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FactCheck: is Australia losing one manufacturing job every 19 minutes?

“Under this [Labor] government we’ve seen one manufacturing job lost every 19 minutes.” - Opposition industry spokeswoman Sophie Mirabella, Q&A, 1 July. The Conversation contacted Mirabella’s office…

Australian manufacturing workers are feeling the heat of economic change. www.shutterstock.com

“Under this [Labor] government we’ve seen one manufacturing job lost every 19 minutes.” - Opposition industry spokeswoman Sophie Mirabella, Q&A, 1 July.

The Conversation contacted Mirabella’s office to request a source for this claim, and a spokesman quickly responded:

“Sophie’s comment on Q&A was based on ABS data… the Labour Detailed Quarterly collection (cat no. 6291.0.55.003). If you open Table 04 in the series of spreadsheets available in that collection, then the ‘Data 1’ tab, and then column W, you’ll see it contains seasonally adjusted manufacturing employment figures from 1984 to the current day.

“For the ‘1 every 19 minutes’ calculation, Sophie was using the decline from 1,081,700 employees for February 2008 (the first reading after Labor was elected at the end of 2007) through to the most recent number of 938,300 for May 2013. That’s an overall loss of 143,400 jobs over a period of five-and-a-quarter years, or 273 weeks.”

Dividing that jobs figure by the time elapsed, Mirabella’s office came up with the total of around one job lost every 19 minutes. The spokesman added:

“It’s worth pointing out that at no time prior to this period of Labor Government has the total number of jobs in Australian manufacturing ever fallen below the 1 million mark, let alone by so far under that mark. I may be wrong, but I also don’t think there’s ever been such a sustained loss of manufacturing jobs over a five-year period.”

So are those calculations right? Is it true that Australian manufacturing has had a particularly bad five years compared to the past? And to put that in some context, how has manufacturing fared in other industralised countries?

Crunching the numbers

Employment figures by industry are available from the Australian Bureau of Statistics (ABS) on a quarterly basis. That data is also available through the Organisation for Economic Co-operation and Development’s Short Term Labour Market Statistics. The OECD version reports data to the unit, while the ABS version rounds up data to the nearest hundred.

Kevin Rudd was elected prime minister on 24 November 2007, towards the end of the fourth quarter of the year, so I have examined employment data from the first quarter of 2008 to the end of the second quarter of 2013 to cover when Labor has been in power to date.

The ABS data shows that there were 1,081,664 manufacturing jobs at the start of 2008 and 938,280 by the second quarter of 2013 - meaning there was a net decline of 143,384 jobs.

In that time, there were 22 quarters, each averaging 91.25 days. Since there are 24 x 60 = 1440 minutes in a day, the total number of minutes in a quarter is equal to 1440 x 91.25 = 131,400. Hence, in 22 quarters there are 22 x 131,400 = 2,890,800 minutes. Dividing 2,890,800 by 143,384 one obtains 20.16, which means that one manufacturing job was lost every 20 minutes from the first quarter of 2008 up until the second quarter of this year.

Mirabella’s figure is slightly different because instead of counting the duration of the time in government in quarters, she counts it in months, starting from February 2008 and ending in May 2013. This approach is consistent with the fact that ABS collects quarterly data on the second month of each quarter. This way of counting yields a total of 2,759,400 minutes. Dividing this number by 143,384 we obtain 19.24; that is, one job lost every 19 minutes.

Both counts are acceptable and they yield very similar results, so I would consider both to be numerically correct.

But what does it mean that Australia is losing one manufacturing job was lost every 19 (or 20) minutes? It is worth putting that in some historical and international context.

Made in Australia: a recent history

The data series available from the ABS goes back to the mid-1980s. So it is possible to compute “minutes for one manufacturing job loss” for five consecutive periods of 22 quarters, from the first quarter of 1986 through to the second quarter of 2013.

As noted earlier, the last of those periods corresponds to the Rudd/Gillard Labor governments. The results of this exercise are summarised in Chart 1 below:

Chart 1: Minutes between jobs lost or created in Australian manufacturing. Author’s calculation from ABS data

The chart suggests that the loss of manufacturing job is not a recent phenomenon: with the exception of the 1991-1996 period, all other 22-month periods since 1986 are characterised by a decline in manufacturing employment.

But it is correct that the pace at which jobs in manufacturing are lost has been faster in the most recent period.

In the 22 quarters preceding the beginning of the first Rudd government, one manufacturing job was lost every 140 minutes.

Before that, from the start of 1997 to mid-2002, one manufacturing job was lost about every two hours.

And in the period from the start of 1986 to the second quarter of 1991, one manufacturing job was lost about every hour.

Rudd vs Gillard

Some recent trends in Australian employment are worth noting, including that manufacturing job losses slowed considerably while Julia Gillard was prime minister.

In the 10 quarters of the first Rudd government, one manufacturing job was lost every 12.5 minutes; during the 12 quarters of the Gillard government, one manufacturing job was lost every 29 minutes.

However, this is not really surprising, given that the early years of the Rudd government corresponded to the most acute phase of the Global Financial Crisis.

Jobs growth in the wider economy

The employment data also shows that the loss of jobs in manufacturing has been matched by a gain of jobs in other sectors.

Seasonally adjusted total employment data for the second quarter of this year are not yet available. So, one can only compute changes in total employment over the period from the first quarter of 2008 to the first quarter of 2013.

Over these 21 quarters, total employment (including manufacturing) in Australia increase by 836,490 units. This is equivalent to one new job being created every 3 minutes.

The global picture

Finally, it is worth looking at a global perspective using OECD Short Term Labour Market Statistics.

Using the same methodology described above, we can determine “minutes for one manufacturing job loss” for each of the 34 OECD member nations, including Australia, over the period from the first quarter of 2008 to the first quarter of 2013.

Chart 2, below, shows how Australia compares with other OECD nations on manufacturing employment. The first column is the main one; I have included the column on the right in order to include countries for which 2013 figures are not yet available.

Chart 2: Manufacturing job trends among OECD nations. Author’s computation based on OECD Short Term Labour Market Statistics.

Chart 3, below, shows a comparison between Australia and six of the G7 economies (second quarter 2013 data was not yet available for France, so it was excluded from the comparison).

Chart 3: Author’s calculations from OECD, Short Term Labour Force Statistics data

As it can be seen, the experience of Australia is not unique.

In fact, five out of the six other countries used for this comparison lost manufacturing jobs at a faster rate than Australia (one every 2 minutes in the US and Japan, one every five minutes in the UK and Italy, and one every 12 minutes in Canada).

The loss of manufacturing jobs is a common phenomenon in many industrialised countries and it is partly due to the process of structural transformation of the economy. Furthermore, the Global Financial Crisis hit manufacturing hard worldwide.

Verdict

Sophie Mirabella’s calculations of manufacturing job losses are correct.

Her spokesman’s assertion that manufacturing jobs have been lost at a faster rate in the past five years than other recent five-year periods (going back to 1986) is also correct.

However, these job losses should be considered in their wider international context, including the Global Financial Crisis and an even sharper decline in manufacturing jobs in a number of other industralised economies.

While manufacturing jobs have been lost in Australia, over the past 21 quarters total employment (including manufacturing) has increased at a rate of one new job created every 3 minutes.


Review

I have gone through both the Mirabella statement and this author’s comments. These comments confirm that Mirabella’s original statement, with some minor quibbling, was basically correct.

The main point seems to me to be not the factual accuracy but, as the author points out, the phenomenon that manufacturing employment has been on the slide for over 40 years, no matter who has been in power. This is as a result of structural change, whereby manual labour has been replaced by labour requiring knowledge and people skills as we become an advanced, service-based economy.

There is no reason why we would necessarily regret the passing of skills no longer in demand and the stronger growth in demand for different skills, as long as jobs growth overall increases. There are, however, problems for those workers whose skills are no longer in demand who may find it difficult to gain employment in the new growth areas of the economy. - Phil Lewis

The Conversation is fact checking political statements in the lead-up to this year’s federal election. Statements are checked by an academic with expertise in the area. A second academic expert reviews an anonymous copy of the article.

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