Australian Taxpayer Funded Jobs Growth Goes To The Moon
A new all time record high in Q3
Back in October here on Substack, I asked the question: “Can government print jobs?”
As the article illustrated, the answer in Australia’s case was very much a yes.
At the time, the data revealed that 283,000 of the 375,000 jobs created in total on a rolling 12 month basis stemmed from non-market roles. Also known as, jobs in public administration, education and training, and healthcare and social assistance.
While some of these roles are technically in the private sector, they are overwhelmingly industries where employment is at least partially or entirely government funded.
Last week, we got the latest labour force account data and it can be summed up with the words an old Russian family friend used to jokingly describe the history of his nation:
“And then things got worse”
As of the latest figures which cover up to the end of Q3, total non-market jobs growth over the last 12 months is sitting at an all time record high 391,200 jobs. To put this into perspective the 12 month rolling average in the 5 years prior to the pandemic was 112,700, with a pre-Covid peak of 182,400 in Q4 2018.
This surge in non-market jobs growth has seen the proportion of total employment encompassed by non-market based jobs rise to 29.9% of all jobs. Since the Albanese government was elected in Q2 2022, the proportion of total employment made up of non-market jobs has risen by 2.6 percentage points.
The previous 2.6 percentage point rise in the ratio of non-market jobs to total employment occurred between 2014 and 2022, under the Coalition government’s of Tony Abbott, Malcolm Turnbull and Scott Morrison.
In fairness to the Albanese government, its actions alone aren’t driving the expansion in taxpayer funded employment. Its a combination of government across all levels taking taxpayer funded employment growth into overdrive.
This trend is also nothing new, it began under Kevin Rudd after years of non-market employment growth being roughly proportional to historic norms under the Keating and Howard governments. More on this in detail for paid subscribers in October’s article.
The era of the Albanese government has just seen it taken towards it logical conclusion.
Part of the issue going forward is that scope to continue to grow the ranks of non-market industries is being gradually diminished. If current trends continue, shortly after the next election Australia will have a higher proportion of employment in non-market roles than the United States, which has significant issues with the duplication of public sector roles across multiple levels of government.
As a result of the continued growth in non-market roles, which on average are significantly less productive than those in market based industries, productivity in aggregate continues to go more or less no where.
Rock Meet Hard Place
Between the reality of at times reversing productivity growth, near record population expansion and still elevated inflation, the Australian economy is trapped in challenging circumstances, which are in large part of the various levels of government’s own making.
Meanwhile, market based employment growth is on its knees, with the ranks of those in all other industries outside non-market roles contracting by 8,000 across the September quarter.
Yet despite the private sector seeing the largest contraction in living standards on record, the longest per capita recession and the longest per capita retail sales contraction, aggregate demand and inflation still remain too high for the RBA’s comfort.
In some ways the circumstances Australia finds itself is the purest expression of Burnout Economics, political policymakers attempting to avoid challenging conditions in headline terms emerge on their watch, keeping their collective feet hard on the accelerator, while the RBA continues to try and jam on the brakes.
How and when Australia can begin to extricate itself from this trap is an open question. But what is clear is that despite the rhetoric of governmental efficiency being currently in vogue, is that neither side of federal politics wants to take its foot fully off the accelerator any time soon, given the likelihood of a surge of unemployment amidst still historically high labour force growth and the potential threat posed to the housing market.
Coming up at BurnoutEconomics.com for paid subscribers in the coming weeks is an analysis that will compare non-market based employment across the Anglosphere, encompassing Australia, Canada, New Zealand, U.K and U.S. It will chart the relative size of non-market based employment since the GFC, to reveal which nation has seen the largest expansion in non-market roles over time.
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At what point does all this government employment count as socialism?