currently in the workforce, are not counted among the unemployed.

By combining the numbers of unemployed the ABS counts with those that they should, Creighton calculated the “real” unemployment rate in April to be 15.6 per cent, or 2.2 million people.

When the number of people who are under-employed (people in work but wanting more hours) are added, Creighton calculates the ‘real’ rate of unemployment + underemployment to be 23 per cent, or 3.3 million people. That is the equivalent of the entire Brisbane and Gold Coast population being either unemployed or under-employed.

Workers’ earnings are in decline

These calculations are even more alarming than those calculated by Roy Morgan, which has consistently calculated rates of unemployment plus underemployment in the mid to high teens or low 20s since 2005. Roy Morgan’s unemployment plus underemployment calculation in April 2017 was 18 per cent.

The Roy Morgan measurements, which span more than a decade, reflect a longer-term global trend of workers’ wages earning a declining share of the economy. Since 1970, Australian workers’ share of total national income has shrunk by almost 10 per cent (see Figure 1).

Figure 1.

With the exception of Russia – whose economy was recovering from the shock of its post-communist reconstruction – workers in all the major economies have seen their incomes decline as a share of their national economies.

Strikingly, even the biggest beneficiaries of the shift of labour from advanced to developing countries – China, India, Brazil and Mexico – have seen dramatic drops in their labour’s share of the national economy (see figure 2).

Figure 2.

This paints a bleak picture of the outcomes for workers of four decades of pro-competition, pro-free trade, and pro-globalisation policies, as well as the rapid rate of technological advancement.

These policies, and the unprecedented rate of technological advancement of the last five decades, facilitated the ability for manufacturing jobs to be easily moved from advanced countries to developing countries with low wages, or replaced by advanced robotics and software. They are now posing a threat to services work that could previously be done only by people.

Many of us are on the endangered species list

Oxford researchers Carl Frey and Michael Osborne looked into the types of jobs that are susceptible to replacement by technology. Their research has indicated that many of the “at risk” jobs are in the services sector, which employs 79 per cent of Australian workers.

Based on Frey and Osborne’s work, a team at investment bank Morgan Stanley composed a list of the jobs most likely to be replaced by technology.

They calculated that loan officers are likely to disappear almost entirely: the likelihood of their jobs being automated is judged to be 98 per cent.

Not far behind on the endangered jobs list are receptionists (96 per cent), paralegals and legal assistants (94 per cent), retail sales workers (92 per cent), taxi drivers (89 per cent), security guards (84 per cent), cooks (81 per cent), bartenders (77 per cent), and financial advisers (58 per cent).

Ironically, perhaps, even computer programmers have found their way on to the list: their jobs are rated at a 48 per cent chance of disappearing in the onslaught of automation.

With both services and manufacturing jobs now under threat from further international outsourcing or automation, it becomes imperative that Australia’s social, political and economic leadership develop a agenda designed to boost economic development and jobs growth within Australia.

However, such an agenda cannot be planned, executed, and have its successes or failures measured without accurate statistics for employment, unemployment and under-employment. To achieve this accuracy, it is imperative that:

  • The ABS modify its unemployment measures to include the fifth of Australians not in the labour force who want work, but who are not currently included in the ABS’ unemployment figures.
  • The ABS publish – and encourage media coverage of – a combined unemployment plus under-employment rate, in addition to the individual measures.

These recommendations will give Australians genuine clarity of the effectiveness of the policies promoted by Australia’s social, political and economic leadership, because if a governing elite cannot measure the effectiveness of its policies, no one will trust them to continue to govern.

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