Tag Archives: labour force

Is Bowen’s Budget Update Predicting A Mass Extinction?

4 Aug


Here is a classic example of why this government’s constantly revised economic predictions are not worth the paper they are printed on.

And why — as quoth MacroBusiness reader “Mav” — we could replace the Treasury department with a monkey and a dartboard, and get the same standard of accuracy with economic forecasts.

According to Bowen / Treasury in their “$33 billion black hole” Economic Statement released on Friday, this year the headline unemployment rate will rise to 6.25%. With an annual growth rate in employment of 1%. It will remain at 6.25% in 2014-15, with employment growth of 1.5%.

In 2015-16, however, something magical is predicted to happen.

Despite employment growth remaining steady at 1.5%, the unemployment rate will, somehow, plummet to 5%:

August Economic Statement, Overview, page 1

August Economic Statement, Overview, page 1

Er … say what now?

I am not the only one questioning this “major economic parameter”, on which all the budget predictions are based — including tax revenues, the public debt level, interest expenses, and an alleged return of that mythical creature in the ALP museum, a surplus in 2016-17.

National Australia Bank were quickly out with an economic statement of their own on Friday, where they too remarked on this amazing budget prediction:

The estimates beyond 2014/15 appear unrealistic, with employment growth too weak to reduce the unemployment rate to 5%. While 1½% employment growth in 2014/15 is expected to maintain the unemployment rate at 6¼%, the same employment growth in 2015/16 reduces the unemployment rate to 5%.”

The only way that is possible, is if they are expecting an awful lot of people to leave the work force, and yet, not be counted as “unemployed”.

A mass extinction event?

Or a mass retirement of baby boomers, perhaps.

If so, then all those folks looking forward to retiring in 2015-16 will be very pleased to know that, under the government’s Crisis Management strategy, APRA is being given “robust” new statutory powers — “direction powers”, they say — which enable the government to order your super fund where and how it should “direct” your super.

For your benefit, of course (see Crisis Management: APRA To Be Given Power To “Direct” Your Super).

Somehow though, I don’t think a mass retirement of baby boomers is a plausible, or sufficient explanation for that amazing budget update prediction.

A more plausible explanation is one that I came across recently … alas, I cannot recall where.

And that explanation was, that in the years beyond the “Estimates” period — those years labelled “Projections” in government budget figures — the Treasury modellers simply assume a “return to trend” for major economic variables.

How does that return to “trend” happen?

Who knows.

It is an assumption.

Just like so much of the pseudo-science we call “economics”.

Oh yes, by the way.

In 2015-16, when unemployment will magically plummet from 6.25% to 5%, the government is predicting a deficit of $4.7 billion. And then, a surplus of $4 billion the following year:

August Economic Statement, Overview, page 1

August Economic Statement, Overview, page 1

It’s magic Johnny … magic!

True Unemployment At 13%, New ABS Measure Reveals

11 Jul

As anyone with two functioning brain cells surely knew already, the “official” unemployment figure — just like the “official” CPI inflation figure — is a farce.

No. Scrap that.

A deliberate deception.

From the Daily Telegraph:

REAL unemployment is double the official figure – with 13 per cent of Australia’s workforce wanting a job or longer hours.

The Australian Bureau of Statistics (ABS) yesterday released a new analysis that combines the official unemployment rate with “discouraged” jobseekers, the “underemployed” and those who want to start work within a month, but cannot begin immediately.

The 13.1 per cent rate of “extended labour force under-utilisation” in August 2012 was more than double the official unemployment rate at the time of 5 per cent.

The ABS counts people as employed even if they only work an hour a week.

But the new measure also counts underemployment – workers in part-time or casual positions who want a permanent job or longer hours.

And it includes those “discouraged” jobseekers who want to work but have given up looking because employers consider them to be too old or too young, if they are ill or disabled, lack the necessary training or experience, cannot find a job locally or in their line of work, or cannot speak English well.

The ABS report shows the labour under-utilisation rate fell steadily between 2001 and 2008 but “increased sharply” when the global financial crisis hit in 2009, from 10.6 per cent to 14.3 per cent.

The ABS report said the under-utilisation rate gave a “more comprehensive picture” of the state of Australia’s workforce than the pure jobless rate.

The “pure” jobless rate?!?! One (1) hour a week is not “jobless”?? You’re kidding, right?!

More at the link.

This revelation is so patently obvious, that my only response is a question.

Any particular reason why you have chosen to admit this now?

%d bloggers like this: