It was an early start at Roy Morgan Research in Melbourne this morning with the release of its latest State of the Nation report, presented by the firm’s CEO, Michele Levine, assisted by the old stager Gary Morgan. You can browse the highlights, or readers with a spare $3500 can buy the whole lot.
I found most of the conclusions fairly uncontroversial. Country people are a bit more conservative in their attitudes than city people, don’t use new technology as much and have more health problems — all pretty much as expected. Interesting to see, though, that 74% (78% in the country) disapprove of foreign investors buying Australian farmland, and even more interesting to see that disapproval is slightly higher among Coalition voters than Labor voters. (Which is supposed to be the free market party again?)
But the discussion got interesting when people started talking about unemployment, one of Morgan’s favourite hobby horses. For many years Morgan has been producing its own estimates of the unemployment rate, and they’re invariably higher than those released by the Australian Bureau of Statistics. You can see the full-time series here, going back to 1992.
The two, of course, are not measuring the same thing. The ABS uses a standard international definition according to which you have to have done no paid work in the last week and be actively seeking and available for work. Morgan instead counts all those who “are looking for work”, which it argues — with considerable justice — is a better fit for most people’s intuitive idea of unemployment.
How much the difference matters is another question. Gary Morgan’s case is that understating the seriousness of problem is callous towards the unemployed and leads to policy mistakes. Specifically, he argues for further interest rate cuts and further deregulation of the labour market.
But for policy responses, what matters most is the trend, and if the trend in two sets of figures is the same it doesn’t much matter which one you use. Your static picture might be wrong, but you’ll still get the dynamics right (particularly if the rest of the world is relying on the same measure).
And here’s where it gets interesting. Most of the time, Morgan’s figures match the ABS trend pretty well. They’re consistently higher, to the tune of maybe about a third, and they’re more prone to sudden movement, tending to exaggerate the trend. But over the years they’ve generally moved in the same direction and the gap between them hasn’t been subject to huge variation.
But in the last year that’s changed. The ABS unemployment figure (whether raw or seasonally adjusted) has been basically flat since the middle of 2010. Morgan’s figures, however, are not just higher but have continued rising. The gap between them for the March quarter, 9.7% versus 5.3%, is completely unprecedented. (The previous highest I can find is in March 2001, 10.5% to 6.8%.)
This could be just bad survey technique. Morgan’s polling certainly has some blemishes on its record, most famously perhaps its prediction of a decisive ALP victory just before the 2001 federal election. But its mistakes are usually due to short term problems: if you look at a Morgan poll series it’s extremely jumpy, so any one result is as likely as not to be inaccurate.
Once you smooth out the noise, however, the trends nonetheless match the results from other pollsters quite well.
The unemployment question looks like something different. It looks as if something has been going on that for some reason the ABS hasn’t picked up, which would be a worrying sign. Morgan’s most recent monthly results, however, do show downward movement, so it’s possible that the statistical blip, whatever it was, is now over.
There’ll still be an interesting argument to have over what really counts as unemployment, but if on either measure it’s coming down then at least that’s one less thing to worry about.
Which OECD Countries use Thirteenth International Conference of Labour Statisticians . 1982 to estimate the numbers of unemployed given that no-one can live on one hours work a week?
@Wombat: strange as it may seem, from what Levine said this morning I gather they pretty much all do. A quick read thru Wikipedia supports this: http://en.wikipedia.org/wiki/Unemployment#Measurement .
I normally favour adopting international standards, but fear that Morgan may be right that understating unemployment may reduce the effectiveness of policy responses.
Assume that unemployment has been flat for a decade. Unemployment on the international measure used by the ABS of 5% doesn’t seem too much to worry about so gets not policy response. But unemployment of 6.5% is rather more worrying and hopefully would provoke intervention. On the other hand, an ‘equation’ of economists may argue that structural unemployment is 6.5%, again arguing for no response.
Does Morgan include any specific analysis of unemployment and disability? This is an area where I think there needs to an in- depth analysis of the last decade of policy responses. After ten years of very expensive and highly bureaucratised policy work on DSP and the procurement of employment services what have we got to show for it? We rank very poorly amongst OECD countries for unemployment and poverty.
It’s certainly not for a lack of people with disabikities wanting to work and trying to, but we’ve made it so hard for people to do it and we over regulate the services that exist to support them. This is a largely untold story in Australia where the conversation usually begins and ends with the undeserving trying to get out of work by getting in the DSP a la A Current Affair.
We’ve focussed nearly exclusively I. Australia on trying to stop people getting onto the pension, and accordingly we’ve scewed the delivery of emplyment support services away from those with significant and lifelong disabilities to e ‘bad backs’ and the ‘worried well’. It seems that if you manage to get on to the pension – we’ll, I don’t think we seem to care ifyou work or not.
And the irony is that these are some of the most highly motivated job seekers, and there is an excellent business case for employers to employ a person with a disability.
Seeing as the ABS reports a plethora of employment statistics, including the participation rate and hours worked, it would be fairly easy to see what’s going on under the hood… the problem doesn’t appear to be the ABS’ choice of standards, just an unhealthy focus by politicians and commentators on one of several important indicators.