ABS fesses up on employment data

Advertisement

From Peter Martin (h/t edanielsen) today comes a not altogether surprising confession from the ABS about its labour market stats:

The Bureau of Statistics has got the official employment figures wrong, and although it is happy to acknowledge the errors, it won’t correct them on the official record because it would cost too much money.

Officially, employment grew not at all last year after surging by 363,500 in 2010. Yesterday, at an invitation-only seminar, assistant statistician Paul Mahoney said employment probably climbed 30,000 to 35,000 more than officially acknowledged in the first nine months of last year and climbed 60,000 to 70,000 less than acknowledged in 2010.

…”We acknowledge we have problems with the way we are benchmarking the labour force at the moment,” Mr Mahoney said.

”We are not hiding behind this, we are being very open about it. This is a public seminar, this is going to be repeated a few times.”

The problem arises because in order to convert the results of its survey into figures for the whole nation the ABS has to estimate the size of the Australian population.

Usually it gets the estimate right. But at times when the rate of population growth is changing rapidly it can get it wrong. Instead of revising the official employment figures when more correct population information comes to hand it instead revises its estimate of future population growth. This means incorrect employment figures remain on the public record and future employment growth figures are adjusted in the opposite direction to compensate.

So, that looks like a rounding down of 30-40k jobs over the past two years. Not huge, but if the labour force is 12 million that would add 2 to 3 basis points to unemployment (that’s back of the envelope and I could be missing something…).

Advertisement

Apparently it will cost $1.5 million to fix. Can I suggest that that might be money well spent?

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.