Saturday, April 21, 2007

Vote Labor???

We need a higher unemployment rate. It's not just that I like Kevin Rudd somewhat, and that the economic action is concentrated in water trading (and carbon trading). I am being selfish in this instance because a higher unemployment rate is good for small business owners. Ok, so it's not so good for the country as a whole, nor for the newly unemployed, but quite frankly, that's their problem. Kevin Rudd's IR policies are not laid down in stone, but the noises are in the direction of winding back selected workchoice legislation. What would be typical in Australian election campaigns is that the wind back is "minimalised" by the policy wonks. This is a strategy to maximise votes. Why advertise a complete windback when any windback more than the Liberals are promising will achieve the vote of the interested individual.
The "Labour supply shortfall" is an illusion based on the "lump of labour" fallacy. Low unemployment rates have the tendency to give that illusion. The difficulty in finding employees is real, and scaring (all the other) employers away from hiring is the only realistic avenue to making it easier. The unfair dismissal legislation is the obvious choice for a minimalist windback. This will scare the bejeepers out of most small businesses from employing (or even to dismissing while it is still legal) while my own analysis shows these fears to be somewhat overplayed or irrational. This is why on balance it would play in my individual favour.

3 comments:

Dr. Clam said...

We really need some way of recording and reporting an 'unemployableness' rate... this is what will do us in, in the long run...

Marco said...

Well, assuming unemployableness rate is a variable quantity akin to long term unemployment, it is probably around 3%. The other 1.5% I would rate as "hold out" unemployment rate - ie. unemployed holding out for a better offer, or employers holding out for better applicants. These could yet become lower as employers start to employ the unemployable and offer grossly generous wages to hold-outs. It is more diminishing returns when unemployment gets this low than a fixed limit. However, even unemployment at 6-8% is probably healthy in the long run. Low unemployment gives "individualist" employees more power at the expense of "collectivists". As much as I hate the thought of collectivist employees gaining ground, it is from a very low current base.

Chris Fellows said...

Selfishly, of course, a higher unemployment rate would also be good for me, as it would encourage school leavers into higher education and graduates into postgraduate study. The number of undergraduates largely determines our overall funding, while postgraduates are what enable us to research and hence advance our careers...