The downside of lower unemployment
In the middle of the ‘should Morrison go’ or should he stay brouhaha a couple of weeks ago, there was some interesting news to think about – Australia’s unemployment rate is likely to be under 5% for some years to come.
Economists will tell you that there is a natural unemployment rate of around 5% because people may be officially unemployed while changing jobs, studying, looking for their first job and so on. So an expected rate of under that for a period of time is something worth discussing for a variety of reasons.
It means that there should be, in the words of politicians and economists, some upward pressure on wages and conditions. If there are only a certain number of candlemakers in Australia, how do you entice a candlemaker to leave their current job and commence working for you? The conventional logic is you make them a better offer. The offer could be employment closer to the candlemaker’s home, better quality materials to work with, better facilities to work in, more pay or some combination of those or other ‘inducements’. It’s not unheard of in the current environment for companies that employ a number of tradespeople (such as electricians, plumbers and the like) to offer ‘sign on’ bonuses paid retrospectively after a few months or years of employment.
It means that people who ordinarily wouldn’t get a look in get a chance to demonstrate they are in fact capable and would be valuable employees. Frequently, the employee repays the reluctant trust shown in them by being a far better employee that the ‘usual’ group of people that are targeted. A frequent outcome from this is that the employer realises that they have been ignoring a valuable group of people as potential employees for a considerable period of time.
It means that more people are contributing to the costs of running our society, better known as paying taxes. In addition there are less people receiving unemployment and related benefits, increasing the self-worth of individuals who are no longer faced with the stigma of compliance with the rules around Jobseeker and related payments. ‘Contributing to society’ is also good for an individual’s mental health, especially after being told for years they are not good enough to hold a job or don’t deserve handouts.
The Albanese Government has convened a Jobs and Skills Summit as clearly a long-term shortage of employees is not in anyone’s best interests. While a small proportion of employers will falsely claim they cannot afford increased wages or skills training for staff, the claim is genuine for a far larger number of small and large businesses. The Coaltiion’s practice of plugging skills gaps by importing people to do the work certainly put downward pressure on wages – however Crikey reported recently the Grattan Institute found
For a start, increasing permanent skilled migration won’t have a major effect for some time, because “three quarters of permanent skilled visas are allocated to people already here on a temporary visa”. It would just mean fewer temporary workers leave – undoubtedly a good thing at this point, but unlikely to deliver a major increase in skilled migrants.
The report also discussed that increasing migration adds to demand for labour and labour supply, won’t fix worker shortages and put more pressure on the housing market, health, education and all the other services that are having problems meeting current demand.
There are also issues around economic growth – those whose wages are not increasing in an environment when prices are increasing are effectively going backwards financially and accordingly will reduce their expenditure, harming the economy. The alternative situation whereby employers genuinely can’t afford to keep the lights on or the phones connected is also to be avoided.
There is no real benefit to us as a nation if all the power that surrounds employment is held by either unions or employers – there has to be some give and take. There are some from both sides of the discussion that can’t see the figurative wood for the trees – the government will have to walk a fine line to protect the interests of all.
Hopefully the Jobs and Skills Summit does achieve the objective of an equitable balance in the employee/employer balance, leading to liveable wages, reasonable access to training for all to ensure there are no skills shortages and the ability for businesses to make sufficient profit to ensure long term viability.
What do you think?
This article was originally published on The Political Sword
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By coincidence an investment site had an article last year, without credible data analysis to support (simply opinion), claiming high but unspecified population growth and how closed borders during Covid maybe a solution (for others but not the writer).
Further, a comment was very telling, i.e. restrict or shut down immigration, then with lower unemployment, social security or unemployment benefit ‘welfare’ can be withdrawn for the working classes and taxes cut further; ‘libertarian trap’.
Guys the unemployment rate is a crock of shit. All these jobs, skilled jobs available. Fuck me, has anyone tried to look down the job sites to see whats really available.
The Army is looking for workers, no experience necessary to be a storeman, after completing basic training.
I saw one job, water meter reader. prefer somebody with previous experience.
I saw another one for a council job as a labourer. You have to be a jack of all trades on that one. White card, Hd license, experience with tractors and ride on mowers and an eye for landscaping.
The really skilled jobs are all BS. Nobody here would have that kind of experience and neither would anyone else from OS.
I will be back in a couple of months ready to work, but i am less and less enthralled with the whole package i have to navigate.
For fucks sake, i’m 66, what awaits me in the penal colony?
The ABS site notes that the ’employed’ data is used for international comparison purposes in other respects it has little relevance to what is actually happening in the economy :
‘The ABS defines people as ’employed’ if they work one hour or more in the reference week. The vast majority of part-time employed people work more than 15 hours.
The ‘one hour rule’ is used internationally and allows employment figures to be compared with other countries. It has been used in Australia since the Labour Force Survey began, enabling comparisons to be made over a long period of time.’
If unskilled labour is required in horticulture, not known for paying a living wage instead relying upon backpackers wanting to extend their stay, why have the legal refugees currently jailed for wanting a safe free life in a democratic country not been liberated to work in horticulture for a season?
Naturally the many middle class refugees having tertiary qualifications will still have to overcome the restrictive trade practices of professional organisations claiming that non-Anglophone qualifications are inadequate, but that is another matter.
Rather, consider the benefits for the Australian taxpayers …. no more paying out MILLIONS to companies based in a letterbox on Kangaroo Island, or American owned jail corporations profiting from inhumane government policies supported by the Greens.
The underlying reason that Australia has a TRILLION DOLLAR debt problem is COALition corruption and incompetence, plus too many subsidies to foreign owned multinational corporations that LEGALLY pay little or zero tax.
New England Cocky, whilst i agree that foreign owned multinationals dont necessarily pay their fair share of taxes I think our problems are far greater than this. For a start we caught the Dutch disease, and not a mild version either. Ever since i can remember, the libs have been trying to encourage us to dig as many holes as it takes to fill the Albert hall. We were promised riches beyond our wildest dreams. What did we get? Multinationals who know how to milk the tax system. Yes i know the argument about why that happened and the lack of local capital. Governments havent been allowed to invest in australia since Rex conner tried. Another liberal lie like carbon tax. A bit more subtle but all the same underlaying ideology. Its the neo con agenda at work. We need to create policies based on facts , not ideology or mystical promises of riches to come. We need to have a plan. “Power house of the region ” I hear. Without direct investment now, its fantasy stuff. I can also see another variation of the dutch disease on the horizon.
@ andy56: Agreed. With a sovereign nation creating its own currency there is absolutely no good reason that Australia cannot fund economic development.
Indeed, King O’Malley showed how to do it when he funded the Indian Pacific Railway, by having the Commonwealth bank, then the Reserve bank equivalent, issue special note series that were issue on the IPR and immediately recalled when they were deposited in regular banks. QED. National development at no real cost.