Janet CollinsJob Ads and the Economy
January 12th 2010 09:29
I have always wondered how the count of job ads can really be any indication of job growth or even be any kind of economic indicator. The ANZ Bank regularly release analysed reports of job ads over varying periods and present the data as a significant economic indicator. There are however a lot of flaws in this type of analyses.
First of all, the majority of advertised jobs, whether they are in the newspaper or online, are submitted by recruitment agencies rather than the companies that are actually doing the hiring. That doesn’t mean that only one recruitment agency has the contract to narrow the field down to a shortlist either.
In fact, most of the time, the hiring companies put the contract out to two, three or multiple agencies and these recruiters can all place an advertisement for the one job. It is also pretty rare for a recruitment agency to actually advertise what company is doing the hiring and most recruiters would be reluctant to reveal the company name unless they had the contract exclusively.
That means that if five recruiters place an ad for one particular job, these five advertisements would actually be counted as five jobs, not one. This contracting out of the hiring process also presents another grey area. Even though it is totally illegal to advertise a job that really isn’t available, there is really no way of verifying that data because the recruitment agencies normally only use an internal reference number.
That doesn’t stop economic reporters churning out the released figures as if they are gospel. The first of the ANZ job ad series for 2010 was released yesterday. According to the ANZ, data collected from newspaper job advertisements nationally showed an increase since the July 2009 low point of 34 per cent. Internet advertisements nationally have increased 16 per cent.
Of course the statisticians probably think that the number of jobs that aren't actually advertised would probably balance out this discrepancy but that is so vague that it really amounts to pure guess work.
All ANZ’s data is collected from major papers nationally as well as main online job sites nationally. ANZ may believe these statistics are both a reflection of the current economic cycle and a forecaster for the months ahead. I still think this type of calculation has a lot of flaws.
Image credit: www.abc.net.au
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