Last month I mentioned that John Howard’s boast that jobs growth vindicated his draconian WorkChoices legislation was based on a misinterpretation of the data. Specifically, his claim that 276,000 jobs had been created in the year since WorkChoices came into effect was nearly true - 276,000 more persons were employed, which is not the same thing, but is more important anyway. But bec
The ABC reported this morning in an item provocatively titled ‘IR changes creating jobs: survey’, that according to Christena Singh,
What the report actually shows is that although ‘15 per cent of SMEs’ reported ‘a rise in employment’, this ‘was offset by the 10 per cent of businesses that experienced employment declines’.
This is a trick. And a much nastier one than Mr Howard tried. There’s actually a pretty close relation between the number of persons employed and the number of jobs. In fact, as I pointed out in a comment on Lefti the other day, in the
What’s going on here is that the proportion of businesses hiring new staff, or laying staff off, is not necessarily the same as the proportion of people getting and losing jobs. So one possible scenario that the data could describe is that there was a net increase of 5% in the number of jobs. Another is that each of the businesses that hired new staff created 50 new jobs and those that laid off staff had each just let one go. Or vice versa. The fact is, the report doesn’t tell us anything at all about employment even if the survey actually collected data that would clarify the issue. And of course, the other thing it tells us nothing about is anything whatsoever about employment by larger business and non business employers.
Not that I would attribute any clairvoyant powers to small and medium business owners, I suppose it’s fair to attribute their ‘expectations’ to their intentions. And only 13% of SMEs surveyed said they expected an increase over the current quarter, down by two percentage points from the expectations recorded in the past two quarters. Similarly, while 24% said they expected an increase in their workforces over the next year, another 4% expected a decrease, giving a ‘net balance’ of only 20%, three percentage points lower than the corresponding expectation in the previous two quarters.
What I found most interesting about the survey, unreported by the ABC, was this ominous observation.
Despite strong employment growth, net growth in total wage costs decreased during the last quarter, and SMEs were expecting further decreases in their wages bills for both the short and medium terms, easing inflationary fears.
As a matter of fact, wage inflation is not my deepest fear. The conclusion I draw from this is that the wages share of the economy is declining, and more importantly, wages on average are declining, just in case anyone was entertaining any hopes that WorkChoices was going to deliver a higher standard of living for workers.