The government’s been caught trying to fudge the numbers to make its job target look good. It’s cheap politics but the targets weren’t even that ambitious to begin with, and a cyclical recovery should mean that they’re easily achieved.
During the election, the Coalition pledged to create a million jobs over 5 years.
It’s a cute pledge. By the time the next election rolls around it will still be too early to tell if they came good on their promise or not. By the election after that, it’s ancient history.
So you get to trumpet around some impressive numbers, with no responsibility to make them happen.
I guess that’s politics.
But bluff and bluster aside, The Australian revealed during the week that the Abbott Government has sought to massage the Department of Employment’s employment projections so that they make it look like the Government had succeeded in its million jobs target.
From The Australian:
Ministerial advisers encouraged federal officials to “massage” their economic forecasts to match Tony Abbott’s vow to create one million jobs over the next five years…
Asking department experts to adjust their figures, the advisers to Employment Minister Eric Abetz sought to add 160,000 jobs to the projections due this week…
The exchanges, revealed to The Australian, highlight the government’s anxiety about jobs growth as it fights off Labor attacks over layoffs at big companies including Qantas, Ford, General Motors Holden and Toyota…
The labour market analysts dumped their original projections for 838,100 new jobs over the next five years and replaced it with the higher figure suggested by the minister’s adviser, Josh Manuatu.
Ok. It’s one thing to be making pie in the sky promises that you’re not willing to take any responsibility for. It’s another thing altogether thing altogether to be messing with the projections and forecasts of federal agencies.
Because unlike promises, people actually use these numbers. Industry factors them into their decision making. Other federal agencies build plans around them.
Messing with them just to make yourself look good is pretty weak.
Where are the adults we were promised?
Because the other thing to note is that a million jobs over 5 years might sound impressive, but it’s not actually that great.
It’s actually below par.
A million jobs – or roughly 16,670 jobs per month – would be below the 17,200 jobs per month created in the decade to February 2014. And that included the grim labour market days of the GFC.
And remember that the country is getting bigger. To keep the unemployment rate constant, which is arguably more important, we need this monthly job creation rate to be going up, not going down.
As the population grows we need to create more jobs to keep pace.
To make the point, the 2 million plus jobs created over the past ten years amounted to a 22% increase in the number of jobs. 2 million jobs over the next ten years is just 9%.
So a million jobs is just a promise to underperform. It’s impressive sound-byte politics, but nothing more.
And despite the vain fussing around trying to massage the Department of Employment’s numbers, the economy (and not the government) should deliver on those lofty targets pretty comfortably.
UBS were out in the week revising up their projections for the labour market. Basically, they see cyclical strength in the economy continuing to drive employment growth, and the unemployment rate remaining around where it is through the rest of the year.
An unemployment rate that’s neither going up nor down might not sound that impressive. But when you remember unemployment is still just 6% (a European finance minister’s wet dream), it’s not bad at all.
UBS reckon that all the leading indicators of employment are pointing to a strong year and are, “signalling a turn-around in job creation over the months ahead.” Like this chart of job ads, solidly on the rise:
But with so many high-profile job losses – from Holden to Qantas – it’s a fair question to ask, where will the new jobs come from?
They look at the recent recovery and note that much of it has been in the public-dominated sectors, but there have also been gains in cyclical sectors like manufacturing, construction, finance and real estate (though there’s been weakness in retail which has off set a lot of this.)
But UBS do a ‘bottom-up’ analysis (taking leading indicators for specific industries, and summing all the industry outlooks together):
“We find a ‘bottom-up’ analysis can easily locate the 170k jobs (14k per month) needed to deliver the almost 1½% y/y growth to stabilise unemployment at 6%. Indeed, our relatively simple analysis identifies a potential 240k jobs (20k pm or 2% y/y) which could lower unemployment to 5½% by early 2015.”
Not bad. So within the year, we could potentially be back to adding 240k jobs a year, and driving the unemployment rate back down towards 5.5%.
(This would, by the way, be a big boost to consumer spending, and greater confidence flows very directly into house prices.)
And what’s 240k a year over 5 years?
The government has set itself some low-bar goals and is on track to achieve them.
Can’t wait to hear all about that.