The media and their financial ‘economist-commentators’ become so hyped up with their expectations of doom, that they prefer to overlook the facts as they come out. The facts coming through from the Household Labour Force Survey (HLFS) for the December quarter 2008 are that the state of the economy as measured by the HLFS has changed little in the last twelve months.

Employment is still growing. For the year ended December quarter, employment grew by 18,500. This is close to the average for the last five quarters, a 20,500 increase per annum.

Employment patterns have no ‘shocks’

The pattern of employment changes continue with no major ‘shock’ impacts, either in the industry employment pattern, the occupation pattern or employers shifting from hiring fulltime to part-time staff.

Industries continuing to reduce their employees include the primary sector, construction trade services, motor retailing, services to finance, and property services. No surprises there. Those continuing to increase their number of employees include business services, food retailing, sport and recreation, education and community services.

There are no industries that have gone from significant employment growth to contraction in the last quarter.

Occupations have also followed a pattern similar to the past year. An occupation that is still growing strongly is finance and sales associate professionals, even though the industry: services to finance has been declining. Are other industries taking on these people in-house to strengthen their finances? Other growing occupations include business professionals, teachers and there is even some growth in restaurant and personal service workers. The declines continue for tradespeople, particularly building finishers, mechanics; and for salespersons and clerks.

The occupations that did go from growth to reasonably significant decrease in the quarter were general managers, and architects and engineers. The decline in building tradespeople and in architects and engineers is the process that would be reversed by a sound government-backed investment programme.

Part-time worker numbers increased by 19,300 in the past twelve months, while fulltime workers decreased by 800. Some of the financial commentators said this shows employers were turning to casual staff who were ‘easier to let go if need be’. If this were the case, we would expect to see some industries reducing their fulltime employees and increasing their part-timers. The facts are otherwise. The industries that increased their part-time employees significantly are those that also increased their fulltime employees, namely food retailing, business services, sport and recreation, education and community services.

The employment pattern continues relatively strong, with no ‘shock’ impacts, and just a slight weakening of labour demand. That demand was still growing overall in the December quarter 2008.

Unemployment increases a little as more line up for jobs

The media generally concentrate on the unemployment figures. A TV channel had clearly drafted their headline of ‘massive increase in unemployment’ before their journalists, or their financial sector ‘economists’ had properly read and understood the numbers. There was no explanation of the increase in the news item. One daily newspaper ran a headline ‘..jobless hits six-year high ’as unemployed lifted from 4.0% to a towering 4.3%. This was strictly correct, but below the headline they ran a graph showing that in our recession in 1993 (following the ‘Mother of all Budgets’) the unemployed was 9%. Is 4.3% really that high?

The unemployment number is driven by the total number in the labour force (all people wanting to work) less the number who are employed. In the December 2008 quarter, the number making themselves available for the labour force was 45,000 greater than in December 2007. This dramatic jump (the annual increase had been running at 30-35,000) swamped the steady employment increase of 18,500. With 45,000 more available for work and only 18,500 more finding work, the number unemployed increased by the difference, i.e. by about 26,000.
The unemployment increase is mainly because more people joined the labour force, not because people lost their jobs.

Lining up for jobs or benefits?

We have to ask whether the increase in the Labour Force is partly made up of people who previously had thought of themselves as ‘Not in the Labour Force’ but with all the media hype about unemployment increasing, have decided they may be able to present themselves later for an unemployment benefit. The core numbers ‘Not in the Labour Force’ are those retired, studying or at home looking after children, and their numbers have changed little. It is the rather nebulous categories ‘Other’ and ‘Not Specified’ that have decreased greatly - by 14,000. These 14,000 are now in the labour force, though many are undoubtedly presently unemployed as recorded in the HLFS. Presumably the number of registered unemployed on benefits will increase to reflect this behaviour change.

The solution remains the same

Given that industries and their employment are not yet showing any ‘black holes’ it is time for the media (and the Government’) to look past the ‘assessments’ by the media-ready ‘financial economists’. After all it was their financial sector that caused the present global problem.
If we look at the core economy and its labour force we would aim to strengthen the weaknesses that have been gathering over the last year. The main weakness has been the turndown in building and construction, and this at a time when we should be building more. Our economy drastically needs to step up the pace to overcome our long-term infrastructure deficit.

When are we going to see a practical package for immediate implementation?

We now also have the opportunity to increase skills so that we can reap the benefit from the automation changes underway to lift the productivity in warehousing, primary processing and the like. We also want to have our hospitality industry bursting with people trained and keen to give the best service, and to encourage great spending by visitors to Rugby World Cup 2011. Right on schedule to boost our lift onto the next growth era.