Turnbull and Morrison don't talk about unemployment. It's a deliberate but dodgy cop-out

Mon, 11 Sep 2017  |  

This article first appeared on The Guardian web site at this link: https://www.theguardian.com/commentisfree/2017/sep/11/turnbull-and-morrison-dont-talk-about-unemployment-its-a-deliberate-but-dodgy-cop-out?CMP=share_btn_tw 

-------------------------------------------------------------------------

Turnbull and Morrison don't talk about unemployment. It's a deliberate but dodgy cop-out

It is a sad state of affairs to realise that the current crop of Australian policymakers have effectively given up on reducing unemployment.

Treasury reckons that the lowest the unemployment rate can go without there being a wages and inflation breakout is around 5.25%. The Reserve Bank of Australia notes something similar, forecasting that even when the economy is growing strongly at an above-trend pace, the unemployment rate will hover between 5 and 6%.

The current unemployment rate is 5.6% or some 728,100 people – enough to fill the Melbourne Cricket Ground about seven times. Given the Treasury and RBA estimates, it looks like Australia will never see fewer than about 700,000 people unemployed.

And it seems to be a peculiarly Australian issue. In the US, the unemployment rate is 4.3%, in the UK it is 4.5%, in Japan it is 2.8%, while in Germany the unemployment rate is 3.9%. And none of these countries are experiencing a wage/inflation problem. Indeed, even with the very low unemployment rate in Japan, wages are actually falling.

In Australia, the unemployment rate is being skewed by a number of longer run structural factors.

The education and training system means that those who are unemployed do not have the requisite skills for the modern Australia economy. Rather than hiring unemployed Australians and thereby reducing the unemployment rate, firms are heavily reliant on imported skilled workers who arrive here via the Temporary Skill Shortage (the former 457) visa program.

In addition to the obvious social benefits of having a highly skilled population, maximising training and educational attainment should be an uncontroversial policy aim. Yet the government imposes cuts to trades training, is underfunding school education, ramping up university fees and forcing those who get a degree to pay for it more quickly.

Such policies will leave significant parts of the population short of skills.

It could be that treasury and the RBA are wrong and the Australian economy can sustain an unemployment rate at 4% or lower, if only the right policies were in place to allow the economy to grow more rapidly.

It is clear the government has also given up on reducing unemployment. Rarely, if ever, do prime minister Malcolm Turnbull or treasurer Scott Morrison talk of unemployment. They speak of “jobs” and “employment” and almost always discuss jobs “created” when looking at the labour market.
This is a deliberate but dodgy cop-out.

Look at these facts.

Since the September 2013 election, which the Coalition won convincingly, 701,100 jobs have been “created”. This appears to be an impressive result that means the government will get reasonably close to its promise to “create” 1 million jobs in five years.

But this is a statistical fraud and a misguided representation of labour market conditions.

While the number of people in employment in Australia has increased by 701,100 since the 2013 election, the number of people unemployed has also risen, by 38,900. The not-to-be-mentioned unemployment rate is effectively unchanged at 5.65% today compared with 5.67% at the time of the election.

These labour market trends of rising employment, rising unemployment and a steady unemployment rate have occurred because the working-age population has increased by around 1.1 million since September 2013. In other words, only about two-thirds of the people who have entered the Australian workforce have got a job.

In these circumstances, it is easy to see why the government’s focus is to talk about rising employment – largely a function of population growth – and not unemployment, which has been little changed for many years.

Unemployment in Australia can and should be below 5% with the right policies.

One only has to look at the wonderful example of Canberra and the Australian Capital Territory. Over the last 20 years, the unemployment rate in the ACT has been between 3 and 5% and has generally been around 3.5 to 4.5%. If Canberra can do it, so too can the rest of Australia.

It must be noted that the ACT workforce has the highest educational attainment of any state or territory. It also has the highest household incomes.

To make meaningful and permanent inroads into unemployment in Australia the economy must, as a minimum, register faster economic growth, the workforce must be well trained and educated, wages need to register steady and sustainable increases and be linked to productivity so that consumers can spend and further boost the economy.

It can and should be done.

comments powered by Disqus

THE LATEST FROM THE KOUK

Marriage equality – what’s God got to do with it

Sat, 23 Sep 2017

This article first appeared on the Yahoo7 website at this link: https://au.finance.yahoo.com/news/religious-marriages-slump-record-low-054148504.html 

 -------------------------------------------------------------

Marriage equality – what’s God got to do with it

The debate surrounding the survey on marriage equality is throwing up a range of issues that sit oddly with over 100 years of historical marriage patterns of heterosexual Australians.

Social media feeds, on line news, the radio, newspapers and television are heavy with people discussing the issue of marriage equality whose only real claim to be heard is their religious belief and their status within their church, synagogue, temple or other religious lobby group.

There are few, if any, declared atheists or marriage celebrants on these news and chat shows outlining their views on same sex marriage. This is despite there being more people of no religion than any other faith.

For some unknown reason, the overwhelming bias towards those with a religious affiliation promotes them to a point where they have a special status to pontificate as to whether people should vote yes or no to the marriage equality survey. Their views are getting a disproportionate coverage, including relative to how Australians are now choosing to get married.

For over 100 years, Australians getting married have been shying away from church based ceremonies and instead are opting for a marriage celebrant to allow them to legally tie the knot.

This alone should put the status of religious organisations and their spokespeople as authorities on the issue of marriage on very thin ice.

Penny-pinching on education leaves the nation lagging

Wed, 20 Sep 2017

This article first appeared on The Crikey web site at this link: https://www.crikey.com.au/2017/09/20/koukoulas-penny-pinching-on-education-leaves-the-nation-lagging/

----------------------------------------------------------- 

Penny-pinching on education leaves the nation lagging

Educational attainment is a proven path to higher incomes, not only for the individual concerned, but also for the nation as a whole.

The latest research from the Organisation for Economic Co-operation and Development, Education at a Glance 2017, shows that in each of the 38 countries in the survey, adults with below upper secondary education were paid an average 25% less than someone with upper secondary education. There was an even more extreme difference with a 56% average pay advantage for those attaining a tertiary education against upper secondary schooling.

Put together, this means that someone with a tertiary education will, on average, get roughly double the income of those with below upper secondary education.

The public policy implications of these findings should be obvious.

The first step should be to ensure that all children get fundamental reading, writing and arithmetic skills, without which completion of upper second education is impossible, let alone the step to tertiary education.
Targeted, sufficient and productive public investment in human capital (education) via skilled teachers and high level, up to date resources for students are a bare minimum. Any shortfall in this infrastructure to provide a good start to education will show up in a short fall in educational attainment in later life with negative implications for the economy.