So apparently the unemployment rate in New Zealand is going to creep up towards the 7% mark over the next 6 months. That’s the assertion made by The Herald recently anyway, in its reporting of the ANZ September job ad statistics which revealed that job ads had fallen to their lowest levels since April.
Cue nervous twitching from recruitment agency owners wondering how they can keep delivering value in a less talent-short market. Cue confusion amongst already over-stretched internal recruiters, looking wearily upon their overburdened whiteboards and teetering piles of job requisitions from hiring managers. Cue smug economists nodding sagely to the irrefutable evidence before them.
But actually, there is no need to respond in this way at all. As David Gordon rightly pointed out on Twitter earlier this week:
“When will this stop being used as an economic barometer.
#oldskool metrics Job ads fall to lowest since April…”
He’s right for a number of reasons. As agency recruiters responding to his comments said, probably less than half of agency jobs are advertised on job boards nowadays. And as an internal recruiter also said, they advertise far less than half. I know of one internal recruiter who claims to be labouring the unworkable burden of over 600 open jobs (mostly caused by new store openings in Christchurch). Only a fraction of these would appear on job boards.
As for measuring the amount of job ads appearing in print media, this is the most absurd measuring stick imaginable. Print media is rapidly heading the way of Kodak, sadly, and recruiters are only too aware. Have a look at the recent blog from Ross Clennett to see the devastation the technology and digital age has brought to the ad pages of the broadsheets. On one day in 2007 the Australian Financial Review had 99 job ads listed. On the same day in 2012 that amount had shrunk to just 11. That is a decrease of 90%.
But the crazy thing is that in their reporting, ANZ actually place a heavier weighting on newspaper ads over online ads! If you take a look at the graph on the full press release here it is clear that as the digital age has advanced, the correlation between the number of job ads and the actual unemployment rate is growing further and further apart.
With necessary budget cuts in the print media world it is just about understandable that journalists would continue to peddle these pretty looking press releases because they come from such seemingly credible sources and most readers just lap it up. But I’m surprised that economists persist in using these increasingly outmoded statistics to predict future unemployment.
Economists have a greater responsibility to get it right because business confidence levels depend hugely upon these kinds of predictions.
Do I have the answer? Not really, not yet anyway, although I’d welcome your thoughts and comments. I can say for sure, though, that it is pointless to keep counting the number of job ads printed in newspapers. And if the number of jobs posted online really has to be used as an indicator, then surely it must now also include LinkedIn ads, Facebook ads and even the #nzjobs Twitter feed.
Anyone got any better ideas, or shall we keep our heads firmly planted in the sand and have a look in April 2013 to see if unemployment is indeed at 7%?