Labor’s Poor Record on Jobs

Below is an extract from an article published on Wednesdays’ AFR opinion page, with the addition of the last half of the article in italics. This analysis has been put together as part of a series of Fact Sheets being published by the HR Nicholls Society in the lead up to the election scheduled for 14 September.

Wednesday’s article addresses the oft repeated claim by the Gillard government  (most notably by Treasurer Swan) that 900,000 jobs have been “created” under Labor. Even leaving aside the question of whether governments create jobs, the analysis below shows that the growth in employment under Labor has been relatively poor when compared with the recent past – certainly nothing to write home about.

Of particular interest is that more Australians are now out of work than during the height of the global financial crisis.

The poor performance of the labour market under Labor undoubtedly reflects in part the increased regulation under the so-called Fair Work legislation and the administration thereof. This regulation, which considerably increases the power of the union movement, will be examined at the conference on “Unions in Control?” being held by the HR Nicholls Society on 8 July at Morgan’s 401 Collins St. 

– Des Moore

History shows Labor’s job creation record has been poor

AFR 12 Jun 2013

Labor’s Fair Work Act has held back the performance of our labour market, says economist Des Moore. Photo: Michael Clayton-Jones

Des Moore

The Gillard government’s claim to have created more than 900,000 jobs in the 64 months since December 2007 sounds impressive – but it needs to be assessed against the performance of Australia’s labour market before Labor came to office.

When Labor was elected, 10.7 million Australians were employed. An additional 900,000 jobs since then represents an average annualised employment growth rate of around 1.6 per cent a year.

Far from spurring jobs growth as Australia came out of the downturn associated with the global financial crisis, Labor’s Fair Work Act has held back the performance of our labour market, with employment growing at an average annual rate of only 1.7 per cent since July 2009 when the legislation took effect.

By historical standards these are exceptionally poor jobs growth rates.

In the 30 years to December 2007 – a period which covers a global oil price shock and a number of deep recessions – employment grew at an average rate of about 2 per cent.

And in the last 64 months of the Coalition government, jobs growth was far higher, averaging 2.7 per cent a year – 1.4 million jobs were added between July 2002 and November 2007.

If the current government had presided over that kind of jobs growth, an additional 642,000 Australians would now be employed. Instead, the ranks of the unemployed have swelled to 685,000.

The last time we had a period of such low jobs growth was in the 64 months that ended in August 1996. This period included the “recession we had to have”.

The story is even worse if we look at the growth rate of full time employment. Under Labor, the average annual growth rate of full time employment has been just over 1 per cent. This is lower than the average growth rate (1.4 per cent) of full time employment in the thirty years before December 2007.

And it is much lower than the growth rate in the Coalition’s last 64 months, where full-time jobs growth was 2.7 per cent.

More full-time jobs

In fact, more full-time jobs (1.03 million) were created in the last 64 months of the Coalition government than the total number of jobs created in the same period of time under Labor.

Under Labor, the poor performance of the labour market can be seen in just about every indicator you choose to look at. In its last 64 months, the Coalition presided over a 1.7 percentage point fall in the unemployment rate while the number of unemployed fell by 106,000. Under Labour the jobless rate has increased by 1.2 percentage points and the number of unemployed has risen by 202,000. In its last 64 months, the Coalition presided over an increase in the labour force participation rate of 2.5 percentage points. Under Labour it has fallen by 0.2 percentage points.

As disturbing as all of these numbers are, the performance of the labour market since December 2007 has been an absolute tragedy for Australia’s younger workers. In the Coalition’s last 64 months in office, 274,000 younger workers (those between the ages of 15 and 24) found jobs. Under Labor, the number of younger workers with jobs has actually declined by 51,000.

In the Coalition’s last 64 months, the youth unemployment rate fell by 2.1 percentage points; under Labour, it has risen by 2.2 percentage points.

Just last month the unemployment rate for young males reached its highest rate in over a decade.

And all of this is happening at the same time that the participation rate for young Australians has been plummeting, with young people dropping out of the labour force at record rates.

The bottom line for the Gillard government is this: more Australians are now out of work than during the height of the global financial crisis.

What is needed is a complete rethink of labour market policies by both major parties. But that will never happen if policymakers proudly boast about presiding over a labour market which, more than three years after the worst effects of the GFC have passed, is performing so weakly and failing to create new jobs at a rate that is even remotely close to that which Australians have come to expect.

Des Moore is an economist and political commentator. 

The Australian Financial Review

1 reply
  1. Gordon Harris
    Gordon Harris says:

    Why is this opposition not letting us know this? I thought creating a ion jobs was a pretty good result,although I could see no evidence of this in the empty shops and quiet workshops.
    It’s sad the opposition is so shy, isn’t it?

    Reply

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