Plenty of pay packets for spending

If ever there was a case of the glass half-full or half-empty, it's the Australian labor market - and you hear much, much more about the empty part than the full part.

In reality, despite all the headlines about job losses and unemployment rising, the employment side of the equation is doing incredibly well considering that the world is suffering a very serious recession and we're having (a so-far mild) one ourselves.

Normally the debate about lies, damned lies and statistics doesn't matter very much, but when the statistics concern unemployment and the headlines magnify the situation, it begins to eat away at consumer and business confidence in a way that can become self-fulfilling.

So, ahead of the release of the latest unemployment rate on Thursday, here's a little exercise in understanding what's really going on. First a little test:

Can you remember what Australia was like when Wayne Swan was bringing down his first budget in May last year? It was almost a different world as Wayne's biggest problem was a shortage of labor and skills that was causing inflation.

Well, we sure fixed that problem. Unemployment in May 2008 was jut 3.9 per cent and just about anyone who really wanted a job could get one.

In May 2009, the unemployment rate stood at 5.7 per cent and we're constantly bombarded with stories about redundancies, retrenchments and businesses closing. Wayne Swan's biggest problem in his second budget was keeping the economy ticking over to minimise the rise in unemployment.

So, how many net jobs do you think have been lost in Australia over that 12 months? Go on, take a guess before reading the next paragraph.

The answer is: None. On the latest figures available today, there are actually more people in work in Australia than there were in May 2008 when the unemployment rate was 3.9 per cent.

Of course quite a few jobs have disappeared since then, but more have been created. New jobs though don't get headlines.

There are pluses and minuses about the changes in employment over the year - there are more part-time and fewer full-time jobs, for example, and the number of jobs in the private sector has fallen by roughly 100,000 while public-sector jobs have increased by 150,000.

The reason the unemployment rate has risen is because the size of our workforce has grown - we're in a period of record population growth.

The bottom line from a business confidence point of view though is that there are just as many pay packets out there, just as many potential customers as there were this time last year and more than there were the year before that.

Some of those potential customers are feeling a bit nervous about their job security and therefore are less willing to spend, but that's where the challenge of business comes in: to make an offer or provide a service that is worth buying anyway.