Cracking it on unemployment

I have been dwelling on the remarkable news of a couple of weeks ago that unemployment in Western Australia had dropped to 5 per cent in May – the lowest level since seasonally adjusted monthly data was produced in 1978.

In truth, unemployment was a lot lower in much of the 1970s and 1960s, but the current rate being the best in more than a quarter of a century has got to be a good thing – from society’s point of view anyway.

Of course, for business it’s a double-edged sword. Low unemployment, naturally, reflects a buoyant economy but it also thrusts that deeply wounding problem of labour and skills shortages, which is hurting business right now.

It doesn’t matter who you talk to, almost everyone in business is complaining that getting people who have skills and actually want to work is difficult.

While there might be an argument about whether that 5 per cent figure truly represents total unemployment, you also have to wonder if there isn’t a point where we have to accept that one person in every 20 may simply be unemployable.

Of course, I am not the first person to suggest this. A decade or so ago many economists believed that 8 per cent was rock bottom and it would not be bettered.

How wrong they were.

Unemployment was pushed down, here and overseas, through better market efficiencies, such as the deregulation of wages. Governments, too, have done their bit – WA has hit a 10-year high State employment figure of 124,500 (156,100 if you count Federal and local as well).

But questions remain. Have we achieved the best we can, and what is the social cost of trying to do more?

In the 1960s, unemployment was as low as 2 per cent. But, then again, society was different – jobs were for life, opportunities were limited and dual-income was something only bent cops knew about.

Should we be aspiring to achieve that again, under current circumstances, or instead recognise there are simply people who can’t or won’t work.

Lifting wages won’t necessarily help, because business doesn’t want to pay more for someone who can’t or won’t willingly do the job.

Cutting wages might make business take on more hard cases, but might not attract anyone to do the job.

Migration, my pet subject, may be one answer. Not the guest worker variety to fill short-term gaps, though there is justification for this in specialist skilled areas, a widespread application could lead to second class citizens.

A longer-term migration lift might help provide a higher proportion of workers that would naturally push the unemployment rate down (obviously you don’t allow the unemployable to migrate here). It would also bring its own economic boom, which helps create some sustainability.

Already we are sucking people back in from the eastern States to fill our vacancies. This time, though, we have the unusual situation where we are competing with similar circumstances in the other States, with their buoyant economies and low unemployment.

Clearly, there is also a community issue in this. Is unemployment at current levels something we live with and accept, or attempt to change?

And can we afford not to be constantly fighting unemployment, because complacency might soon lead us back up nearer double digits and the social problems that come with it.