Economics: Stuck on job stats

Disputes about labour market statistics were triggered when the Government – defending its policies after swathe of cut-backs in the mining, aluminium and other sectors last month – preferred to address employment growth rather than the toll of lay-offs.
Labour’s David Cunliffe noted there were several recognised measures of unemployment, including the Household Labour Force Survey (HLFS) and the Linked Employer Employee Data (LEED). He favoured LEED because, he said, Statistics New Zealand regarded it as “the best measure of what’s really happening in the jobs economy”.
Steven Joyce, Minister of Economic Development and Employment, preferred the HLFS. So did Finance Minister Bill English. His riposte to questions about the lay-offs was that in the past two years “this economy has created 50,000 net new jobs and over the next four years we expect about another 150,000 net new jobs”.
Radio New Zealand recently reported Statistics NZ as saying the HLFS was not an appropriate measure of job creation and destruction. It used LEED data to determine how many new jobs had been created and how many existing jobs had been lost. These showed nearly 452,000 jobs created between 2008 -2011 but almost 465,000 were lost.
English was unfazed and told Morning Report the HLFS had always been the official measure of employment statistics. But do they help his cause?
We need around 30,000 new jobs year to accommodate population growth. In the 2011/12 June year we fell far short of that with just 13,000 new jobs.
The HLFS shows employment growth (57,000 new jobs) averaging 1.3 percent year in the two years to June 2012. But 44,000 of those jobs were recorded in 2010/11 (two percent growth). In the latest June year, the growth fell to 0.58 percent (and the population increased 0.63 percent).
Answering parliamentary question as Associate Finance Minister on 13 September, Joyce stood by the figure of 57,000 more people with jobs than two years earlier. He emphasised this was according to the household labour force survey, seasonally adjusted, “which is the standard internationally recognised measure of employment and unemployment”.
As to the figures from the LEED set, they looked at specific PAYE jobs rather than people jobs, and, in any case, it appeared to significantly undercount the number of jobs in the economy. Furthermore the most recent figures were 15 months old.
Even given those caveats, Joyce insisted, the LEED data set showed net increase of 4870 jobs over the two most recent years from June 2009 to June 2011. Things were becoming confusing.
He then was questioned as Minister of Economic Development. Labour’s David Cunliffe asked why he had said, two days earlier, that the economy was “seeing around 250,000 jobs created every year, and slightly fewer than that being lost every year” when Statistics New Zealand’s “best measure of job creation” [LEED, presumably] showed net loss for the period 2008 to 2011?
The invitation to substantiate the claim about 250,000 jobs being created every year was the more fascinating bit of that question. Joyce evaded it and took refuge by reiterating the HLFS’ 57,000 extra jobs in the past year.
New Zealand First’s Andrew Williams came up with yet another measure, asking Joyce to explain why the HLFS showed 57,000 new jobs in the past two June years but the national employment indicator during the same period recorded only 33,245.
The answer: the national employment indicator was an experimental series that leaves some matters out. Either way, Joyce accepted the number was not big enough, and the Government was looking for measures to generate stronger growth.
That was why it was putting all the effort into the Business Growth Agenda, with items such as oil and gas exploration, the intensification of agriculture, international investment and the convention centre. And so on.
Nobody stacked employment growth alongside population growth. Had they done so they would have found the population has increased by 3.8 percent since December 2008. Employment numbers have increased just 1.6 percent. These are HLFS numbers and they are worrying. M

Bob Edlin is leading economic commentator and NZ Management’s regular economics columnist.

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