Question 2 - Does the private sector create enough jobs?
In 1967, the unemployment rate was a low 1.93 per cent. In the first quarter
of 2000, the unemployment rate now hovers between 6.5 and 7 per cent. What
has happened in between? What has been the growth in the labour force? What
has been the growth in employment? What has been the growth in the constituent
parts of employment (Private and Public)? The following discussion examines
these trends and sources the reason why the unemployment rate has trebled.
According the Australian Bureau of Statistics data, private business employment
went from 3,721.7 thousand in June 1967 to 7,431.3 (growth rate thousand by
September 1999. In the same time, the civilian labour force grew from
4,887.4 to 9561.4 thousand. The ratio of private employment to the
labour force (the private employment rate) fell from 78.5 per cent to
77.1 per cent.
Overall government employment over the same period has failed to keep pace with
the rising labour force. Following the mass privatisations since 1990, employment
in public enterprises has plummetted from to 442 thousand to 198.6 thousand (a
large part of that is privatised employment). So the private business figures
include jobs that were formerly in the private sector. However, the growth in
private employment has not been sufficient to offset the public sector losses.
Over the period, General Government employment went from 631.2 thousand to
1248.9 thousand, roughly proportional with labour force growth. Unemployment rose
from 92.5 thousand (1.93 per cent) to 682.6 thousand (7.2 per cent).
The following Table summarises the data for this period. The evidence is that despite
the claims that the private sector would absorb workers released from the public
sector after the severe cutbacks the reality is different.
The private sector has always only been able to employ around 77 per cent of the
labour force. Unless the public sector provides jobs for the remaining workers
seeking employment unemployment will remain high. The Job Guarantee is designed to
ensure that the public sector meets the slack that the private sector generates.
An additional warning in interpreting the data in the Table. While the private
sector has maintained employment growth in proportion to the labour force growth
the ratio of full-time to part-time employment has changed dramatically. In 1978,
full-time jobs accounted for around 85 per cent of the total, whereas by November
1999, the ratio was down to 74 per cent. It is true that some of this change
reflects the preferences of the workforce for casual arrangements. But ABS data
shows that over that time, the percentage of part-time workers who wanted to
work more hours had doubled (now at around 29 per cent).
|% pa growth
Private is private employment, PSE is Public Sector Enterprise employment and GG
is General Government employment. UN is total unemployment and LF is the labour