Australia’s suprisingly secure workers, part 2

Last month I pointed out that subjective job security, that is how likely people think they are to keep their jobs over the next twelve months, was at its highest level since surveys began (I expanded on this for ABC Radio’s Counterpoint last Monday).

With the release this morning of new labour market mobility data we can see that, on this at least, subjective and objective measure are moving in the same direction. The proportion of workers experiencing involuntary job loss is certainly the lowest since 1988, and quite possibly the lowest since records began, on 6% of people who worked during the year. If we take out those who were in temporary or seasonal jobs or had to quit due to ill health or injury, the retrenchment rate was 2.2%. In the first job mobility survey, back in 1972 before the 1970s economic crisis took hold, it was 2.7%, and it reached 6.4% during 1992.

Though objective and subjective measures of job security are moving in the same direction, there is a big gap between them. For example, if we average the Morgan job security survey results for the relevant years, about 17% of workers thought they had a chance of unemployment, though only 6% actually did lose their jobs. Using HILDA data (pdf, p.82) the Melbourne Institute has calculated that the correlation between a respondent’s own estimate of job loss and actual job loss was just .15. While this was a better predictor than anything else, people significantly over-estimate their chances of losing their job. There are a lot of people worrying about an event that won’t happen to them.

This is not to say that all is well in the labour market. Compared to the early 1970s, more men of working age have avoided being sacked by not holding any job at all during the year. But if you do have a job, the strong economy makes employment more secure than at any recent time.

4 thoughts on “Australia’s suprisingly secure workers, part 2

  1. Surely the increase in casual employment would have a bearing on this. Casual workers do not experience a defined unemployment event so termination of contracts would not show up as sacking events, even though they experience the same unemployment as sacked staffers. (I haven’t read the papers; I’m just commenting on your discussion.)


  2. Tony – I am not sure how simply not giving a casual any hours would be counted, but any defined ending of the employment relationship would end up in the job loser statistics. People who are employed by their own business are also counted as job losers if their business fails. I am going to do some work on job turnover later (which also counts people who leave their jobs voluntarily) to see if the impact of casualisation can be seen there.


  3. Andrew;

    I think people worry about losing their jobs not so much because they think it’s likely, but because the penalties for doing so are so high.

    It’s like a mirror image of lotto ticket buying: the odds are low but it’s easy to imagine what it might be like to win.

    So I suppose it’s a risk assessment skewed by the high impact of job loss.


  4. You’re right Jacques – Mark Wooden has made this point at length. But of course in a booming labour market the likely penalty for losing your current job is much lower than in a recessed one. People may not yet realise just how buoyant things are at the moment.

    FWIW there’s a school of thought in labour economics that believes many workers systematically over-estimate the difficulty of getting another job, and that this gives employers more power over them.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s