Australia’s jobs rebound since the Covid recession has been a big part of the Coalition’s re-election pitch.
On Tuesday the Morrison government committed “to create 1.3 million new jobs over the next five years”, on top of the “1.9 million new jobs” created since the Coalition was elected in 2013.
But what does it mean for the government to claim it “created” jobs, and is the “future jobs” pledge meaningful?
Where do the figures come from?
In September 2013 the number of employed people in Australia was 11,477,300, in seasonally adjusted terms, according to the Australian Bureau of Statistics.
In February 2022, the latest labour force release, the number of employed people was 13,372,000. The difference between those is the source of the 1.9m jobs created claim.
In that time, unemployment has declined from 5.7% to 4%. The participation rate also improved from 64.8% to 66.4%.
Do governments create jobs?
Prof Jeff Borland, a labour economist at the University of Melbourne, said the first qualification on the jobs boast is that “the government doesn’t create those jobs”.
“The government creates some jobs in the public sector and by funding particular activities in the private sector,” he said.
“But it’s the overall economic environment that determines job creation, which the government only influences.
“They shouldn’t be held entirely responsible nor given all the credit for whatever growth there is.”
On Tuesday, the finance minister, Simon Birmingham said the employment results were “driven in part by our investments … in infrastructure, our support for small businesses … our modern manufacturing strategy”.
“These things don’t just happen by accident. It matters who people vote for.”
How does this square with the budget?
According to the budget papers, Australia’s unemployment is forecast to fall to 3.75% from 2022-23 to 2024-25, before rising back to 4% in 2025-26.
Jim Stanford, director of the Centre for Future Work, said the 1.3m forecast was “hard to figure out” because the budget “forecasts employment growth of 1.5% for the next 2 years, and 1% for the 2 years after that”.
“That produces cumulative growth in employment over the next 3 years (a term of government) of just under 550,000 jobs.”
Are absolute job increases meaningful?
The next thing to note is although jobs are up since 2013, Australia is also a much bigger country. In September 2013 the population was 23.2 million, but in February 2022 it was 25.9 million, an increase of 2.7 million people.
Matt Grudnoff, a senior economist at progressive thinktank the Australia Institute, said the biggest factor behind jobs growth is “basically just population growth”.
With respect to the future target, Grudnoff calculated that if the average growth in the labour force in the last seven years continues for another five, 1.25 million more people will be in work or looking for work.
With an unemployment rate of 4%, the 1.3m jobs pledge is 100,000 more people in work than would be expected.
Borland agreed, calculating that jobs growth had averaged about 220,000 a year over the last decade, meaning over the next five years jobs growth “would be about 1.1m anyway”.
Once the effects of the pandemic over the last two years are excluded, Grudnoff projected the labour force would grow by 1.5m, meaning that adding just 1.3m jobs “would actually increase” the unemployment rate.
“[The pledge is] not significant,” Grudnoff said. “The only way it wouldn’t happen is if there is a big recession.
“The economy would be expected to generate that regardless of who is in power.
“It’s like saying there is record funding in health or education, but that is true because of the population increasing and inflation – it sounds impressive but it is entirely meaningless.”
Borland said: “It’s a one-day attempt at a headline … It’s rolled out at every election, but it’s not meaningful as an economic target.”
What should we target instead?
Borland said absolute jobs growth is the “wrong target” because “what we actually care about the is proportion of the population in employment, or in the labour force who are able to get employment”.
“It would be much more meaningful to say: we are committed to keeping unemployment below 4%.”
Borland said for much of the last decade unemployment had “meandered along at 5.5%” and Australia’s performance on that metric was “nothing sensational”.
Didn’t the Coalition promise more jobs in 2019?
In the 2019 election campaign the Coalition promised 1.25m more jobs.
This pledge was not fulfilled. In May 2019 there were 12,858,700 employed people in Australia, meaning just 513,300 jobs have been added in the last term of government.
Birmingham explained on Tuesday that Australia had “lived through a global pandemic” and averted the “loss of 700,000 jobs” through the jobkeeper wage subsidy.
The Australian economy had 370,000 more jobs after Covid than before, he told ABC Radio National.
Verdict
Australia’s economic recovery from the Covid recession has been impressive, and this is reflected in high labour force participation and low unemployment.
Nothing meaningful is added to these measures by saying 1.9m jobs have been created since 2013 or 1.3m will be created in the next five years.
