A year later: the true picture of unemployment

Alfred Mifsud Sunday, 9 March 2014, 09:00 Last update: about 13 years ago

I am fed up with endless arguments between the government and Opposition in which the former emphasises that the employment situation is getting better and the latter stresses that the unemployment situation is getting worse.

In theory, because of the old adage of lies, damn lies and statistics, both arguments could be correct. If the labour supply increases faster than employment, government could boast of increased employment and the opposition could point out increased unemployment.

To avoid this statistical conundrum one has to avoid going by registered employed or unemployed and read the situation through the Labour Force Survey (LFS) which rides over the erratic registration issues and looks at employment and unemployment in toto, irrespective of whether registered or not.

To give an idea about the difference in results produced by different methodologies just see these figures both related to September 2013, the date of the latest published LFS.

LFS Q3/2103 Registration statistics September 2013

Employed 179,476 157,684

Unemployed 12,827 7,619

Labour Supply 192,303 165,303

What this basically means is that over and above the number of registered workers there are some 21,792 productively employed but unregistered and therefore paying no payroll taxes or national insurance. It means there are a net additional 5,208 unemployed people, who wish to work but are not registering with the ETC. It also means that our labour supply is 27,000 (16 per cent) greater than official registered records indicate it is.

So politicians of either the left or the right should stop singing from the hymn book that suits them, which gives a very incomplete picture of the employment situation, and instead interpret employment data from the LFS which is more complete and consistent.

The last LFS is for Q3/2013 and in comparison to Q3/2012 the situation is

                                                                     LFS Q3/2103            LFS Q3/2012

Employed                                                          17,9476                    17,4126
Unemployed                                                        12,827                      12,283
Labour Supply                                                   19,2303                   18,6409

This shows that unemployment has held steady in absolute terms even though the Labour Force increased by 5894. In percentage terms the unemployment as a percentage of the labour force kept steady from 6.59 per cent to 6.67 per cent.

In September 2013 the present government had been in office for just six months. It is doubtful whether, in the first six months, any government can do anything material that translates into noticeable differences in the rates of employment or unemployment, although the very removal of uncertainty of elections help to stimulate job-producing investment. In fact, jobs increased in the 12 months to September 2013 by 5,350 compared to 3,660 in the previous 12 months to September 2012.

It is too early for the government to take credit for job creation as well as for the Opposition to pin the blame on the government for what it perceives as rising registered levels of unemployment. Generally, such an increase in registered unemployment in the context of increasing employment is a sign of people who had stopped registering coming back on the labour market as they perceive better employment prospects.

But for a real analysis of government labour policy effectiveness, we have to await a few more LFS quarterlies.

* * *

A year ago to the day, Labour won the general election with an untypically wide margin that left no room for doubt that people wanted change. On Tuesday, Dr Joseph Muscat will celebrate his ‘quccija’ as Prime Minister. Many of today’s columnists will present their analysis of Labour’s performance during its first year in office and maybe I am also expected to put in my two cents worth, biased or objective as it may be perceived.

I will try to keep it short. If one prefers one-line assessments, it can be condensed to: “So far, so good but could be better”.

For a somewhat more detailed analysis the good is:

The can-do attitude

· The business-like approach, free of corruption and minimal bureaucracy

· Tackling old problems like Enemalta’s finances, the cost of utilities, public transport and the restructuring of the judiciary systems and set-up.

· The disclosure of corrupt practices as in the Smart Meter scandal

· Allowing continuity where necessary as in the case of Air Malta’s restructuring and the tourism sector in general

· Delivering a pro-growth and pro-employment budget, while staying within eurozone deficit targets

· Energising foreign investment promotion through a re-born Malta Enterprise

· New initiatives related to oil exploration

· The build-up of regional support for effective lobbying in the EU Council to revisit the EU’s burden-sharing arrangement related to illegal immigration

· Innovation to open up new economic areas such as the IIP and ensuing boost to infrastructure investment through sovereign wealth-fund like mechanisms

Could be better:

· No initiatives for higher tax compliance and the enforcement of fiscal morality.

· Not enough consultation before important decisions are taken, projecting an image of dithering when decisions have to be revisited following subsequent consultations

· Not yet fully adjusted to the role of government and still clinging to the practice, when in Opposition, of pointing out problems but offering little by way of effective solutions

We are also marking the first anniversary of the PN’s role reversal to Opposition after an overlong stay in government when they finished with an empty tank leading to their disastrous performance at last elections.

How did the PN fare? The simplest answer is the same as the then MLP fared in the legislature between 1987 and 1992 after three consecutive terms in government. Like the MLP then, the PN has not accepted its new reality and is continuing to assume that, by depicting the government in the most negative way and obstructing in the most confrontational manner possible, it can force the electorate to realise its misjudgement last year and restore its pretence for a God-given right to be a permanent government. The PN’s interpretation of consensus is still the same as it was when it was in government: my way or the highway.

As is normal, it will take a second election defeat before the PN takes steps to re-make itself electable.