Thursday, 18 August 2016

In denial

The first edition of the new Household Labour Force Survey came out yesterday, and there have been some strange reactions.

At first I agreed with Grant Robertson, Labour's finance spokesman, when he said that it wasn't right that people looking for jobs solely over the Internet aren't being counted as unemployed. In today's world, that is indeed a daft approach, as I said at the time when Statistics NZ was running its (very useful) seminars around the country about the new-look HLFS. It's particularly odd, since this definition, which as Robertson correctly said has the effect of making unemployment look lower than it really is, came from the UN's International Labor Organization, which is emphatically not a labour-hostile institution with an agenda of concealing unemployment: it is, as its website says, "devoted to promoting social justice and internationally recognized human and labour rights".

But I was then surprised, and dismayed, to see Robertson casting aspersions on the motivation of Statistics NZ, which justifiably took exception. We don't need the quality of public discourse getting nudged further into the mud.

I was also surprised by commentators who took the line that, because the new survey contained methodological changes, we could not be sure that employment grew at all in the second quarter. At face value, the HLFS had shown a 58,000 rise in employment in the June quarter compared with March, but as Stats said (here) "part of this increase reflects improvements to the redeveloped HLFS alongside any real-world increase in employment this quarter".

It is technically angels-on-the-head-of-a-pin true that the HLFS doesn't tell us whether there was "any real-world increase in employment". But to try and make the case that there really wasn't any is complete cobblers. Absolute arsehats.

For one thing, Stats had earlier published the June quarter results from what used to be a separate Quarterly Employment Survey publication and is now part of an overall Labour Market Statistics release. It isn't on all fours with the HLFS one (for example it misses very small businesses, and agriculture) but it is another valid perspective on employment, and it showed that the number of full-time equivalent employees rose by either 0.3% (seasonally adjusted measure) or by 0.6% (the 'trend' measure) in the June quarter.

For another, every single business survey tells us that employment is growing. The latest employment components of the BNZ/BusinessNZ Performance of Manufacturing Index, the BNZ/BusinessNZ Performance of Services Index, and the ANZ's Business Outlook survey are all showing growth in employment. Here's the ANZ one.

So it's time to stop playing silly buggers with the data and to stop denying the undeniable: employment is growing. That's it.

The other interesting thing in the new HLFS was a new 'underutilisation' measure, which adds up the officially unemployed, the underemployed, those looking for work but not quite ready to take it up, and those not "actively" seeking work but who would like a paid job and are available (which includes those Internet-browsing people, who aren't being "active" enough, apparently, to fit the official definitions).

Measures like these are often politically abused - "Sure, the unemployment rate has gone down, but see, there's all these other people..." - but it's still an interesting concept, as this Stats publication (pdf) explains. And it's one where we can see (here) how we're travelling by international standards (give or take - it's the picture from last December, as not every country has up to date figures).

To be honest, I'd thought we would show to greater advantage than 'a bit better than the OECD average': cyclically, the economy has been doing well by international standards, so you wonder how (for example) the sluggish Japanese economy is to the left of us. Perhaps the answer is demographics: there may simply be very few warm bodies left unemployed in the relatively aged Japanese population, compared with our younger structure. It's less of a surprise, though, that our relatively flexible labour markets have produced better outcomes than the sclerotic institutional arrangements in France, Italy, Greece and Spain.

But we have one blot of our own (shown below) that badly needs fixing. I don't have any immediate answers, beyond the traditional liberal nostrum of more, and better, training and education. Hopefully others have more ideas: either way, this can't be allowed to go on.


  1. Interesting. Any idea why Australia's underutilization rate is sitting between Portugal and Italy? It's further to the right than I would have expected.

    1. Yes, I wondered about that, too. It's not down to the unemployed (their rate is only a bit higher than ours). Their participation rate is a good 5% below ours, so that must be part of it, but why....

  2. I believe I saw that the definition of unemployed is that looking online (or elsewhere) doesn't count, but applying for jobs on online (or elsewhere) does count. Seems reasonable.

    I thought RNZ could have done more to clarify the issue, I'm sure they would have been told, or perhaps they could have asked. It's hard enough to wade through the political noise, without MSM simply repeating it.

  3. Your first point is absolutely right: that's the definition. Applying for a job counting - quite agree, that's something that definitely puts you in the 'active' looking basket. Just looking - that's harder to call. Personally, for anything specialised (I was thinking of economists, funnily enough), I think you might well look (and perhaps pretty diligently across a fair few sites) and flag it away if there's nothing, but that sounds like actively looking as well, so I'd count it.

    On your second point, yes, I think people could have cut through to the chase rather better. Stats have been doing the rounds explaining the changes. You might also be interested in this one-off statement they put out yesterday to clear things up

  4. this was good experience. to read it thanks & assure in future i have opportunity.