Don't base policy on labour market myths

18 July 2019

This opinion article by Business Council chief economist Adam Boyton was published in the Australian Financial Review on Thursday 18 July 2019

The jobs market has remained strong over the past year despite some softness in economic growth. Thursday's labour force data will show if that strength continued into June.

Yet many question the underlying nature of the labour market. Aren't only part-time jobs created? What about the gig economy? And isn't there more and more casualisation of the workforce?

Both men and women now want more job flexibility and part-time work to balance family and career. 

The facts - and the way Australians view their employers - tell a different story.

Most employees in Australia are in full-time employment, with the majority of jobs created over the past year being full-time.

Yes, the share of part-time employment has risen over the past 40 years. Which really shouldn't surprise anyone. Australia's economy and society have changed dramatically since the monthly labour force survey began in the late 1970s.

Australians don't typically go straight from high school into a full-time job anymore. It's now more likely to be high school to post‑secondary education, and often a part-time job at the same time, and then into the full-time workforce.

People are also living and working for longer. And the end of our working lives is now less of a sharp transition from full‑time work to full‑time retirement.

There has been a surge in the share of older Australians working - including working part-time. Twenty years ago less than half of those aged 55 to 64 were in the labour force, compared to around two-thirds today.

And women have increasingly entered the workforce, with a family or a career no longer a mutually exclusive choice. Greater flexibility in working arrangements helps in balancing family and a career (for men and women).

The rise of part-time work - which in the ABS data can mean working 34 hours a week, every week, with entitlements - simply reflects these changes in Australia's society.

And of the around 4 million part‑time workers in Australia, the ABS finds that only 505,000 (one-eighth) were wanting to work more hours, were available to work more hours, and were looking for more work.

In other words the vast majority of part-time workers are working part-time because they want to or can only work part-time (due to other commitments).

That doesn't mean there aren't some who would like full-time work or more hours.

But the solution isn't to restrict, or for that matter demonise, part-time work. Rather the solution is stronger economic growth that creates more demand for work. Similarly, a solution to weakness in wages growth isn't found in regulation, but in having strong economic and productivity growth.

What about casualisation? Here data from the ABS shows the share of casualisation has remained steady for 20 years. In fact, the stability in the share of casual employment tells you there are a group of Australians for whom the higher casual hourly wage is likely more beneficial than the entitlements related to other forms of employment.

And the gig economy? A recent study for the Victorian government found that a little over 7 per cent of respondents were currently working via a digital platform, or had done so over the past year. The "had done so over the past year" is important. Imagine what people would say if the ABS included anyone who was currently working, or had worked in the past year, as employed.

So the share of people offering to work on digital platforms at any point in time is likely to be much less than 7 per cent.

And of the people working (or who had worked in the past year) on digital platforms, a little over half described the income as "nice to have but can live without it".

Similarly, almost half those currently on, or who had been on a platform over the past year, spend less than five hours a week working via a digital platform.

Those data points suggest that working on an online platform is for most people a matter of choice, not necessity.

Of course if Australians really were unhappy with their working arrangements then it would likely be reflected in how Australians view their employers.

Here again the facts tell a clear story. The 2019 Edelman Trust survey reports that "despite a lack of faith in the system, there is one relationship that remains strong: my employer".

In Australia 77 per cent of respondents trust "my employer". That's well above trust scores for NGOs, business more broadly, government and media.

Yes, there are always aspects of our labour market that can be stronger. But let's not allow false perceptions about the nature of work drive us to the wrong policy solutions.


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