This paper reviews Australia’s job-creation record over the past five years, on the basis of year-end employment data recently published by the Australian Bureau of Statistics. Its aim is to evaluate claims that the pace of employment creation during that period (with 1.1 million net new jobs added between 2013 and 2018) represents an outstanding and historic economic achievement.
For several reasons, Australia’s employment performance between 2013 and 2018 was actually relatively weak in historical context. These reasons, described in detail in the report, include:
The 2013-18 period marked the tenth time in Australia’s history that over one million net new jobs were created over five years. The first occurred 30 years ago, when Australia’s labour market was barely half the size it is now.
Given the size and growth rate of Australia’s working age population, the labour market must create more than one million jobs every five years – just to keep up with ongoing population growth and maintain unemployment at its current rate.
Expressed as a rate of growth, rather than an absolute number of jobs, job creation over the past five years has been relatively weak: ranking 8th of 12 five-year periods dating back to 1958. This was the slowest job-creation in any of those periods that did not experience a recession or major financial crisis.
Almost half of the new jobs created between 2013 and 2018 were part-time, and the share of part-time work in total employment grew notably. Greater reliance on part-time jobs (many of which are filled by people who want to work more hours) transforms a given number of hours of work into a larger number of jobs – but at the cost of reduced income and underemployment. Without the higher share of part-time employment, the number of new jobs created in the past five years would have been well under one million.
Measured by aggregate hours worked, total “work” performed in the economy grew more slowly than the number of jobs. This is mostly because of the growth of part-time work, along with a gradual decline in average hours of work for fulltime workers. The growth of total hours work actually lagged slightly behind the growth of Australia’s working age population.
Since 2008 Australia’s population has been growing at the fastest rate since the late 1960s. This means more work was needed just to occupy that growing population. Coincidentally, the total number of new jobs created in the last five years (1.1 million) equals the net inflow of migration to Australia over the same period (1.1 million).
Given rapid population growth, there was only enough work available in Australia’s labour market in the past five years to keep half of working-age Australians employed on a full-time-equivalent basis – or, alternatively, to provide just 19.8 hours of work per week for each working-age Australian.
In this context, the quantity of work available in Australia’s labour market over the past years was inadequate to the needs of a growing population. Underutilisation of labour was significantly worse in the last five years than in the previous period (including unemployment, underemployment, and non-participation), and the worst since the recession-wracked 1990s.
In addition to an inadequate quantity of work, the quality of work deteriorated markedly. By several indicators, typical jobs are less secure, have fewer hours, and benefit from fewer contractual protections than was the case five years ago. Hence, even Australians who found work are experiencing more severe working conditions and greater precarity.
Labour compensation also deteriorated dramatically during the past five years, which have witnessed an unprecedented slowdown in nominal wage growth, and an erosion of real purchasing power for Australian workers. The decline in relative and absolute compensation of workers is inconsistent with a situation in which demand for workers was truly strong.
In sum, the growth in work and employment over the past five years has been mediocre, at best – and certainly not sufficient to absorb the number of Australians wanting and needing work. The falling quality and compensation of work, meanwhile, imposes real hardship on many households: struggling to make ends meet despite inadequate and insecure hours and working conditions. Millions of workers, therefore, are coming out of this five-year period of supposedly “historic” growth in rough shape. In this context, the labour market experience of the last five years is much less impressive than some political leaders have claimed.
Centre for Future Work, The Australia Institute 2019. Reproduced with permission