Call it narrative shock — the moment when the story expected and prepared for by the media is so badly derailed that it can’t be gotten back in motion, at least not for a time. That’s what happened yesterday when the ABS produced figures showing vigorous jobs growth. The white-collar-recession and economic-destruction-caused-by-the-high-dollar stories had to be put on hold. Well, not everywhere. “Jobless rate falls but outlook bleak,” was the somewhat confusing headline on Sky News.
The opposition has been making much of the comparatively flat jobs performance of 2011 as evidence of Labor’s poor economic management. The ABS, in an observation yesterday spotted only by a few observers like Mark Kenny, Michael Pascoe and SmartCompany, threw something of a spanner in those particular works, offering the following comment:
“Recent reports have compared the annual growth in seasonally adjusted employment level estimates and have suggested 2011 is the year with the lowest employment growth since 1992 (see below). This neglects consideration that the growth in population estimates for 2011 was also the lowest in over 10 years. It is likely that a large portion of the growth in employment levels in the recent years prior to 2011 has been due to higher levels of population growth.”
According to the Bureau, 2011 saw the third-highest average employment to population ratio ever. Also bear in mind, as Crikey reported, much of the “job losses” in December were not job losses but the non-appearance of seasonal part-time jobs, primarily in retail.
This isn’t to say 2011 wasn’t flat and worse than expected after a surprisingly strong 2010. We’ve tended to forget the economic shock delivered by the natural disasters at the start of 2011, from which Queensland is still recovering — just in time for more floods and more dislocation this summer. The second half of the year was also dominated by growing bad news from Europe with concomitant impacts on consumer confidence (and a Greek default might yet test out the growing Eurozone belief that Europe can handle the Greeks exiting the euro).
Today Treasury secretary Martin Parkinson, speaking to the Senate Economics estimates hearings (with none of the rancour from Coalition senators that became a hallmark of Ken Henry’s appearances in recent years) pointed out another reason, suggesting that employers in 2010, having been bitten by the dearth of skilled labour before the GFC, had put on more staff than they otherwise would in expectation that growth would be stronger in 2011 than it turned out to be, meaning 2011 was always doomed to disappoint on the jobs front. Nonetheless, growth, as Parkinson pointed out, is now more or less back at trend.
That means that the structural change being wrought by the strong dollar is occurring against the backdrop of employment growth — not a catastrophic collapse in employment from a global recession as happened during the early 1990s when we undertook a major structural change with manufacturing.
Thus the frustration, expressed with only a little subtlety last night by Parkinson in a speech at ANU, at Treasury for the government’s growing willingness to intervene to prop up industries struggling with the impact of the strong dollar. It’s a marked contrast with the Hawke and Keating governments, which pressed ahead with reform in the face of a savage recession that smashed manufacturing in Labor’s heartland, but which delivered an unparallelled period of economic growth and real income rises for Australians.
Unlike the early 1990s, we didn’t choose to embrace this reform — the Chinese Communist Party made the decision for us. But that’s irrelevant — we’re stuck with it.
Treasury has learnt the lessons of the 1990s. It appears our politicians have forgotten them.