Random Analytica

“The next Coalition Government will create one million jobs in five years and two million jobs in 10 years,” he said. “This pledge is achievable given our record and policies.” Tony Abbott (27 Nov 2012)

First of all, Labor side should be commended for its employment story during its term in office (2007-2013) where 955,200 jobs were created. Saying that one of my key criticisms of the then Employment Minister, Bill Shorten was that the spotlight was always on total job creation rather than looking at full-time and part-time job breakdowns. During the Labor years 450,400 part-time jobs were created against 504,800 full-time ones.

Currently, there is a lot of discussion in Australia around employment and unemployment at the moment. In the past month many companies have announced large job cuts either in the immediate or near future. Recent examples with direct jobs lost include Holden (2,900), Toyota (2,500), Forge (1,400), Rio Tinto (1,100), Qantas (1,000), Electrolux (544) and just today Alcoa (980). The seasonally adjusted unemployment rate hit 6% for the first time since July 2003 (when it peaked at 6.1%).

The RBA is has for some months forecast that the unemployment rate would hit 6.25% during 2014, then steadily improve from 2015. That view remained unchanged in its most recent Economic Outlook.

Thus it would be unfair to immediately thrust blame on to Tony Abbott and the recently elected Coalition government as many in the opposition camp are doing.

To that end I thought I might shine a light on the Abbott promise. 1-million jobs in five years. Here is a look at the data for the first four months to January 2014.

First chart is a look at employment gains and losses since the Coalition took power in September 2013. Two points:

• The total jobs are slightly negative, that is 9,949 jobs lost; and
• The sample size is way too small to start analysing and unemployment figures from the ABS are generally considered a lagging indicator.

Second and last chart looks at job creation in three parts. Total job creation (green), full-time employment (blue) and part-time employment (maroon).

In effect there have been 56-thousand full-time jobs lost against 46-thousand part-time jobs gained for a gross loss of 9,949 jobs.

Final Thoughts

Bill Shorten’s recent commentary around 54,000 job losses (or one job every three minutes) might make a good sound grab but actually only reflects full-time employment losses over a very short timeframe.

I think it’s disingenuous of him as the former Minister to use total employment figures then but now only concentrate on one set of numbers.

That aside I wonder if the RBA has underestimated the unemployment nadir at 6.25% which will make it much harder for Tony Abbott to hit his 1-million jobs in five years promise.

Only time will tell. I’ll keep you updated.