Andrew Norton has posted on some interesting findings from Roy Morgan’s employment perceptions survey. Basically, there’s something of a disjunction – with 70% of respondents believing unemployment will rise over the next year (the highest since the last recession, and the third highest since the survey began in 1975) while 80% think their own job is secure (the same number as last year’s survey). 63% believe they could easily find another job.
These sorts of surveys demonstrate one of the weaknesses of opinion polling – we’re left to speculate on the reasons. It really would be extremely helpful if polling groups were to supplement such research with qualitative forms of enquiry such as focus groups, or qualitative aspects to the survey instrument.
But since we have to speculate, my guess would be that one or more of the following factors might be in operation:
(a) “The economy” itself is something of an abstraction in most people’s minds, and unless they can feel the impact of economic stats directly or by anecdote then it remains an abstraction. This is exactly the dynamic that explained the failure of various “beautiful sets of numbers” to give John Howard and Peter Costello any traction last year, and for that matter, vitiated the arguments in favour of WorkChoices. So, if there’s something of a lag beween the financial aspects of the crisis and their impact on “the real economy”, then it may be that expectations also show something of a lag;
(b) Relatedly, people tend to extrapolate to the future from the recent past, and more powerfully from their own experience than from history or meta narratives. So we would expect attitudes to employment and the labour market to reflect the most recent patterns, particularly among younger and more skilled workers. It may also be a realistic (at this point) implicit understanding of the fact that “the economy” is a much more disaggregated creature than it once was, with different sectors both occupationally/industrially and geographically more weakly correlated with overall trends. In that sense, if people are aware of continuing tightness in the market for particular jobs in their field, there’s a reasonably rational belief that the underlying skills picture may continue, and/or that their sector may be somewhat insulated from broader nationwide and global developments.
(c) “Unemployment” itself has a different subjective meaning due to the casualisation of the labour market and the increase in contracting. It may be that a recession no longer poses the threat of a non-existent secure permanent job disappearing just like that for many people, but rather a shift in hours or longer gaps between contracts. “Unemployment” as a lived category means something different from both its statistical and legal meanings.
I’m not immediately sure that there’s a mismatch here. If 70% of Australians think unemployment will rise, but 80% of Australians who are in full or part time work think their job is safe, then there’s not a problem. The survey’s clear – the first question was asked to everyone, then the second only to those in full or part time work, who’d be a subset of the people asked the first question.
No, I think there’s still a mismatch, Alister, because obviously it’s those in full time or part time work who should have a heightened apprehension of unemployment, all other things being equal. What I’m interested in is what those things that aren’t equal are, as it were!
As Andrew Norton puts it:
Like Joni sez, you don’t know what you’ve got ’til it’s gone.
On a slightly different note the SMH’s Stephanie Peatling, under a tricky headline of “Rudd’s continued harsh line on Welfare”, talks about the continued harsh breaching of the unemployed despite the government’s recent statement that the policy would change to lessen this.
Has me puzzled.
Is the department continuing an old Howard policy in defiance of the new government, or is the government just clumsy in effectively relaying its stated intentions and wishes to department heads?
Y’know,
Like, “Memo to depts: lay off on the breaching”.
Given the amount of depression suffered by welfare recipients, I would say someone, somewhere- politician or bureaucrat- is playing somewhat nasty games with less fortunate people’s lives.
The discrepancy is technically explainable – survey-takers are just as confident of keeping their job as they were this time last year, but not nearly so confident of getting a new one should they lose it (which is always an accepted possibility, even if you feel your job is “secure”). Plus you have to allow for recognising that even if you’re not one of them, the 20% of those who don’t feel their job is secure are also less likely to find a new job should they lose theirs. The net result of that is an expected rise in unemployment.
Having said that, I’m genuinely surprised that there has been no change in the number of people who feel “secure” about their job – unless perhaps “secure” is just too vague a term: perhaps if participants had been given a chance to rate “how secure” on a scale of 1 to 10, we would have seen a drop in confidence since last year.
Mismatches aside I’d say this is very good news Mark. It shows Joe Blow doesn’t believe he’s going to be affected too badly which augers well for consumer confidence etc. Add in a 2% interest rate cut etc and I’d say we are starting at a far better place than I feared we might. Petrol is also now starting to fall now the $A has “stablised”.
It is also pretty consistent with retail figures out yesterday where if you exclude NSW they were fairly reasonable given the circumstances. I note however they do not include October which was the horror month in terms of a negative news onslaught.
Another statement I have seen elsewhere but haven’t been able to verify is that the stimulus packages and loosening of Monetary policy around the world have happened far earlier this time as compared to say ‘80-’81. Interested in people’s views on that either way. If this is true the pollies need to be smart enough to get that fact out there.
Might be interesting to see the data for this poll Mark has analysed for NSW versus the rest of Aust.
Here’s another possibility:
Suppose I’m employed in full-time work. I read newspapers, I watch TV news. They say that bad times are coming. I think back to earlier bad times (not a recession, just a downturn). I guess unemployment may rise from 5% to 7%. That’s a real rise. It’s quite a substantial rise. +2 from a base of 5.
But it means an EXTRA 2% of my fellow-employed are likely to lose their job. Randomly distributed, that is only 1 in 50 of the population, or in terms of the currently employed, 2 in 95. So my chances of going from employed full-time to unemployed, are TINY.
OK, now re-do the figures with a much heftier rise, say from 5% to 9%. Still only a 4 in 95 chance of losing my job.
Caveats:
i) if I’m in a more vulnerable industry like car assembly, house building or tourism, I might be less sanguine.
ii) if my organisation looks like shedding staff, ditto.
iii) if I’m in casual or part-time work, I may expect my weekly hours to be reduced in a downturn; how would I then answer the survey questions?
“The economy” is certainly an abstraction, but interest rates, petrol prices, credit card statements, weekly pay slips, friends’ employment, and TV news bulletins are all concrete and readily understood.
People know that bad times are probably coming, but until they see layoffs in their industry they will continue to see their job as secure. Voila.
In terms of expectations about unemployment unless you are in an industry that is really in the firing line a lot of the rise in unemployment will not be so much people losing existing jobs as new entrants into employment market failing to find their first job. If this downturn ends up being a sharp downturn but not a real recession I think we’ll see most businesses just delay expansions, hiring freezes etc rather than wholesale lay-offs which means the new entrants will be the ones that struggle rather than experienced operators.
Three things to watch for in relation to unemployment, which is primarily driven by personal and business consumption:
1. The nature of the credit squeeze suggests that savings will increase. In the current debt-fuelled environment, this will mean people paying off their credit cards. While the medium-term consequences of this are good, it will generate short-term pain. Hence the Keynesian focus of the budget stimulus package on pensioners, low-income families and the First Home Owners Grant (which i hate from an equity point of view): they are all more likely to promote spending rather than saving;
2. Structural changes arising from the ‘gales of creative destruction’ that Joseph Schumpeter talked about, and which accelerate in recessions. Some jobs will be gone due to technological changes, decline in the demand for the product or service, and globalisation shifting some jobs offshore (try buying an Australian made shirt or children’s toys these days). At the same time, new ones will emerge, as has happened since the 1780s;
3. What impact will recession have on the digital economy? The last general worldwide recession was 1991-92, which was particularly strong in Australia. We have not had a recession since most people got the Internet, so there is a real zone of uncertainty here.
Yes, some good points, Terry.
I’ve been thinking about structural changes not just in the labour market but also in terms of people’s attitudes to and subjective understandings of work (as the post indicates), and I think so much has changed since the last recession that a lot of assumptions about both effects and behaviours/attitudes will need some rethinking.
If by digital economy you mean IT sector Terry it could get hit fairly hard as a lot of it is capex which is discretion certainly over say 12 – 18 month timeframe.
Kingsley, I’m thinking about something different to the IT sector, although they are clearly related. I’m thinking about consumer preferences for buying things online, as well as subscribing to online products and services, or using online sites to buy and sell things (e.g. classifieds).
If people may need to save money, the subscription to an online multi-player game may start to look like a bit of an indulgence. At the same time, there may be greater use of online auction sites, in search of a bargain.
A lot of businesses are riding on these decisions, and there are not really historical precedents at this time.
Will be interesting Terry as I note that book sales went up in the retail figures released yesterday so perhaps foolishily using that as a proxy for other goods sold over internet maybe they’ll do alright. On flipside my take is an awful lot of that stuff is discretionary. Further countering that though is this trend to stay at home and be enterntained there rather than “out and about”. As you suggest we’ll have to wait for the data.
I suspect the discrepency between the expectation that unemployemnt will rise and the expectation that we’ll all keep our jobs has to do with self-perception: “I’m so good at my job that I’m close to irreplaceable, but that no-hoping bludger two desks over is almost certain to get sacked and never work again.”
Kingsley @ 10.26am on the 18th. Good point!! Are we full-timers, old-timers: smug, or what?