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The Forum > Article Comments > Does high employment require high social inequality? > Comments

Does high employment require high social inequality? : Comments

By Fred Argy, published 3/8/2006

Northern European countries have been able to deliver low levels of inequality with strong employment outcomes.

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Perseus,
To be classified as "employed" in Australia, you only need to do one hour of work per week - and that doesn't even need to be paid work.

To be classified as "employed" in Germany, you must be working more than 18 hours per week.

Furthermore, if you are working say, 19 hours per week AND are seeking to work more hours, you are classified as "unemployed".

Apples and oranges?
Posted by wobbles, Friday, 4 August 2006 11:14:03 PM
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Re: Apples and inaccurateness

Terrific "Wobbles" .... am still laughing - TA!
Posted by miacat, Saturday, 5 August 2006 7:46:17 AM
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I take your point, freddy, but cannot agree on the issue of comparing household savings ratios. This on-going fetish of australian economists in continuing to lump household capital expenditure in with consumption is plain illogical. It may make sense in a country like the Netherlands where home ownership is low but in Australia home ownership is the primary wealth creating (saving) strategy.

And the shifting of retirees to SEQld after selling their higher priced house in SydMelb is proof that house buying is a well established savings/investment strategy, not consumption. And it is such a major portion of total savings and investment that it cannot continue to be treated as consumption. Especially when doing international comparisons.

It is my understanding that the French include a notional income of home owners, net of mortgage debt, in their calculation of GDP. Do you have any thoughts on this?
Posted by Perseus, Saturday, 5 August 2006 3:42:10 PM
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Perseus, I would need to check my facts but I think the OECD uses the ABS definition of household saving as income less consumption. Consumption includes a lot of spending on consumer durables like cars but not housing. Still, I agree there is something arbitrary about how expenditures are classified.

Another problem with household savings is that "income" does not include capital gains (which have been huge in Australia in the 90's). This is a standard national acounts approach and for some purposes such as evaluations of the impact of changes in household savings on the "real" economy and on the external account deficit (saving less investment), it is the best measure. But if one is trying to evaluate changes in the net wealth of Australian households and their capacity to absorb further debt, the conventional measure tells us very little.

As I said, I might not have all my facts straight.Perhaps someone can further enlighten us.
Posted by freddy, Saturday, 5 August 2006 4:26:27 PM
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Yes, curious how an increase in share price is saving but payments of principle on a pre-bought store of wealth (a house), is not.

It would seem that the character and scale of this distortion is too significant to leave unaccounted for when making international comparisons. Is a grey nomad who has sold the house for a winnebago a self funded retiree or a consumer of capital? And does the kids perspective on this differ to that of the nomad?
Posted by Perseus, Sunday, 6 August 2006 12:30:46 PM
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gusi: I realise Europe has a higher population density than Australia, so land is in shorter supply. However, that still doesn't make living in a dog box any more acceptable or attractive.

Regardless of that though, a look (from Wikipedia) at the population densities of the Scandinavian countries compared to Australia reveals the following, in people/square km:

Australia: 2.6
Iceland: 2.9
Norway: 12
Finland: 15.5
Sweden: 20
(United States: 31)
Denmark: 126 (presumably not including Greenland)

With the exception of Denmark, the rest of Scandinavia is hardly struggling for space, so why the dog boxes? Cheaper to heat perhaps? It still doesn't seem very attractive.

If we look at the breakdown by Australian states, we get the following:

NT: 0.1
WA: 0.8
SA: 1.6
QLD: 2.2
TAS: 7.1
NSW: 8.3
VIC: 22.1
ACT: 130.9

The last I looked, people in Canberra didn't live in dog boxes, yet the ACT is more densely populated than a whole slew of European countries, including all of Scandinavia. What gives?
Posted by shorbe, Sunday, 6 August 2006 9:59:53 PM
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