Saturday’s Australian contained two important articles from David Uren and Adam Creighton (Kevin Rudd Revives Failed Productivity Pledge) and Judith Sloan (Job Creation No Government Miracle).
These pieces address the message the HRN Society is trying to get across, namely, how under the present government productivity and employment growth has been lower than under the previous government even though the economy has been growing at or around trend. In particular, the Sloan article draws attention not only to these points but to the fact that the work force (those who are officially employed or unemployed) has been growing slower than the proportion of those of working age (15-64). This means that people (particularly low skilled) have been dropping out of the work force altogether – too hard to get a job so let’s retire or live on welfare.
Current productivity levels in Australia are below where they were when Kevin Rudd first took office.
KEVIN Rudd’s six-year-old productivity agenda, revived since his return to the Labor leadership last month, has delivered little for the nation, with productivity below the levels when he first took office.
Productivity Commission figures show that while productivity growth averaged 2.5 per cent between 1994 and 1999, it fell to zero in the last four years of the Howard government and has been dropping at an average annual rate of 0.7 per cent since.
Despite the Prime Minister repeatedly promising to put productivity reform at the heart of the government’s agenda – most recently in a speech to the National Press Club this month – critics are demanding that he turn the rhetoric into action.
ONE of the things that really gets my goat is members of the government claiming “we have created a million jobs”.
Take this quote from Brendan O’Connor, Minister for Employment, Skills and Training: “Since the Labor government came to office in November 2007 we have created almost one million jobs, and our average unemployment rate is just 5.1 per cent – one of the lowest in the developed world.”
Other ministers are slightly more careful with their language. For example, Health Minister Tanya Plibersek more modestly, albeit inelegantly, stated that “Australia’s got almost a million jobs extra since the global finance crisis”.
Even so, there are two empirical problems with these claims. The first is that the figure is actually closer to 900,000 than one million. And second, the labour force has grown considerably more than the numbers of employed persons since the Labor government was first elected in 2007.
The number of employed persons is up by 924,00 but the labour force has grown by 1.17 million. The gap is close to 250,000. There have been insufficient new jobs to absorb the growing labour force.
And why quote an average unemployment rate? Here are the facts. When Labor was first elected, the rate of unemployment was 4.3 per cent. It is now 5.6 per cent. And were it not for the fact that the participation rate has slipped noticeably – from 65.5 per cent in December 2007 to 65.2 per cent now – the rate of unemployment would be greater than 6 per cent.