Putting faces to statistics

The level of employment and unemployment is always in the forefront of the ongoing discussion on economic activity. So is the level of income and its distribution, though there is not enough public data in their regard. These factors will form an integral part of the build-up to the general election. But they are important in themselves through all the seasons, not just at election time.

I do not feel that the economy is doing badly- Lino Spiteri

Economic output depends on technological capability and on the ability of the economic agents to develop and incorporate technological innovation in their economic activities. Parallel to that, the availability of adequate human resources reflecting a broad and relevant skills base is also essential. We are not yet in the era of robots, and God forbid that we should ever get there.

Humans will remain at the heart of production though their role has changed and will change further. That is why it is not enough to look at crude numbers and proportions. Doing that, we say that we have a low level of unemployment relative to most of the European Union, especially the horrendous likes of Spain and Greece. Such an attitude is wrong – we should be looking at the achieving countries, not at those in distress.

That aside, our own totals of registered unemployed may translate into a reasonable non-crisis unemployment rate. Looking deeper, though, we find that there is much less to be satisfied about. The composition of the unemployed reveals two worrying factors. One, the unemployed include too high a proportion of young registrants. Two, too many of the unemployed are unskilled or have only basic skills.

That means that there is a bad mismatch between the growth points of the economy on the one hand, and the registered unemployed on the other. The economy is growing in the financial sector, dangerously so, according to the International Monetary Fund, though our regulators do not share that concern. And it is still growing in the gaming sector. Other targeted growth areas are related to digital games and to the airplane servicing industry. That means that both in terms of existing growth as well as in terms of targeted new growth most of the unemployed miss out. It is doubtful that MCAST educational or ETC retraining programmes can transform the unemployed registrants into suitable applicants for the existing or projected growth industries. That is an issue, I continue to stress, which still is not being addressed properly. Instead the regular official and political emphasis lies on the claim that 20,000 jobs have been created over the last four years through government intervention. Even if that were so it still leaves untackled the problem of the registered unemployed as I am defining it.

Is it, in fact, so? No fully broken down details of the 20,000 new jobs are offered. Where are they? How did they come about? The gainfully occupied population does not reflect them. I have a feeling that what is being referred to has more to do with labour movement than total new jobs. The registered figure and the gainfully occupied total are net aggregates. Within them there will always be a lot of movement.

I am prepared to believe that some 20,000 workers moved from one job to the other over the past four years. That would reflect, however, job changes to personal preference, movements due to circumstance, and opportunity mobility as new jobs do arise. This flux covers not only jobs created but also jobs lost. That is why fuller details are required.

Not to score political points but better to understand how the economy is performing beyond the easy photo-opportunities. Figures plucked out of the air are always unconvincing. For instance, official spokespersons, including the Prime Minister over the weekend, have taken to saying that over the last four years the minimum wage has risen by €1,000 and the median wage by €2,000.

Can that be right? As Caritas has pointed out in its study of poverty and living conditions, the statutory minimum wage has not been revised since it was established decades ago. It only increases through the statutory cost of living increase, which means that, even if it did rise by €1,000 over four years, in real purchasing power terms it did not rise at all. I even doubt whether the statutory cost of living increases have allowed minimum wage earners to keep pace.

That doubt is reinforced by the NSO and Caritas separately compiled data on the absolute poor and those in danger of absolute or relative poverty.

This reasoning applies to the claim that the median – or middle-range – income has grown by €2,000. That too includes the statutory cost of living increases. Serious economic discussion is conducted in real terms, after adjustment for inflation.

Moreover, where did the Prime Minister and others get their median wage data? I am not aware that the NSO has published income distribution data.

I do not feel that the economy is doing badly. But we do not have a clear understanding of how the increase in income and wealth is being distributed, or whether social inequality is growing or rising. That is a gap that should be filled sooner, rather than later if we want to respect each other’s intelligence.