Learn about the Job Guarantee

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).

  Private PSE GG Total UN LF
1967 3721.7 442 631.2 4794.9 92.5 4887.4
1999 7431.3 198.6 1248.9 8878.8 682.6 9561.4
Change 3709.6 -243.4 617.7 4083.9 590.1 4674.0
% pa growth 2.18 -2.47 2.16 1.94 6.45 2.12
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 force.