Craig Emerson was a tad misleading yesterday when discussing the performance of the labour market under the Rudd-Gillard government.
At a time when 11 million jobs were lost in North America and Europe, more than 400,000 were created in Australia.
Ongoing jobs growth since the global financial crisis, taking the total under Labor to 836,000, has translated into an average unemployment rate of less than 5.5 per cent. That’s well below its average of 6.8 per cent over the past 20 years and about two-thirds the rate of all OECD economies.
So I downloaded Labour Force statistics from the ABS (Table 2) and played around with the data. In all the analysis below I’m looking at seasonally adjusted data.
There has been an increase of some 814,000 “Employed – Total; Persons” between December 2007 and December 2012. That isn’t quite the 836,000 that Emerson claims, but let’s concede the point. About 800,000 more jobs now than when the Rudd-Gillard government came to office. Sounds good, right? Well not when you consider that the “Labour Force; Persons” has increased by some 988,000. That explains why the unemployment rate has increased under the Rudd-Gillard government. For all the talk about jobs being created and unemployment being low by OECD standards the fact remains that unemployment has increased since the Rudd-Gillard government came to power.
As we’ve discussed before, the current unemployment rate is not low by Australian policy standards. At the same time Emerson’s comparison of the current unemployment rate to the average over the past 20 years can be seen as somewhat misleading. The trend for most of that 20 year period was down. Even when those downward trends reversed they resumed quickly; but the latest upward spike has not been quickly reversed and unemployment is not falling.
What I do next is calculate the trend growth in “Employed – Total; Persons” (Jobssa) over the period October 2004 – November 2007 (the last term of the Howard government). I then extrapolate that trend growth over the period December 2007 – December 2012 (the Rudd-Gillard era). I then graph the two series.
Not a pretty sight.
It looks to be that there are four phases in the data – first the labour market stays on the Howard trend. Then the GFC causes the labour market to flatten out – that period looks to be about October 2008 – September 2009. Then labour market growth resumes for about a year and at October 2010 we have a bit of kink and growth continues but at a lower rate. So Emerson can’t blame the GFC for the current high rate of unemployment – policy choices and regime uncertainty have played a part too.
Having this government claim credit for low unemployment is a sick joke. Job creation has not kept up with growth in the labour force, the unemployment rate is higher now than when it came to office. The only excuse they have for increased unemployment is the GFC – a crisis that ended in 2009. At some point they will have to realise that their policies have resulted in thousands of Australians being unemployed.
Update: Grey points out in comments that I’d compared the last term of the Howard government to the two terms of the Rudd-Gillard government and the last two terms of the Howard government as I said, and as I had intended. So here is the graph showing the Howard trend calculated from October 2001 – November 2007.
Still not a pretty sight.