Economic policy PR without scruples

by May 23, 2012All Articles

Originally in Business Day, 2012-03-05
Adcorp’s method of measuring employment “generates such massive employment levels that it does away with SA’s unemployment problem in one fell swoop, lowering the unemployment rate to around 5%”, write Dr Kerr and Prof Wittenberg in a short summary of their devastating scrutiny of Adcorp’s newsletter (Adcorp method crude, Letters, March 1).
Adcorp ’s method of measuring employment “generates such massive employment levels that it does away with SA’s unemployment problem in one fell swoop, lowering the unemployment rate to around 5%”, write Dr Kerr and Prof Wittenberg in a short summary of their devastating scrutiny of Adcorp’s newsletter (Adcorp method crude, Letters, March 1). 
It isn’t just that unemployment is low, according to Adcorp. From its bizarre November press statement we can deduct an implicit policy recommendation to remain passive on employment creation. According to the Adcorp laboratory, an additional hiring of, say, 100000 employees will create no effect whatsoever, or even a slight decrease, in the production of goods and services.
During the 2000s, labour productivity had become “negative”, said Adcorp. If we put more people to work, we will produce less!
A variant of so-called statistical regression applied to a decade when the gross domestic product fell (2008-09) gave an absurd result. In addition to that fallacy, but placed in the fine print of a footnote, the result was admitted as “insignificant”. It is a statistical term for “don’t use this”.
Such details don’t stop a labour broker economist and Adcorp’s PR department. The tendency since 1998 for average labour productivity to grow faster (averaging about 3% per year) than real wages has not subsided, according to Reserve Bank data. This continues to be an embarrassment for the corporate campaign, on which Adcorp is an authority. There are even reasons to believe that real wages for the majority have long been stagnant or falling.
As long as the pressure from companies like Adcorp on ordinary wages continues, the wage share of the national income will continue to fall. This is to the detriment of mass consumer demand and local industry.
Dick Forslund
Economist at Alternative Information and Development Centre
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