Wayne Swan made this claim just this morning:
WE have an unemployment rate with a “five” in front of it, less than half of what it is in Europe at 12 per cent
That appears to be a fantastic achievement. Yet it ignores a fundamental issue. Last week Judith wrote about the current debt situation.
But in his open letter – “join the thousands of people taking a stand against misinformation” – [The Kouk] does fail to mention one important fact. When the Labor government came to office in 2007, there was no debt at all. Rather, government net debt was minus $45 billion, which was nearly 4 per cent of GDP.
Well, Swan neglects to tell us that the unemployment rate was like when the Labor government came to office in 2007. Those days it had a “four” in front of it.
But again, the Labor government has an excuse – the GFC. As Gillard is wont to tell people, anyone who criticises the government on economic grounds is denying the GFC. Well, yes. Pity the facts don’t support that view. The latest ABS data on unemployment came out today and so I decided to graph the seasonally adjusted unemployment rate since March 1996.
So the unemployment rate is nearly back to what it was at the height of the GFC. That must be a bit of a problem. A story about unemployment formed the basis for the stimulus packages at the time. Here is David Gruen explaining:
It is worth providing a brief summary of some of the benefits of avoiding a recession that would not be relevant if a recession was instead simply an equilibrium market outcome.
The first, and most obvious, benefit is that involuntary unemployment is lower than it would otherwise be. Among other things, lower involuntary unemployment implies less long-term unemployment and hence less skill atrophy and less general disaffection with society on the part of the long-term unemployed.
So the logic is to avoid a recession as any cost. Fine, that is one way to look at things. So how does the government explain that the number of unemployed individuals is now higher than it was at the height of the GFC?
Sure the number of individuals in the labour market is bigger now than it was just two or three years ago, but the unemployment rate is nearly at the GFC high.