Saturday, December 17, 2016
It is possible to make sense of what's happening in the labour market, but only if you follow a few rules.
For a start, it's never possible to make sense of the monthly figures if you focus on the change from last month because they're subject to sampling and other errors and keep bouncing around.
You make it doubly hard if you defy the bureau's advice and focus on its "seasonally adjusted" estimates rather than its "trend" (smoothed) estimates.
Also, employment and unemployment aren't opposite sides of the same coin. There's a third possibility: neither employed nor unemployed, because you don't have a job and aren't looking for one. The statisticians call this "not [participating] in the labour force".
So it's perfectly possible for both employment and unemployment to increase at the same time - if, say, some people are leaving the unemployed because they've found a job, while others are adding to the unemployed by joining the labour force to look for work.
But let's stick to the trend figures and step back for a longer view, looking at the 12 months to November.
The figures show total employment grew by 87,000 and the rate of unemployment fell 0.3 percentage points to 5.6 per cent.
If you think that sounds good, sorry. Over the same period, the proportion of working-age people participating in the labour force, either by having a job or looking for one, fell by 0.6 percentage points to 64.5 per cent.
About 0.25 percentage points of that fall would have been caused by the ageing of the population, but the rest was probably caused by "discouraged jobseekers" ceasing to be classed as unemployed because they gave up looking for work.
The bureau points out that growth in total employment of 87,000 is an annual increase of only 0.7 per cent, which is less than half the average growth rate over the past 20 years of 1.8 per cent.
Then, when you delve into the employment story you find that while part-time employment grew by 138,000, full-time employment actually fell by 51,000.
It's not so surprising that the jobs market isn't doing as well as our reasonable rate of growth in gross domestic product would lead us to expect, because a lot of the output growth is coming from increased production of minerals and energy, which involves employing very few extra miners.
But why are those jobs we are creating more likely to be part-time? The Reserve Bank investigated this question in last month's quarterly statement on monetary policy.
It says much of the recent swing from the creation of full-time jobs to the creation of part-time jobs is explained by the economy's return to non-mining led growth since the end of the mining construction boom.
The Reserve divides the economy into three broad sectors. First, the goods-related sector: agriculture, mining, manufacturing, construction, utilities and distribution (transport, postal and warehousing, and wholesale and retail trade).
Second, the business services sector: finance and insurance, administration and support, media and telecommunications, professional scientific and technical, and rental, hiring and real estate.
Third, the household services sector: health and aged care, education, accommodation and food, and arts and recreation.
"Since 2013," the Reserve says, "employment growth has been strongest in the household services sector, where the share of part-time employment is relatively high at about 45 per cent."
Over this period, the share of part-time employment in the business services sector and the goods-related sector has also increased but, at about 25 per cent, it remains much lower than for the household services sector.
Employment growth has been weakest in the goods-related sector, partly reflecting the loss of jobs as mining construction projects come to an end and the ongoing decline in manufacturing employment.
So far we've said that, since 2013, some sectors of the economy have growth faster than others, with the sector that's grown fastest also being the one that's always had the biggest proportion of part-time jobs.
But there's also been a shift to part-time employment within each of the sectors. The Reserve says this fits with what businesses are telling it in its "liaison" interviews, that they've been hesitant to employ full-time workers until they see evidence that increased demand for their output is likely to be sustained.
Of course, the share of part-time employment in total employment has been increasing steadily since the mid-1960s. Then, it was 10 per cent; today it's about a third.
Being able to employ people for those times in the week when you need them - rather than having full-timers with little to do for much of the week - has allowed firms to increase the efficiency with which they use labour.
So there's been growing employer demand for part-time workers. At the same time, however, there's been growing willingness among employees to supply their labour on a part-time basis.
The obvious examples are full-time students, parents of very young children and, these days, older workers seeking semi-retirement.
This makes it wrong to think that part-time jobs are inferior to full-time jobs, that everyone with a part-time job really wants a full-time job (there aren't many for whom that's true) or that all part-time jobs are casual rather than permanent.
What is true, however, is that with the rise in part-time employment has gone a rise in under-employment - essentially, people with part-time jobs who'd prefer to be working more hours.
Since February 1990, under-employment's risen from 4 per cent to 8.5 per cent today, though it's been steady for the past two years.
On the downside of the resources boom, employment growth isn't as strong as we'd like it to be.