Underlying movements in claims on job totals

The government's focus on macroeconomic management is concentrating on the employment situation. Little wonder, since that is the primary objective of any political administration - seeing the gainfully occupied total expand through well-driven economic growth. The objective itself, though, suggests a closer look at what is actually going beyond the figures being quoted, as well as in the context of other objectives which also need to be tackled.

The Prime Minister repeatedly says and marvels that over the last year "the government" has created some 7,000 jobs. Over the weekend he refined the claim to make it somewhat more correct, referring, without actually spelling it out (at least as reported in the media), to a resulting year-to-year growth of around 2,500 people in employment.

I think what Lawrence Gonzi was referring to was the net movement in the gainfully occupied total as reported by the Employment and Training Corporation to National Statistics Office. This total is reached without taking fully into account lags in reporting terminations and vacancies by employers and possibly at other levels.

The process relates to any economy which is not mired in a stagnant situation. At any one time people will be leaving employment, being made redundant or discharged for disciplinary reasons. At the same time employers will be trying to fill the resulting vacancies, either directly, usually following adverts in the newspapers, or through the ETC, or both.

Viewed politically this natural process could easily be used by critics of the government to say that so many thousand jobs were "lost" due to the government's actions. That unqualified statement would be as much of a mistake as the government claiming that so many thousand jobs were "created" by it.

What counts at the end of the day is the net movement in the total of those registered with the ETC. If it is a significant negative change, it suggests the economy is contracting. If it is a significant positive, it suggests the economy is growing. The significance is brought in to allow for the lags in advising both terminations and recruitments, despite the legally stipulated periods, and the inputing of such notifications to the ETC's data base.

As it is, the net plus year-to-year movement is around the 2,500, as quoted by the Prime Minister in his usual political address over the weekend. At last Lawrence Gonzi has aligned his claim with the net figure which had been indicated by the Minister for Social Policy, John Dalli, much to the naughty merriment of the Labour opposition, whose spokespersons made it out as if they had caught out two leading government figures in a glaring discrepancy.

On its part the 2,500 net movement in the total of those registered as gainfully occupied with the ETC gives out confusing signals. For one thing, despite the reported growth in the number of those in full-time gainful employment, the economy has been contracting since the middle of last year. For another, there has been a substantial year-to-year rise in the number of those registering for employment. The latter movement suggests either that discharges are taking place, or that new entrants into the labour market are finding it less easy to find a placement, and that those who leave their employment or are discharged are also finding it more difficult to find alternative employment.

The movements are most likely a combined result of all the three factors, suggesting that the net growth in the number of those on the ETC's actively employed register took place in the earlier part of the 12-month period to March or April.

It is not the case of the PM or anyone else trying to twist the net figures. It is the way year-to-year movements tend to mask the more recent movements. These are captured in the month-to-month figures which, on their part, could be distorted by seasonal fluctuations.

All this goes to show that the employment rhetoric being used by the political class, particularly in an effort to sway voters before the looming European Parliament elections on June 6, is by no means completely valid. But then, electioneering always has the effect of putting the basic truth in temporary suspension.

To the extent that this only affects popular perceptions as massaged by the contesting political parties, it is neither here nor there in economic terms. But if the massaged perceptions are taken to heart by the politicians themselves, especially those in charge of macroeconomic management, then there is a problem.

Management should be related to facts, not to perceptions. Management has to rely on actual facts and realistic projections and forecasts in order to draw up and adjust public policy. The government is relying on facts when it assesses the situation of manufacturing companies which seek its assistance through the broad scheme devised by the government. The Prime Minister claims that scheme has so far saved some two thousand jobs. That is good to hear. The scheme has its merits, with its reported focus on retraining and new investment.

The assisted manufacturing firms aside, there are other developments taking place in the economy. That is so both in the rest of the manufacturing sector, which is feeling the severe pinch of reduced demand in its traditional markets, and in tourism, which is in decline and where balancing part-time jobs are being especially affected. Part-time jobs are not included in the figures quoted in the political exchanges and touched upon above. But they, too, are a reality that needs to be kept in mind.

The reality has to be seen as such since it is the best base to suggest how public policy is to be crafted or adjusted, as it has to be on an ongoing basis.