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Casual work traps workers into low-pay and precarious jobs

I am giving a presentation tomorrow in Melbourne at a conference on Annual Skilling Australia and Workforce Participation Summit. My topic is Making Australia a “full employment economy” and that topic stands out from the others which are all about the mainstream pre-occupations of participation and training. My view is simple – if you offer someone a job and a training slot you solve the participation problem and provide them with a paid-work environment to develop their skills. The most effective skill acquisition comes from training within a paid-work context. I am also talking about how workers get trapped in a low-skill, low-pay circle of disadvantage and the increasingly casualised Australian labour market is reinforcing that pathology. This proposition, of-course, runs counter to the mainstream view that has justified the growing precariousness of work in Australia (and elsewhere) as being a market response to the desire by workers for more flexibility. They also argue that casual work is a “stepping stone” into better jobs and provides unskilled workers with a transition from low pay to high pay. The evidence does not support the mainstream view – why would we be surprised about that. The evidence is categorical – casual work traps workers into low-pay and precarious jobs.

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Australian labour market continues to weaken

The Australian Bureau of Statistics (ABS) released the Labour Force data today for May 2011 which shows that the labour market is in a very weak state. Full-time employment collapsed further (having falling sharply last month) and part-time employment growth was very weak. Employment growth is failing to keep pace with population growth which means that no dent is being made in the very high labour underutilisation rates. Total working hours barely moved and total labour underutilisation (the sum of unemployment and underemployment) rose from 11.9 to 12.2 per cent. The teenage labour market remained in an appalling state. Even the usually optimistic bank economists (who predicted that employment growth would have been much stronger than it was) are starting to sound circumspect in media interviews today – “weakness”, “softness”, “poor result” – were descriptors that were heard today. The Australian economy is nowhere near full employment and the slack increased in May 2011.

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Australian labour market goes into reverse

The Australian Bureau of Statistics (ABS) released the Labour Force data today for April 2011 which shows that employment and participation contracted sharply over the last month. The data confirms recent trends (March being the outlier) that the labour market is not very robust at present. Total working hours also contracted sharply. With full-time employment sharply negative, and modest part-time employment growth – I also suspect that underemployment rose again this month. I do not consider this data supports the popular view being promoted by politicians and bank economists that we are close to full employment and interest rates will have to rise. My view is that there is a lot of slack left in the economy. A stunning aspect of this observation is that teenagers continue to suffer employment losses having lost 73 thousand jobs overall since the crisis then recovery began. The other reality is that trend employment growth is barely keeping pace with population growth so unemployment is hovering at high levels. If the “once-in-a-hundred-year” mining boom was really delivering a bounty then we should be eating into unemployment and underemployment. The reality is that the Australian economy is, at best, growing modestly with most regions close to contraction.

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Australian Labor Government abandons its roots

Last night (April 13, 2011) the Australian Prime Minister Julia Gillard gave a speech to the right wing think tank – the Sydney Institute – entitled The Dignity of Work. The Sydney Institute has taken positions in the past which include supporting the labour market deregulation (removal of trade union privileges); financial deregulation; need for budget surpluses in times of prosperity; privatisation; welfare reform (emphasising private solutions); the expansion of private education at the expense of public education and more. So it is a strange place to give a lecture on the dignity of work. The labour market policies which the Sydney Institute has supported have undermined workers’ rights, held back the growth of real wages, and been responsible for a massive redistribution of income from wages to profits over the 20 or 30 years.

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Australian labour force data – some positive signs

The Australian Bureau of Statistics (ABS) released the Labour Force data today for March 2011 which sends some very positive signals unlike the mixed news we have been receiving over the last few months. Overall, my interpretation of the data is that the labour market is adding jobs and providing some modest scope to reduce the huge pool of unemployed. Full-time and part-time employment growth was positive and the participation rate rose slightly – a virtuous duet. Total hours of work rose for the month. But despite the media narrative that we are now “below” full employment. The bank economists were claiming this meant that the RBA should put interest rates up. My view is that there is a lot of slack left in the economy. A stunning aspect of this observation is that teenagers continue to suffer employment losses having lost 86 thousand jobs overall since the crisis then recovery began. The other reality is that employment growth is barely keeping pace with population growth so unemployment is hovering at high levels – at at time when we should be really eating into it. Given related data series recently, the RBA would be mad to increase the interest rate.

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Australian labour market – mixed signals – but subdued overall

Today the Australian Bureau of Statistics (ABS) released the Labour Force data for February 2011 which sends mixed signals. Overall, my interpretation of the data is that the labour market is fairly subdued at present. Today’s data shows that employment growth was negative (but there is probably some flood impact in that figure). Participation fell which took the pressure off unemployment so the unemployment rate was steady. The positive news is that full-time employment growth was stronger and total hours worked rose in February (leading to a modest decline in underemployment). While some of the parrots in the bank economist ranks are already predicting an interest rate rise to combat some “imaginary” inflation threat, today’s data would not support a change in monetary policy in the coming months. The related data (sharp drop in housing finance) reinforces the view that there is no inflation threat building. The data tells me that exactly the opposite is the case. There is still plenty of slack in the Australian labour market and employment growth is doing nothing to mop it up. Its not my opinion – just take a look at the data! The signals are mixed today but you will not see me smiling!

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Australian Labour Force data – nothing to be happy about

According to everyone (bar me) we have an economy that is facing major skill shortages and going gang busters under the steam of the once-in-a-hundred-years mining boom. Today the Australian Bureau of Statistics (ABS) released the Labour Force data for January 2011 which would seem to contradict that impression. Today’s data shows that the labour market is anything but strong and bursting at is capacity seams. Total employment growth was modest and not strong enough to absorb the labour force growth and as a result unemployment rose. But the really telling news is that full-time employment declined sharply as did total working hours. Employment growth was driven solely by part-time employment and that means underemployment will have risen as well. Today’s data definitely doesn’t support the claims by the Government and the RBA that there is an inflation threat building and fiscal and monetary policy should contract. The data tells me exactly the opposite is the case. There is still plenty of slack in the Australian labour market and employment growth is doing nothing to mop it up. Its not my opinion – just take a look at the data! There is nothing to be happy about in today’s data.

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Australian Labour Force data – bad news again

I have very limited time today as I am heading to the airport soon and have a full set of commitments once I get to where I am going. But today the Australian Bureau of Statistics (ABS) released the Labour Force data for December 2010. As usual the bank economists got it wrong and grossly overestimated the growth in employment (last month they grossly overestimated it). Today’s data shows that the labour market has falling in a heap – employment growth is barely above the zero line and the participation rate fell sharply. While this combination led to a decline in unemployment and the unemployment rate it just meant that we have traded unemployment for hidden unemployment – not a good option. The situation is now very unclear and the impact of the natural disasters that have consumed Queensland and are heading south will clearly cause a contraction in real economic activity in the coming months before the reconstruction phase gets into gear. If the Federal government continues with its moronic line that it will see oversee a net contraction in fiscal policy despite promising billions for the reconstruction phase then the labour market will contract. This will mean that the modest gains in reducing labour underutilisation that we have seen in the recovery period to date will probably be lost – mining boom notwithstanding. Today’s data definitely doesn’t support the claims by the Government and the RBA that there is an inflation threat building and fiscal and monetary policy should contract. The data tells me exactly the opposite is the case. There is still plenty of slack in the Australian labour market and employment growth is doing nothing to mop it up.

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Falling unemployment is not necessarily good

I have been travelling for most of today and unable to write very much. But there were are few things I penned which might be of interest. I was sent a news report today which appeared in the local Fairfax press and related to yesterday’s ABS release of the detailed labour force estimates by region. This usually garners a lot of regional interest and the estimates are used by politicians, business groups etc to further their own vested interests. Rarely do any of the public statements that are made about this detailed data actually tell an accurate story. The news report in question was a classic case of this. What we should always understand is that the labour force framework is complicated and falling unemployment is not necessarily a good outcome.

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Labour force data – most signs good

The Australian Bureau of Statistics (ABS) released the Labour Force data for November 2010. As usual the bank economists got it wrong and underestimated the growth in employment. The data shows that the labour market is improving – employment growth positive and biased towards full-time jobs; a rising participation rate; and falling unemployment – the troika we look for. The commentators are almost demanding that the RBA increase interest rates sooner rather than later. But that would be a very stupid thing to do. The growth we have seen in November is required to be sustained for an extended period to ensure that we continue to eat in to the pool of unemployment and underemployment. Deliberately curtailing that growth with contractionary policy initiatives would be an act of vandalism and would deny those workers who remain idle (12.4 per cent of available labour) the chance to enjoy income earning opportunities. The data definitely doesn’t support the claims by the Government and the RBA that there is an inflation threat building. There is still plenty of slack in the Australian labour market and for the first time in several months the degree of slack fell marginally. I am not complaining – just cautious.

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