Do you ever get a feeling, that what is happening around you is very different to what our Government is telling you?
I have friends that are very well qualified and credentialed professionals with an abundance of experience unable to secure work within a reasonable time frame. Yes, they are getting squeezed out of the selection process and left wondering what is really going on with the job market in this country. So I did some research, and found that all is not what it seems to be. The engine room of marketing spin is working overtime in Government circles to tell us a sod story that everything will get better soon.
Collin Twiggs is an Australian market analyst and in his blog, Trading Diaries, he makes an astonishing find, and it all starts in the US. Recently, US employment has been very topical after two months of poor jobs figures. Employers added 113,000 new jobs, against an expected 185,000, last month compared to a low 75,000 in December 2013. Rather than focus on monthly data, let’s take a long-term view.
Collin Twiggs states that the number of full-time employed as a percentage of total population [red line below] fell dramatically during the GFC, with about 1 in 10 employees losing their jobs. Since then, roughly 1 out of 4 full-time jobs lost has been restored, while the other 3 are still missing (population growth fell from 1.0% to around 0.7% post-GFC, limiting the distortion).
Part-time employment — the difference between total employment [green] and full-time employed [red] below — has leveled off since 2000 at roughly 6% of the total population. So loss of full-time positions has not been compensated by a rise in casual work. Both have been affected.
A closer look at the Australian context can be made by reviewing the labour force participation rate. This is a good measure to use for employment strength in the economy because it’s less subject to manipulation by Government. It’s a measure of the active portion of an economy’s labor force. During the GFC in 2008 the labour force participation rate for all person aged 15+ came to a sudden stop at 65.6%. The participation rate has declined steadily since to 64.7% in July 2014 and this represents almost a 1% decline.
So what has happened to jobs growth and why are we in a period of decline? During the GFC companies got smarter and became conditioned to survival strategies. After all, they had just been through the worst global economic threat since the great depression of the 1930’s. Every time there is blip in the global economy or the US market sneezes we see the ripple effect down under.
During the GFC crisis companies learned to do more with fewer employees. So if you feel stressed out doing the job of 1.5 or 2 people with little or no extra reward, then you’re not alone. It has become common place and it may be the price you have to pay to stay employed. It’s my opinion that ongoing efficiency, rationalization and economies of scales has meant there is limited job creation penciled in for our future economy. The 1% decline in the participation rate may be a signal for worse to come as the trend line points downwards. Alternatively, are we experiencing similar structural job decline to the US, and those percentage of jobs lost since 2008, have simply vanished…never to be seen again?