The jobs boom lie
By Jonathan Singer
The Coalition government puts the blinkers on when it looks at unemployment. It hides how big the problem is and is just hoping for further economic growth to make it go away.
On January 25, the treasurer, Peter Costello, predicted four years of good economic growth would result in a situation "where every Australian who wanted a job could find one". On February 10, Prime Minister John Howard said, "We have many areas of the country that have virtually seen off unemployment" — a qualified repetition of employment services minister Tony Abbott's January declaration of "the end of unemployment as it has been known over the last two decades".
The last three years are considered a "boom" because the gross domestic product has grown by more than 4% each year. But in this "boom", the number of people employed has grown by less than 500,000, and only half of these jobs have been full-time. There is little likelihood that these "good" economic times can roll on for several more years.
Understated
The number of people without jobs and underemployed are understated by the official unemployment statistics. The government counts as unemployed only those who, in the week the Australian Bureau of Statistics conducts its survey, are actively seeking work, available to start work within four weeks and did not perform paid work at all (not even for an hour).
But by broader criteria — that is, all those who want to work or want to work more hours — the unemployed number more than 2 million and need the equivalent of more than 1 million full-time jobs.
The official unemployment rate peaked at more than 11% in 1992 before falling to less than 9% in 1995, and began falling again in 1997. According to the preliminary figure provided by the ABS for January, the official unemployment rate was 6.8% that month, seasonally adjusted. Costello's prediction suggests a further fall in the official unemployment rate to less than 5%, which is now considered by mainstream economists to be full employment.
Even this unemployment rate, however, would leave close to half a million people officially unemployed. More than 670,000 people were officially jobless last month according to the ABS estimate. Three-quarters or more of these people are looking for full-time work.
Existing job vacancies, about 100,000, could not provide even one-sixth of these people with work. Moreover, many of the vacancies exist as a result of sackings or resignations (adding to the number of unemployed) and alongside new jobs there are redundancies.
Growth
Growth in employment is a better guide to the potential for winding back the number of unemployed people over time. In the present "boom", employment growth has been slower than in at least the previous two economic recoveries, for both full-time and all employment, and only a little above the historical average for employment growth.
The unemployment rate has only declined because the number of people actively participating in the workforce has gone down slightly, rather than having increased significantly, as it has done during previous economic booms.
Full-time employment is falling as a proportion of total employment. In some months, full-time employment has fallen in absolute terms — there was a 39,700 drop in the total number of full-time positions in January. Fifteen years ago 18% of all employment was part-time; today the same figure is more than 26% and climbing.
Various ABS surveys show more than 500,000 part-time workers want more hours of work, and 90% are actively pursuing these extra hours. Two-thirds of these workers want full-time jobs.
According to the number of hours they state they would prefer, the equivalent of a further 200,000 full-time jobs is needed to satisfy this demand for more work. While many full-time and some part-time workers would like to work less hours, available figures suggest the full-time workers in this case tend to work excessive hours and may want to reduce these to more standard full-time hours.
Beyond the officially unemployed there are more than 1.2 million other people who aren't in the paid work force but would like to be.
According to a 1998 survey, about 60,000 people are looking for work but aren't available to start immediately, more than 110,000 people are available to start work but have been discouraged from looking, another three-quarters of a million could start work within four weeks but aren't looking for reasons such as child-care responsibilities or educational participation, and more than 250,000 more would like to work but couldn't start so soon.
If the employment situation were to improve, these people would progressively join the workforce. Jobs equivalent to at least an extra several hundred thousand full-time positions would be needed for all these people. Otherwise, unemployment rates will stay where they are.
'New' economy
There is no good reason to expect ongoing improvement in employment, or the economic situation as a whole, though.
Recent press headlines have announced a "new" economy. Steve Burrell, in the January 22 Sydney Morning Herald, says inflation has been slain by new information technology arising from what US Federal Reserve head Alan Greenspan calls "a once in a century acceleration of innovation", which compels the lowest prices, so unemployment can fall as long as there is labour "flexibility". Alan Mitchell, in the January 31 Australian Financial Review, argues that "steady growth is better than strong growth interrupted by recessions" for cutting unemployment.
These mirror the headlines of the late 1980s. They are there for the same reason and they are wrong for the same reasons.
The cyclical upturn in the world capitalist economy that began after the recession of the early 1990s is reaching its peak. Things look good right now, but the upturn will inevitably, eventually, be followed by a downturn, the seriousness of which will be determined by whether the longer-term economic crisis that generated the worldwide recessions of the 1980s and 1990s continues.
The reserve banks of Australia and the US certainly have little confidence that inflation is dead. They have raised interest rates to "cool" their economies long before full employment is achieved.
Economic analysts in BIS Shrapnel have predicted reduced economic growth and increased unemployment in the next few years and also that the unemployment rate will remain at 7.6% at the end of 2004, according to the January 31 Australian.
Downturn
The downturn could only be delayed beyond its normal time of arrival (this year) by factors such as a rebounding of some Asian economies from their slump of 1997. Barring such a delay, the hope of the mainstream economic analysts and institutions is that the economic downturn will be significantly less severe than the last two.
This could only occur if Greenspan is right: that is, if productivity is rising due to more capital investment and innovation on the basis of radically improved profit rates (rather than from driving workers harder, as has occurred in Australia, or paying them less, as in the US).
Profit rates have probably not recovered sufficiently for this, however. Fred Moseley calculates, in the Spring 1999 issue of Capital & Class, that in the US, the main force in the world economy, profit rates have come back by a third from their lowest point since the post-WWII long economic boom, but are still 35-40% below those at the height of that boom.
The government's Abbott and Costello show is, therefore, a smokescreen of words about full employment thrown up to hide its actual policy. This actual policy was expressed in an article by Abbott in the February 3 Australian: to force people into part-time work, understanding that this is what employers want, or out of the workforce altogether through "mutual obligation".
At every step the government is seeking to shift the burden of solving unemployment onto working people. Working people need to find their own voice to raise a policy that is in their own interest: a shorter working week with no loss in pay, to share the work around.