James J. Morrison W.G. Dupree

Jobs and Growth – Part Two

As already outlined in part one of examining the mantra of the Coalition’s claim to be creating “jobs and growth”,  jobs in the economy are in inadequate supply. Indeed when you consider the vast numbers of under and unemployed on record, as well as the numbers of foreigners eligible to look for and consume jobs in the market, jobs are relatively non-existent. But if there is potential for economic growth in the Australian market, albeit little hope for millions of Australians to find suitable work in the short term, then perhaps there is hope for the long term holds. Perhaps, given enough time, the Coalition – who want you to believe they pride themselves on being “THE economic managers” – can pull a “rabbit out of the hat” and grow the economy to generate more job vacancies for the unemployed to fill than the rate of expansion of the workforce. For now, they are struggling to do this.

Growth?

So, with the Coalition supposedly focusing on “Jobs and Growth”, exactly what infrastructure is the government committing to, to creating growth in our economy? There is a big focus to one of the large contributors to the LNP, of the Mining Industry. Mining reaps the benefit by our largess in revoking emissions trading and mining taxes and billions in subsidisation of fuel, exploration costs, grants and cheap loans. All of which results in profit margins well in excess than these subsidies, most of which goes overseas, as mining is 83% foreign owned. Despite the big sell of the benefits of mining by the government – which the public largely buys – the reality is quite different. Mining investments are a diminishing industry with declining jobs – now down to 2% and a negligible contribution to GDP. In fact nothing at all in the Dec 2014 quarter. As jobs were disappeared from mining, the expected pickup in Construction did not occur and had in fact begun failing us as well – as it fell 3.6% in the last December Quarter with every expectation of it continuing to weaken. Any new mines – despite exaggerated claims to the contrary by the coalition about the Adani Mine – will take up tiny numbers of our unemployed as Rod Campbell demonstrates in “The Australian”. So no growth in these industries, unless you are talking about increasing workplace deaths in which case the reintroduction of the ABCC in construction is useful. The previous regime of the ABCC saw dramatic rises in construction industry deaths under the Howard Government because of a lack of the union’s ability to enforce safety standards.  There was a rapid drop off of deaths once it was abolished. This would be a small boon for employment as more workers die quickly then vacancies in the construction industry will arise more often. The uptake of the unemployed into construction will help reduce unemployment’s numbers. So while mining and construction are not growing, and is shedding employee numbers, the rollover of employees through the implementation of ABCC style legislation may be of benefit to the unemployed – should they survive the experience. It certainly has no powers to combat corruption so there must be other reasons for its existence. The government’s desire to expand this style of legislation into other industries such as the Registered Organisations Bill, would potentially expand businesses capacity to roll through the unemployed as they “dropped” off, while not necessarily contributing to the real growth of the businesses in question or addressing any union corruption issues.

Exploring other industries, we might note the government have undercut our manufacturing sector as car manufacturers will bleed 200,000 jobs and as much as $29 billion in lost economic output. The steelmaking company Arrium, which employs one in ten people in the South Australian town of Whyalla, just went into administration in April this year (2016). SPC fruit canning industry only needed a tiny fraction of the money we hand out to mining to protect the industry and jobs.  The Manufacturing Worker’s Union had no success at convincing Abbott to adopt a less hard-line approach to our canneries.

RET and renewable energy changes from both Abbott and Turnbull have devastated a growing industry that had a vibrant future. This is evidenced by the progress established in multiple European countries who despite many having less sunshine & wind access than Australia, are contributing significantly to their energy needs and in Norway’s example exceeding their energy requirements from renewables.

The change from public transport initiatives to road building means people are more dependent on vehicles at a greater cost to the consumer and the environment. (Perhaps Joe Hockey will be right after all, and poor people won’t be able to afford cars) Other OECD countries have developed public transport that keeps travel costs low by the clever development of properties around the transport hubs (school, hospitals, shopping centres, etc.transport). The lack of investment in public housing in city CBDs means that disenfranchised people are more remote than ever from employment opportunities, health and education services. So no growth in transport or city building infrastructure except for the most etransportation options for the public.

Health follows wealth and employment follows education, so the inadequate or lack of infrastructure development in these areas will equate to the failure to invest in human capital. This represents appalling short-sightedness at a time when China’s tertiary sector, Singapore, South Korea and Japan (and in time, Indonesia) are making dramatic consolidations around trade and education. They are gearing their workforce up to be able to participate effectively in 21st-century technology economies while Australia’s professional full-time occupations are declining according to the Graduate Careers Survey from the CGA.  As degree qualifications become more expensive, the long-term outlook is not optimistic. Integral to this is that Australia is creating an NBN system that has us ranked down from 30th in the world to 60th in internet speeds. The educational advantages of online learning specifically for a country like Australia where distance education is a pertinent need is undercut by our pathetic internet offerings. Cutting the Gonski funding for our children reduces the future level of education for our nation. It’s simply short-sighted. From education to health, the prognosis is also heart stopping. Given the reduction in funding by removing previous indexing arrangements for hospital funding to “save” $80 Billion, the Government’s commitment to health in the midst of a population with an increasing proportion of aged care needs is counter-productive. If you want your population’s retirement age to be delayed as Howard, Abbott and Hockey suggested, then you need to cater for rising health costs, not diminish them. So no growth in health and education.

Under the coalition, Australia has dismantled active market labour programs creating the ineffective “work for the dole” scheme, where people are forced to paint community halls and rake garden paths. This semi skilled meaningless busy work is not dissimilar to the enforced programs that you see in North Korea. It is, after all, a means by which people are forcibly employed at below minimum wage rates with penalties extracted for failures to comply. Perhaps a North Korean labour camp is not that big of a jump, conceptually?  Neither scheme in Australia or North Korea results in fulfilling full-time work.

Tourism and Agriculture although are key growth areas for Australia. Given there are 267,000 tourism businesses in Australia 95% of which are micro businesses which outside of the casino industry and hotel and hospitality association are not broad enough to afford to donate to the Liberal Party to attract favourable considerations. Given Mining can do so; it is no surprise that it is given priority over tourism and agriculture. As the Australian Institute has pointed out: “The expansion of mining causes a contraction in non-mining industries, particularly manufacturing, tourism, agriculture and education. This results in business closures and job losses”. Recent government decisions in regards tailings dumping on the Great Barrier Reef and the Shenhua mine’s resumption of farming land in NSW bear these assumptions credit. Support for these industries by the government is certainly not a priority.

Given the history of ongoing falls in consumer and business confidence, apart from a temporary boost at the change of Coalition leadership, there has been too little evidence of worthwhile growth in Australia. In fact, if it were not for the way we account for defence spending, by only accounting for all previous payments as one lump sum presumed to be paid in total on the final instalment for an “item”, Australia’s economic outlook would be dire. Change the accounting convention to recognise the defence payments when they were made, and Australia would be officially in recession.

Unemployment is an pernicious problem not being dealt with by a government that is busy dismissing public servants and growth industries and their support mechanisms (Renewable Energy projects) and undermining manufacturing in this country and reducing funding for numerous Not-for-Profits (i.e ABC, SBS, CSIRO, the Climate Commission and dozens of expert advisory bodies). All of these resulting in massive retrenchments, increasing the stress levels of employees in these and related industries leading to the aforementioned reduction in economic growth that this country is experiencing.

So, given the coalition’s reluctance to tax the wealthy or large businesses which contribute significantly to the Liberal Party but next to nothing in taxes to the Australian people’s health, wealth, infrastructure and even employment, where will we find the revenue to support Australians? The continued reluctance to pull back the massive welfare subsidisation of such companies which contribute so little to our GDP – such as mining & construction, is deeply inegalitarian when one considers how little welfare we supply to Australians who have real financial needs.  The service sector contributes 68.7% of our GDP, but where the government’s policies do either so little for or are inhibiting the non-finance segments of it, from what do we then build national revenue? An economy where it is no longer possible to raise sufficient revenue from income tax because people don’t have jobs, explains the coalitions desperate bids to reduce services to the community. “JOBS AND GROWTH” have been the mantra of the Government for the last three years, worryingly resulting in such a poor performance that we risk further economic collapse. And, in the next financial year, we may not have fully paid off the next defence purchase in time to hide the reality, that Australia, will be in a recession.

The capacity for people to be cruel and disparaging, born of opinionated judgements of self-righteousness is one of the qualities at which human beings excel. Whether it’s our attitude to foreign refugees or racial discrimination among our indigenous people, if there is a “them” to our “us”, we are determinedly resistant to human unity.  None is more apparent that that of the economic divide between the “haves” and the “have nots”. The social pariah (the unemployed, the disabled, the un-superannuated elderly and just poor) is the drain on society that our government would happily have removed from any significant social benefit.

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The 2014 Budget’s proposal to eliminate six months of unemployment benefits, amongst other cuts, was the carefully considered resolution to our “economic debt crisis”. The response from the public, alternative media, professional agencies and senate surprised them.  These were the unemployed, the dole bludgers, the welfare cheats, and later on, the double dippers, who were the malignant sore on the face of a civil society that needed to be lanced. So it was a mystery to the conservatives that anyone existed who wished to preserve or subsidise this lowly contingent of “un-people”, especially, when mining companies were clamouring for continued subsidies. (See Part 2 for further commentary on this.)

Punishment of Jobless

Unemployment under the coalition accelerated and coasted around 6% of the Australian workforce according to the ABS and MSM. The Liberal party claimed to be creating jobs while these bludgers were just not taking them up. These recalcitrants apparently wouldn’t attend appointments with the selfless private enterprise employment agencies who do every thing in their power to find them jobs. So Malcolm Turnbull devised an appropriate punishment for these malingering jobless. On the spot fines for failure to comply with the directions of these agencies, in relations to appointments, behaviour or training. Of course, should appeals lodged against these fines find them unjustly applied, then the job seeker will eventually be reimbursed after four months. This new disciplinary power rewards employment agencies for their “exemplary services” in spite of these “malingerers”. These are the same agencies depicted by the “Four Corners” expose “The Job Game” in February last year. The federal government presumably thought, after recovering $41M worth of false claims by these agencies following that report, that these were the most trustworthy organisations to enforce penalties on the unemployed. Perhaps, dear reader, you are beginning to suspect that there is something that is not quite kosher with the attitudes indicated above.

First off, let’s examine the veracity of the claim that 6% is our unemployment rate. Not only have the ABS stats have been rubbished by a former head of ABS who said they are “not worth the paper they are written on“, but also they have been criticised by Steve Keen a writer for Murdock’s “The Australian” paper. He doesn’t hold to the validity of the ABS statistics on “unemployment”. Steve noted that: “The ABS uses the internationally sanctioned definition of unemployment, which is similar to Tom Waits’ definition of being drunk: you have to be really, really out of it to qualify. Not only must you not be in employment, but you can’t have done even one hour of paid or unpaid in the four weeks before the survey. Nor can you be discouraged by the absence of available jobs either – you must have applied for something in the previous four weeks – and you must be available to start immediately.” The truth is, as Steve continues that the Roy Morgan’s statistics measure real unemployment in Australia – not the ABS.

If not ABS then…

So what does Roy Morgan tell us? As of Feb 2016, of the 13,174,000 people in the workforce, 1,319,000 are unemployed, and 2,480,000 Australians are unemployed or underemployed. This is 18.8% of the workforce. Participation in the workforce had risen steadily from the 12,467,000 when Abbott was elected. A reflection of numerous factors including a population growth of 1.75%, and a net migration growth of over 1%. (These add approximately 400K and 200K per year to the population respectively). Other factors include the growing propensity for later retirement. Each time the share market drops, diminished returns for superannuation funds which directly impact the capacity for those profits to fund people’s retirement capacity results in an increasing tendency to remain in the workforce beyond retirement age. Add the rising numbers of women entering the workforce. Add the single parents and the disabled; beings reassigned to “Newstart” and expected to “look” for work despite their apparent disenfranchisement. Let’s not forget, also, each year Australia has around 300K school leavers many of whom become new entrants into the workforce. Every year HSC and university graduates eventually enter the labour force via traineeships, apprenticeships, a job or the unemployment line.

Thwarting all their efforts to be employed is the pitifully small numbers of job vacancies within Australia. ANZ bank’s survey of newspaper and Internet ads for February noted a 1.2% decrease to 154,748.  The Department of Employment’s Internet Vacancy Index (IVI) observed a decline of 4000 jobs to 163,000 in February.  The Index does not include the declining number of newspaper ads or limited copy ads employers may put on shop windows or their websites. The ABC reported in January that “…newspaper ads rose 0.4 per cent last month, but now make up less than 5 per cent of employment advertising…”. Let’s be as generous as possible to our government in assessing the number of jobs the Australian market has – therefore ignoring ANZ Bank’s smaller estimate – and add around 5% to the government’s Vacancy Index. That makes a generous estimate of 171,000 vacancies available to 1.3 Million unemployed (or nearly 2.48M if you add the underemployed). The opinion of the Employment Minister Michaelia Cash is that there are jobs for Australians to find?

Beyond Numbers

Numbers, of course, never tell the whole story as one need also consider issues such as locality & accessibility limitations, skill & education levels, competition, financial limits, literacy, and the arbitrary selection processes and criteria of employers. Let me give you an example of locality issues. NSW and Victoria supply 64% of all Australian job vacancies. You certainly don’t want to be looking for employment in Tasmania; the Northern Territory, ACT or South Australia whose combined percentage of vacancies do not exceed 9% for the Australian market. Skills and education levels in Australia are eroded by the fall off of trade apprenticeships, and the growing expenses inherent in TAFE qualifications and university costs. Need I expand further with all the rest?

Other factors for which I have not made adjustments, are the issues around foreign workers with rights to work in Australia. In May of 2015, the SHM reported that there were 167,000 457 visa workers and, that the 1.2 million foreigners who have work rights include 160,000 with working holiday visas or more than 623,000 New Zealand special visa holders. Now to be fair to the government, the number of 457 visa holders has recently dropped to just over 100K, although that is officially only the number of direct visa holders and does not include accompanying families. It is not that all these foreigners are competing for the jobs available to Australians but that they can, and of course, many do. Companies claim to bring in foreigners on 457 Visas because of the absence of appropriate skills in this country. What does that, therefore, say about the level of education we provide or our commitment to education? (more in part 2)

Non-Australian participants

Even for the ABS stats, for what ought to be reclassified as the “absolutely, desperately, undeniably unemployed”, there are five people for every vacancy. For the more realistic Roy Morgan numbers of merely unemployed, there is an 8:1 ratio. Add in the underemployed, and the ration becomes 14:1. Add in the 1.2M foreigners with work rights and your competition for work becomes a ratio of 21:1. Given the requirement for the 1.3M to write 20 applications a month to – to at the most – 171Kvacancies, statistically, the average employer might receive 154 letters a month. These numbers, would, of course, vary due to local accessibility, skill/education required, etc. and be dependant on a given vacancies attractiveness to foreign workers, including 457 visa workers, or underemployed and employed “drifters” (fully employed people who would like to change jobs).

Poverty

Should the unemployed suffer difficulties inherent in limited access to appropriate finance, transport, training, education, online facilities, social connectivity, digital literacy, access to health services, housing, clothing, live in the wrong State or city and have to busy “working” for the dole or be occupied be irrelevant training and paperwork from your employment agent; then they can kiss any job prospects goodbye! Worth noting is that unemployment “wages” are $391 below the international poverty line. On top of that, the mainstream media goes out of their way to find someone, anyone in fact, who looks as though he/she is not actively searching for work, and labels them as “dole bludgers” on the front page of a Murdock press paper or a current affairs program. This effectively extends that label – with no justification – to nearly a fifth of Australia’s workforce. That 18.8% of the workforce constitutes a workforce that probably lives below or close to the poverty line, which has some correlation to ACOSS’s claim that over 2.5M Australians live in poverty. Following an attack by the media, or being treated disparagingly and/or having been fined by the very people who are supposed to assisting them find jobs – that actually are statistically irrelevant – and having to “work for the dole” to receive a “pay rate” far below minimum wages, what would you believe is their level of psychological resilience?

Telling someone “get a job” as though it was simple, expresses an opinion (a dismissal of reality in actuality). It reflects ignorance of the real facts evident in the real factually non-opinionated numbers of jobs available and the vastly larger numbers of people competing for them and the real (not imagined or opinionated) sociological issues associated with being unemployed.

Job creation?

So are the Liberal party policies facilitating jobs creation in Australia? Alan Austin questioned the media and Coalition’s take on unemployment in February referencing Scott Morrison’s claim that Australia had generated more than 300,000 jobs since the coalition was elected. Alan focused on ABS figures pointing out numerous flaws in the coalitions numbers. What, though, are the numbers from Roy Morgan’s perspective? It would appear 300K jobs generated, grows to 685K jobs since September 2013. Looking so much better than you would have to wonder why the Government only uses ABS’s figures until you look at the larger realistic unemployment numbers.

Workforce Numbers, jobs and Vacancies

It is, however, the Department of Employment’s vacancy index that has shown relatively slow marginal growth in job vacancies of only 23.6K over the full LNP term of office.  [IVI Sept 2013 vacancies: 139K and Feb 2016: 163K]  Keep in mind that NET unemployment only (RM figures), has increased by 22K and net participation has grown by 707K during the coalition occupation.  [Roy Morgan Sept 2013 unemployed: 1297K to Feb 2016: 1319K and RM Sept workforce: 12467K to Feb 2016: 13174K].  With such a small rise in vacancies, it becomes concerning that no matter which statistics, either ABS’s or Roy Morgans job growth are used, it is evident that it is only just keeping ahead of the increase in workforce participation.  The net change of growth of employment (vacancies plus occupied jobs) 709.9K with the total workforce change 707K (highlighted in yellow in the spreadsheet) suggest the market is only just keeping its head above the rising water of workforce population growth by 2,900 jobs in three years. Statistics – is a game that has margins of error – if you were to use ANZ’s vacancy numbers, then we would be drowning by 14,000 jobs.  Either way, you look at it, if Australia fails to maintain a better margin in the growth of jobs, then the workforce participation growth would overtake jobs; and unemployment will skyrocket.  As a country, we had better hope there are no significant job losses on the horizon like, oh … a major loss of manufacturing jobs for example.  At best, this country is just “treading water” in a desperate “dog paddle” to stay afloat, and at worst, they are peering over a chasm into a very deep valley and an economy about to collapse into recession.