Ahh statistics, underemployment and unemployment...what does it mean?
As a relatively new migrant it is not often that I get queries from people outside Australia seeking to know about employment opportunities in Australia. I was fortunate enough to move to Australia with a job in hand, but I know of several people who are still struggling to find permanent employment or a stable career.
The fact that Australia regularly reports its unemployment at around 6% does not seem to be reflected to those on the ground especially those seeking employment or those seeking to move jobs. I recalled my personal experience in changing job where I sent close to 200 applications over a period of 1 year without much success several years ago which some, would attribute to the economic condition prevailing then.
Lets us first understand what the official statistics of unemployment of 5.8% means, as the job market remains extremely difficult for job seekers and new migrants to Australia. To put in perspective, 5.8% unemployment rate is considered "fairly low", somewhere in the lower mid range by developed economies standard.
As comparison the unemployment rate (www.tradingeconomics.com/country-list/unemployment-rate) in the US 6.3%, UK 6.9%, Japan 3.4%, Singapore 2.1%, France 10.2%, Italy 12.7%, Germany 5.1%, Netherlands 8.7%. It appears that Asia is still the growth area, with the US and UK improving in recent times followed by Continental Western Europe, South Europe and lastly East Europe generally speaking.
To fall under the existing definition of "EMPLOYMENT", it is relatively easy, as defined by the OECD:
Persons in employment comprise all persons above a specified age who during a specified brief period, either one week or one day, were in the following categories:
- paid employment;
- self employment.
Source: http://stats.oecd.org/glossary/detail.asp?ID=778
So it appears that if one is employed for just one day, one would therefore be considered "employed" and by definition, no longer unemployed.
To boost employment i.e. reduce unemployment, one could therefore give every single person of working age, paid employment of just one day!
Which brings me to the next point.
In today's work environment due to the availability of information technology capabilities and, changes in legislation, many are no longer in full time employment unlike during our grandparents' era. In those days, one either works full time or remain unemployed. There was little part time or casual employment roles (with exceptions of course). This is where underemployment comes in.
We now have a relatively large work force who are underemployed i.e. able to work more than the hours they are currently in employment e.g. working 2 day weeks, or 20 hours week etc. Some choose the shorter works but many are only able to secure employment for this shorter period compared to the 40 hours standard work week most of us know of. Governments may for example decide to pass a law prohibiting work beyond say 25 hours work week, and presto, we have full employment immediately.
I'm sure that when the legislation was pass to allow for casual and part time employment, the intention was to allow workers with other commitments e.g. child caring responsibility, the possibility of seeking flexible hours around their personal or family duties. The unintended consequences however, companies now seek to just hire workers to "fit-in-time" their work routine and pay them those few hours of employment. It is also extremely difficult for people to seek other employment to fill up those few hours of their non-working time, if they are underemployment, due to to travel time and/ or other commitments which may not fit the work schedules of both parties, employer and employee.
I am worried about the consequences of all this for the future generation and the way moving forward appears to be self-employed contractors who are hired purely for their services on a need to basis. This however comes at a higher rate of wages per hour but with less hours in place, an overall lower fixed costs.
Sunday, May 18, 2014
Friday, May 9, 2014
ACCC, competition and costs Part II
I have used the same energy provider since moving to Sydney close to 5 years ago and this week I decided to shop around for another electricity re-seller.
Like most people today, Google was the first port of call, and after a few seconds, it got me an independent intermediary for energy who is reputed to be independent in providing price and costs comparison for consumers.
A phone call later and with my electricity bill in front of me, I was able to provide them with my current energy account details. They gave me a few option out of around 20 re-sellers in terms of the lowest costs (how else do you buy electricity as they're identical). My current provider was ranked around number 12 in terms of price from the lowest costs.
I chose one from the option provided and they informed that I was able to enjoy upto 10% discount on my existing bill with a two years contract with this new supplier in my next billing cycle. A confirmation was provided on the spot for them to switch supplier on the phone. As usual I had to go through the series of questions and answers to make sure I said "yes" to every question posed. After this so call interrogation, they confirmed that my account was ready to be moved to this new provider and with a final yes, the move started.
The next day, I decided to browse the website of this new provider and I was surprise to see that the best discount provided on line was 15% as compared to the 10% provided to me by the intermediary just yesterday. I then called the intermediary and asked why was I only provided with a 10% discount from this re-seller when the highest discount was 15%. They then rechecked their system and told me that there was no such discount rate in their system. I then told them that I'll call the energy re-seller to confirm why was this the case.
A phone call to the new energy re-seller confirmed that the new higher discount rate was only published yesterday and therefore the intermediary did not have it on their system yet. They did confirm to me that my account application has been received and they would provide me with the new higher discount rates of 15% as oppose to the 10% applied previously.
Moral of the story, check, check and re-check for the best deal and feel free to insist on the highest rates. My existing energy provider has taken me for a ride for 5 years, without offering me any discounts. Loyalty again does not pay.
The ACCC ensures that moving across service providers is easy and each and every consumer should endeavour to move where possible.
Like most people today, Google was the first port of call, and after a few seconds, it got me an independent intermediary for energy who is reputed to be independent in providing price and costs comparison for consumers.
A phone call later and with my electricity bill in front of me, I was able to provide them with my current energy account details. They gave me a few option out of around 20 re-sellers in terms of the lowest costs (how else do you buy electricity as they're identical). My current provider was ranked around number 12 in terms of price from the lowest costs.
I chose one from the option provided and they informed that I was able to enjoy upto 10% discount on my existing bill with a two years contract with this new supplier in my next billing cycle. A confirmation was provided on the spot for them to switch supplier on the phone. As usual I had to go through the series of questions and answers to make sure I said "yes" to every question posed. After this so call interrogation, they confirmed that my account was ready to be moved to this new provider and with a final yes, the move started.
The next day, I decided to browse the website of this new provider and I was surprise to see that the best discount provided on line was 15% as compared to the 10% provided to me by the intermediary just yesterday. I then called the intermediary and asked why was I only provided with a 10% discount from this re-seller when the highest discount was 15%. They then rechecked their system and told me that there was no such discount rate in their system. I then told them that I'll call the energy re-seller to confirm why was this the case.
A phone call to the new energy re-seller confirmed that the new higher discount rate was only published yesterday and therefore the intermediary did not have it on their system yet. They did confirm to me that my account application has been received and they would provide me with the new higher discount rates of 15% as oppose to the 10% applied previously.
Moral of the story, check, check and re-check for the best deal and feel free to insist on the highest rates. My existing energy provider has taken me for a ride for 5 years, without offering me any discounts. Loyalty again does not pay.
The ACCC ensures that moving across service providers is easy and each and every consumer should endeavour to move where possible.
Friday, May 2, 2014
Property Prices Up?
Property prices have been on the upside in recent times after a slowdown only a few years ago. Cities in developed economies such as London which saw prices down or stagnant only a few years back have also recently bounced back and even the chairman of Lippo of Indonesia is now looking to the US to invest in properties.
In Sydney, prices have moved up rather significantly due to various factors including limited supply in selective location, influx of more foreign investments, the rush or fear of missing out factor etc.
Home owners feel good whenever prices move higher. Potential buyers however are unhappy as prices seem to be out of reach and keeps escalating upwards.
Home owners talk about how much they have "gained" since they joined the owners club and are urging non owners to join the club. However is this gain for real?
Let use an example to illustrate this gain:
A buys a property says at $500K for cash (i.e. no loan) which is the average price within the suburb. A then keeps this property for 5 years and voila...the average price in the area has now jumped to $700K, hence a perceived $200K capital gain. The question then arises, did A make the "gain" (leaving interest, transaction and holding cost aside and assume there is no cost)?
A then decides to sell the property and pocket the "gain" and now have $700K. However is this gain real if A wishes to buy another home? He'll still need to spend $700K if he wants to be a house owner again, hence the perceived gain is only real, if A downgrades i.e. buys a lower price home or moves to an area where the average price is lower for a similar property e.g. country or bush land.
Not forgetting in my example above, I've assumed no interest, holding nor transaction costs were included and if one includes all of it, the $200K perceived gain will probably be close to nil.
Just on a similar subject, a colleague of mine recently saw a house for sale which appears to be at a 10-15% discount compared to its average within the suburb. The reason why there was a discount was due to the fact that the house is very close to large power lines which we hanging over very close. Those of you who have some basic knowledge of Chinese "Feng Shui" would want to avoid this and those with some basic understanding of modern science may also wish to reconsider the house (although scientific research about the negative impacts of power lines on human health is still inconclusive, I guess its better safe than sorry).
Although the discount looks tempting, I reminded him the fact that the house will forever be at a discount (unless the power lines are removed) when he resells it in the future, hence the "discount" will never materialise for him.
I guess many of us would like to believe that we are rather smart in buying and/ or investing in property, but the reality is, the market place is also equally if not more intelligent. There is actually not much to be made out there although exceptional circumstances do happen. I guess in life you'll only hear that 1 winning lottery ticket story, but not the other thousands who missed the winning ticket and remained silent.
In Sydney, prices have moved up rather significantly due to various factors including limited supply in selective location, influx of more foreign investments, the rush or fear of missing out factor etc.
Home owners feel good whenever prices move higher. Potential buyers however are unhappy as prices seem to be out of reach and keeps escalating upwards.
Home owners talk about how much they have "gained" since they joined the owners club and are urging non owners to join the club. However is this gain for real?
Let use an example to illustrate this gain:
A buys a property says at $500K for cash (i.e. no loan) which is the average price within the suburb. A then keeps this property for 5 years and voila...the average price in the area has now jumped to $700K, hence a perceived $200K capital gain. The question then arises, did A make the "gain" (leaving interest, transaction and holding cost aside and assume there is no cost)?
A then decides to sell the property and pocket the "gain" and now have $700K. However is this gain real if A wishes to buy another home? He'll still need to spend $700K if he wants to be a house owner again, hence the perceived gain is only real, if A downgrades i.e. buys a lower price home or moves to an area where the average price is lower for a similar property e.g. country or bush land.
Not forgetting in my example above, I've assumed no interest, holding nor transaction costs were included and if one includes all of it, the $200K perceived gain will probably be close to nil.
Just on a similar subject, a colleague of mine recently saw a house for sale which appears to be at a 10-15% discount compared to its average within the suburb. The reason why there was a discount was due to the fact that the house is very close to large power lines which we hanging over very close. Those of you who have some basic knowledge of Chinese "Feng Shui" would want to avoid this and those with some basic understanding of modern science may also wish to reconsider the house (although scientific research about the negative impacts of power lines on human health is still inconclusive, I guess its better safe than sorry).
Although the discount looks tempting, I reminded him the fact that the house will forever be at a discount (unless the power lines are removed) when he resells it in the future, hence the "discount" will never materialise for him.
I guess many of us would like to believe that we are rather smart in buying and/ or investing in property, but the reality is, the market place is also equally if not more intelligent. There is actually not much to be made out there although exceptional circumstances do happen. I guess in life you'll only hear that 1 winning lottery ticket story, but not the other thousands who missed the winning ticket and remained silent.
ACCC, competition and costs
The first thing a Malaysian usually notices when he/she settles here is how expensive everything is except for cars, compared to Malaysia. One also tends to forget that the salary one earns here is also very "expensive" by International standards.
The two main reasons which I speculate for the high costs are:
i) Real estate prices
ii) Low volume due to small population size
Real estate prices determine a lot of costs in our lives. It determines our of our main cost to our household income; either in the form of rents or home mortgage repayments.
For businesses, it determines one of the main elements of its cost structure especially if the business is in retailing e.g. a shop lot in a shopping mall. This is probably a key reason why many top brands are only deciding to set foot in Australia after setting up shop in other parts of the world e.g. H&M only set up shop recently with UniQlo following very soon.
The low volume due to the size of Australia's population is also a major cause for how expensive things are here. Contrast this to the price of goods in USA which has nearly 15 times of Australia's population. Due to this, it is not uncommon for many international brands to price their goods much higher to compensate for the lower economies of scale. Just walk into Ikea and see the difference in prices for identical products in Malaysia.
However despite the high prices here, the Australian Competition and Consumer Commission (ACCC) enforces a law designed to ensure fair competition within the marketplace. Several examples of how the ACCC function can be seen as follows:
i) Car brands cannot compel or force new car buyers to service their cars with the authorised reseller; i.e. one can service their car anywhere without voiding their new car warranty (with certain conditions)
ii) One can cancel an insurance policy at anytime and obtain partial refund for unexpired period without significant or no penalties (there is also a cooling off period of 30 days when buying a new policy)
iii) All phone numbers including land lines are portable i.e. subscribers can move phone carriers and keep their existing phone number
Which brings me to my recent experience with the world of switching.
I joined a free online campaign called "One Big Switch" who were looking for members to bring down prices of home and contents insurance policy. They attempt to bring collective buying power back to consumers by negotiating on behalf of its online members with major insurance underwriters.
The campaign eventually managed to secure the service of one insurance company, and then within a certain period of time, allows member subscribers the option to seek a quote and secure the new insurance policy if they feel that the savings is substantial and the insurance coverage is comparable. I was shocked to find out that I saved about 1/3 of my insurance premium by switching under this campaign.
The moral of the story, there is no longer customer nor brand loyalty...shop and swap around. It is the way how businesses are conducted and, the ACCC is here to ensure we are able to continuously seek and shop for the best deal.
The two main reasons which I speculate for the high costs are:
i) Real estate prices
ii) Low volume due to small population size
Real estate prices determine a lot of costs in our lives. It determines our of our main cost to our household income; either in the form of rents or home mortgage repayments.
For businesses, it determines one of the main elements of its cost structure especially if the business is in retailing e.g. a shop lot in a shopping mall. This is probably a key reason why many top brands are only deciding to set foot in Australia after setting up shop in other parts of the world e.g. H&M only set up shop recently with UniQlo following very soon.
The low volume due to the size of Australia's population is also a major cause for how expensive things are here. Contrast this to the price of goods in USA which has nearly 15 times of Australia's population. Due to this, it is not uncommon for many international brands to price their goods much higher to compensate for the lower economies of scale. Just walk into Ikea and see the difference in prices for identical products in Malaysia.
However despite the high prices here, the Australian Competition and Consumer Commission (ACCC) enforces a law designed to ensure fair competition within the marketplace. Several examples of how the ACCC function can be seen as follows:
i) Car brands cannot compel or force new car buyers to service their cars with the authorised reseller; i.e. one can service their car anywhere without voiding their new car warranty (with certain conditions)
ii) One can cancel an insurance policy at anytime and obtain partial refund for unexpired period without significant or no penalties (there is also a cooling off period of 30 days when buying a new policy)
iii) All phone numbers including land lines are portable i.e. subscribers can move phone carriers and keep their existing phone number
Which brings me to my recent experience with the world of switching.
I joined a free online campaign called "One Big Switch" who were looking for members to bring down prices of home and contents insurance policy. They attempt to bring collective buying power back to consumers by negotiating on behalf of its online members with major insurance underwriters.
The campaign eventually managed to secure the service of one insurance company, and then within a certain period of time, allows member subscribers the option to seek a quote and secure the new insurance policy if they feel that the savings is substantial and the insurance coverage is comparable. I was shocked to find out that I saved about 1/3 of my insurance premium by switching under this campaign.
The moral of the story, there is no longer customer nor brand loyalty...shop and swap around. It is the way how businesses are conducted and, the ACCC is here to ensure we are able to continuously seek and shop for the best deal.
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