Finance Work The ‘real’ jobs numbers are finally moving again

The ‘real’ jobs numbers are finally moving again

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Forget the headline numbers – it's 'hours worked' that tells the real economic story. Photo: Getty
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At the end of 2015 an alarming employment trend set in – while the government crowed about stabilising the unemployment rate, the number of hours worked was being outstripped by population growth.

When ‘hours worked’ lags population growth it can mean only one of three things: more unemployed people, fewer hours for the already-employed, or a combination of both.

That’s why this week’s ABS jobs data is so significant. For the first time in 18 months it shows a monthly and annual rise in hours worked that is clearly ahead of population growth – 0.4 and 2.4 per cent respectively.

If that is more than statistical noise – and May’s annualised figure of 1.5 per cent suggests it is – then it’s a good sign for the economy.

Not everyone’s a winner, however. A sudden surge of full-time jobs has boosted the hours-worked overall, but other workers have either lost hours or lost their jobs.

In the most reliable ‘trend’ terms, the ABS says 30,000 full-time jobs were added, and 9,600 part-time jobs were lost in June.

The population fudge

For decades politicians and journalists have failed dismally to explain the difference between extensive growth, which relies on a growing population, and intensive growth, that actually makes Aussies richer on average.

There is a big difference. As explained previously, long-term annual GDP growth of 3.1 per cent actually falls to just 1.7 per cent when corrected for the growing population.

Indeed, as long as Australia’s birth rate is high, oldies are living longer, and immigration remains high, real GDP growth has to be above 1.4 per cent to beat population growth overall.

And because Australia’s relatively high immigration intake contains a disproportionate number of working-age people, providing enough hours for those workers requires a growth rate above 1.8 per cent, based on ABS figures.

So again, for the first time in 18 months the economy’s generating enough hours to make that expanding workforce better off – though not, of course, if their pay-rises are falling behind inflation, or their penalty rates are being removed.

Reasons to be cautious

At this point in our economic history, every bit of good news should be celebrated, particularly given the fact that consumer confidence is remaining stuck in the doldrums.

On that point, ANZ’s head of Australian economics, David Plank, said shortly before the release of the new data: “If jobs growth continues at the pace seen in recent months, it has the potential not only to boost confidence but perhaps also challenge our view on the stable course for monetary policy in 2018.”

That’s pretty bullish stuff – possible rate rises on the back of higher confidence. That really would signal good times ahead.

There are, however, still plenty of headwinds that could make the jobs boost short-lived.

Although the winding back of jobs in the auto-manufacturing and mining industries has been underway for some time, the residential construction boom that helped offset those declines is only just ending.

And the hoped-for lower dollar, which is supposed to be breathing life into exports sectors such as manufacturing, food processing, and professional services, is creeping uncomfortably high.

Those trends, when added to the growing interest-rate pressure on heavily indebted households, are serious headwinds for the economy.

Nonetheless, after slamming former Treasurer Joe Hockey and current Treasurer Scott Morrison for ignoring the hours-worked slump, this columnist can now offer some different advice: shout it from the roof-tops.

The embattled Aussie worker could do with some genuinely good news for a change.

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