It is commonplace in Australian policy debate for groups presumed adversely affected by proposed policies to provide estimates of the undesirable consequences of change.
A fashionable form relates to predictions of job losses for the group affected, usually accompanied by counter-claims made by the government of the day or other groups in favour of the policy.
A highly public example of this is the claim by the Minerals Council of Australia (MCA), based on work done in 2009 by Concept Economics that the then-planned Emissions Trading Scheme (ETS) would result in 23,510 fewer jobs in Australian mining than would otherwise be the case.
A major background issue is that most economists would argue that any changes in the relative price of carbon-producing output must also be associated with offsetting increases in employment as a result of the higher level of activity in, for example, alternative energy production, and this is perhaps the critical point in the jobs debate concerning the consequences of policy reform.
While we acknowledge this fact, the very large job loss figure might be a frighteningly large number for many observers, so we’ve addressed the question: how many jobs is 23,510, really?
Our research reports on findings using three different data series and methods to put into context the supposed jobs loss figure.
In our paper for the Australia Institute, we analysed the different data sets aimed at improving the understanding of, and putting into an aggregate economy context, the projected mining sector job losses as a result of the 2009 planned ETS.
While the focus is on the ETS and mining, the illustrations apply to almost all public and political debate concerning the meaning of job loss projections from anticipated policy reform in an aggregate labour market context.
It matters, for example, for the Murray Darling Basin Plan.
We recognise that there are some weaknesses with respect to the data and methods used.
Even so, a very clear and consistent message has come through.
It is that the projected job losses from the ETS, particularly when considered over a 10 year time horizon, are in a statistical sense close to invisible with respect to employment and unemployment stocks, and trivial with respect to aggregate flows in the labour market.
Also, it is apparently the case that with respect to mining sector employment, the projected losses are a very small proportion of overall inflows to and outflows from mining.
Further, it seems to be the case that those leaving mining periods of growth are not then entering a protracted period, and more likely any period at all, of unemployment.
Our results should not be taken to mean that economic policy reform is costless to all employees who might be affected by sectoral changes in the labour market, and there remain clear roles for government to minimise the personal costs for those so disadvantaged.
As well, the details of this research cannot be translated into precise analyses of the employment effects of the carbon price policy being developed by the current government.
But the essential points concerning the size and meaning of mining sector employment effects should not be in dispute; the alleged jobs losses aspect of the climate change policy debate is not in any sense important to the overall discourse.
This appeared in the paper, “How many jobs is 23,510 really? Recasting the mining job loss debate” by Bruce Chapman and Kiatanantha Lounkaew Crawford School of Economics and Government, from Australian National University.
It has been reproduced with permission.
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Comments (2)
Michael J. Biercuk
(Senior Lecturer in the School of Physics at University of Sydney)
Very clear presentation - thanks for the article.
Beyond these arguments, however, are broader questions of balance in the economy and long-term strategic planning for the Australian economy.
The continuing boom in mining does certainly benefit the government (via taxes and royalties) and individuals pursuing high-wage work in the industry, but it has tremendous negative consequences.
First, it is leading to consumption of natural resources, beginning with the most easily accessible deposits…
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Malcolm Gorman
Mr (logged in via email @gmail.com)
An additional point is that any modern enterprise is striving to reduce the number of employees on its payroll to reduce costs. It's a little ingenuous for such an enterprise to object to policies BECAUSE they will result in reductions in employee numbers. Rather a more honest objection is that a policy will (allegedly) result in reduced profitability for the enterprise, which because of the enterprise's own policy of minimising employment, will have the knock-on effect of reducing the number of employees on the payroll.