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Paula Bennett prematurely opens the champagne, again

Written By: - Date published: 10:31 am, April 20th, 2010 - 8 comments
Categories: jobs, unemployment - Tags: ,

For about a year now, Paula Bennett has been almost continuously proclaiming victory over unemployment.

First, it was the fact that unemployment only rose gradually at the start of the recession (due to the self-reinforcing effect of low unemployment and companies having plenty of over-time to cut).

Then, when unemployment leaped 1% in just 3 months it was ‘well, our unemployment rate is lower than Aussie’s, so we must be handling the recession better, dumb Aussie and their stimulus plan’.

When Australian unemployment peaked and then started falling to the point where their rate now a full 2% below ours (the first time in a decade theirs has been lower) they started comparing us to the OECD average instead and proclaiming the success of ‘job ops’ which everyone knows is just a rort for employers.

Then unemployment benefit numbers jumped an unprecedented 13.2% in a month.

I thought Bennett had finally learned about things like seasonal variation when she didn’t try to cover herself in glory over the normal Feb-March drop in unemployment numbers. But I was being too optimistic.

Now, Bennett is trying to claim victory because the number of job vacancy ads is rising. The Department of Labour produces a monthly index of the number of job ads. It started at 100 in May 2007, it fell to 55 in June last year and now stands at 67.

Bennett is all excited because 67 is more than 55. But is it the good news she seems to think?

Obviously, for unemployment to be stable there have to be a certain number of vacancies in every month for people joining the workforce, others whose previous jobs have been lost in the normal churn of businesses, and still more for the normal churn of employees. More than that number of vacancies and unemployment will fall, fewer and it will rise.

I compared the job ads index to Stats’ unemployment rate numbers to see what the link was. Turns out change in unemployment rate and job ads index level are highly correlated (-0.76).

The bad news is it looks like we are still, a year after the official end of the recession, not at the point where the economy is creating enough jobs to keep unemployment in check, let alone bring it down.

It seems you need a job ads index reading of about 100 for unemployment to be steady. Once it dips below 80, unemployment takes off.

The last quarter that the index stood near where it is now in the late 60s was the March 09 quarter when unemployment rose 0.3%. So, it looks likely that a rise to 7.5% in the next unemployment rate update isn’t out of the question.

I’m very surprised and disappointed. I thought we would be heading back down by now. We may not be losing jobs as fast as we were but, incredibly, this indicator suggests that unemployment is going to keep rising for some months yet.

How far away we seem now from the four years of sub-4% unemployment that we enjoyed under Labour, a government that, unlike National, actually cared about helping Kiwis get work.

8 comments on “Paula Bennett prematurely opens the champagne, again ”

  1. Your last sentence sums it up. One of the cornerstone principles of the Labour Party is a commitment to full employment.

    One of the hidden cornerstone principles of the National party is complete indifference if not an objection to full employment. Remember Smile and Wave’s “we would love to see wages drop”?

    Unemployment serves National well. It achieves:

    1. Downward pressue on wages, particularly if they change the Industrial Relations system in a way their mates want them to.
    2. It serves their sense of superiority – “ooh look at that unemployed person who is responsible for his or her plight and I am such a great person because I am wealthy”.
    3. It also gives them political attack targets so they can blow on the CT dogwhistle and give a sector of their support something to rail against.

    Bring back Helen!

  2. Rex Widerstrom 2

    Clearly the poor woman has diffculty processing information that isn’t presented in pictorial form (preferably in crayon). So can I suggest Mr Key assist her grasp of statistics as follows:

    1. Tell her her Ministerial salary is being sut to $55,000 (still more than many NZers have to get by on).
    2. Then yell “Surprise! I was only kidding… we’re going to pay you $67,000!! Isn’t that great news!”

    [micky, I was with you right up to the last line and then you lost me completely. I’m all for recycling, but not when the waste is toxic 😛 ]

  3. Draco T Bastard 3

    Looking at that it seems that a job index of:
    100 will keep unemployment steady
    less than 100 will increase unemployment and
    greater than 100 will decrease unemployment

    One of the hidden cornerstone principles of the National party is complete indifference if not an objection to full employment.

    Remember Blinglish saying that getting unemployment down below 6% was impossible? That figure is the neo-liberal holy grail – Milton Friedman got a noble laureate for coming up with that figure. Unemployment lower than that and you get “wage inflation” (businesses have to compete to attract workers and so have to pay more) and higher than that and the people start to revolt as their living standards decline as wages are pushed down.

    • Marty G 3.1

      The 100 level is just the base month – May 2007. But yeah, it looks like that happens to be around the steady level too.

  4. tim 4

    Note: Job ADS are on the rise……..which is actually not a true reflection of the number of jobs available.
    Job ‘agencies’ once used to continue to advertise jobs that had been filled, and of course a number of agencies are actually advertising the SAME job – especially ‘professional’ jobs.
    All agencies want prospective candidates on their books.
    As a former employer, this I know. The number of times several agencies sent in C.Vs for the same candidate (even when they’ve asked a candidate for exclusive agency – a bit like real estate) I lost count of.
    But more fool employers. And more fool the gubbermint

  5. Irascible 5

    Paula has obviously been drinking deeply at the Tory trough and briefing room. Here’s the over privileged Cameron on the UK beating the same drum.
    http://www.guardian.co.uk/politics/blog/2010/apr/20/1
    The right wing selfish few seem to have been issued the same hymn book.

  6. tc 6

    Bennett continues to show her grasp of primary school maths is as good as it gets yet where is the opposition puncturing her over inflated claims ?
    MS has a nice post but agree with Rex on the last line….Goff’s got that recycled/tired/disinterested feel about him and continues to talk over the swinging voters heads….if there’s ever enough to make a useable soundbite out of.

    It’s not bring back Helen time it’s dump Goff time but can anyone see labour admitting the next cab off the rank was the wrong cab…….highly unlikely as they lack the ruthlessness required IMHO.

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