Job ChurnJob Churn

Business Demography and

Job Churn Workshop May 2011

OutlineOutline - The Motivation- The Motivation - The Sources- The Sources - The Methodology- The Methodology - The Story (a chapter or two)- The Story (a chapter or two)- The Possibilities- The Possibilities

John.Dunne@cso.ie

The Motivation - Context

Increased demand for information on jobsLess financial resources New opportunities to exploit administrative dataA methodology already outlined in research literature

Contribute to

Identification of employment opportunities (Short term)

Evaluating and targeting (re)training (Medium term)

Jobs policy (Long term)

The Motivation – Policy value

The Sources – the analysis file

CSOBusiness Register

EMR IDCBR ID

Legal formActivity

Revenue Employer Employee Tax returns

EMR IDPPSNClass

WeeksPay

DSPClient record System

PPSNDOB

GenderNationality

SPP35 Analysis file for each reference yearCSOPPSN

CBR IDMonth of birth, Sex, Nationality

Activity (NACE Rev 2), Legal formWeeks, Reckonable pay

Integrated and depersonalised for multi-purpose analysis

The Sources - strengths

– Links information on employer and employees

– Comprehensive

– High quality

– Consistent

The Sources - weaknesses

For administrative purposesAs is (warts and all / legal record)

Not perfectNo point in time (Concurrent v Consecutive records, seasonality)

Timeliness (10 months after reference period end)

Business register (on going quality enhancement)

The Sources – Added opportunities

Other indicators

– Job volume (Sum of weeks | years worked)

– Job value (Sum of reckonable pay recorded)

– Job quality (Mean weekly reckonable pay)

A firm has 10 paid employees on books in 2008

An firm has 12 paid employees on books in 2009

The firm has 4 paid workers on books in 2009 that don’t exist in 2008 (Hirings)

The firm has 2 paid workers on books in 2008 that don’t exist in 2009 (Separations)

The Methodology – illustrating by simple example

Ref Year 2009Hirings (H) = 4

Job Creation (JC) = 2Separations (S) = 2

Job Destruction (JD) = 0Job Churn (CH) = 4

The Methodology – building blocks

For two timepoints/periods in enterprise/employee data

At the person levelHirings (H)Separations (S)Job stayers (JS)

At the enterprise levelJob creation (JC)Job destruction (JD)

An identity

The Methodology – calculations (job reallocation / job turnover)

Total job reallocation (REALJ) refers to the sum of job creation (JC) and job destruction (JD) for a group of enterprises.

Excess job reallocation (EXCJ) for a group of enterprises is defined as the difference between total job reallocation (REALJ) and the absolute net change in total employment ( |JC - JD| ), for group j at period t.

Excess job reallocation provides a measure of the offsetting job creation and job destruction within a group of firms.

The Methodology– calculations (worker reallocation / worker turnover)

Total worker reallocation (REALW) is calculated by summing hirings (H) and separations (S) over all members of a specified group, the group can be defined either by a group of enterprises or on a set of particular demographic characteristics (age, gender etc).

Excess worker reallocation (REALW) for a group is defined as the difference between total worker reallocation (REALW) and the group’s absolute net change in employment (|H - S|). So for group j at period t,

Excess worker reallocation provides a useful measure of the number of excess new person job matches over and above the minimum necessary to accommodate net employment growth/decline; in other words, it reflects the reallocation of job matches (reshuffling of jobs and workers) within the same group (Bassanini & Marianna, 2009).

The Methodology – calculations (Job churn / churning flows)

At the enterprise level or any group of enterprises, churning flows (CH) is the difference between excess worker reallocation and excess job reallocation.

Churning flows represent labour reallocation arising from enterprises churning workers through continuing jobs or employees quitting and being replaced on those jobs. So for group j in period t

The Story – Chapter JCA02 (Firm based components)

Primary components for Business Economy (Employment records)

People less likely to leave their jobs in a downturn - > Job churn is pro cyclical

The Story – Chapter JCA02 (A comparison - Environment)

Finland - end of 80s high growth and overheating-deep recession at start of 90s due to internal and external shocks that included collapse of Soviet Union, slowdown in Western Europe, severe banking crisis due to deregulation. ( Ilmakunnas 2001 )

The Story – Chapter JCA02 (A comparison – Primary components)

The Story – Chapter JCA02 (Selected Sectors)

Sectoral view

Sector C ManufacturingSector E Water supply, sewage ....Sector F ConstructionSector G Wholesale and retail trade

Sector H Transportation and storageSector I Accommodation and foodSector J Information and communication

The Story – Chapter JCA01 ( Who are the separations? )

The Story – Chapter JCA03 (Re-employment of persons separating)

Primary separations

With no new employment

Primary separations

With new employment

Construction (F) 2006 Number 24223 68155 43932

Per cent (36) (100) (64)2007 Number 29011 79224 50213

Per cent (37) (100) (63)2008 Number 43424 94859 51435

Per cent (46) (100) (54)2009 Number 58952 93795 34843

Per cent (63) (100) (37)

Industry (B to E) 2006 Number 19053 52830 33777

Per cent (36) (100) (64)2007 Number 22152 57998 35846

Per cent (38) (100) (62)2008 Number 24416 59436 35020

Per cent (41) (100) (59)2009 Number 35027 68436 33409

Per cent (51) (100) (49)

Business economy services excluding activities of holding companies (G to N,-642)

2006 Number 113296 362803 249507 Per cent (31) (100) (69)

2007 Number 112657 395016 282359 Per cent (29) (100) (71)

2008 Number 137166 431906 294740 Per cent (32) (100) (68)

2009 Number 187274 438509 251235 Per cent (43) (100) (57)

Business economy excluding activities of holding companies (B to N,-642)

2006 Number 156572 483788 327216 Per cent (32) (100) (68)

2007 Number 163820 532238 368418 Per cent (31) (100) (69)

2008 Number 205006 586201 381195 Per cent (35) (100) (65)

2009 Number 281253 600740 319487 Per cent (47) (100) (53)

The Story – Chapter JCA04 (Where are separations re-employed?)

Sectoral distribution of re-employed separations (2009) B to N,-642 C F G I N

Business economy excluding activities of holding companies (B to N,-642) Number 270112 25792 22024 78360 43788 37207 Per cent (100) (10) (8) (29) (16) (14)

Manufacturing (C) Number 26175 10485 1532 6394 1794 2522 Per cent (100) (40) (6) (24) (7) (10)

Construction (F) Number 30493 2772 13522 3706 2177 4260 Per cent (100) (9) (44) (12) (7) (14)

Wholesale and retail trade; repair of motor vehicles and motorcycles (G) Number 72824 4860 1751 42571 7479 6320 Per cent (100) (7) (2) (58) (10) (9)

Accommodation and food service activities (I) Number 43975 1732 962 9002 23590 4157 Per cent (100) (4) (2) (20) (54) (9)

Administrative and support service activities (N) Number 39872 2842 2160 7384 4828 13365 Per cent (100) (7) (5) (19) (12) (34)

The Story – (Where might new jobs come from?)

Ilmakunnas (2001)

Business characteristics (Location/county, firm status – expanding/contracting, trade indicator, coverage beyond business economy, Foreign controlled)

Geo- spatial (Introduction of post codes, employee and employer location, admin data quality)

Other data sources ( FAS, Live Register, .... )

The Possibilities – (Business register, geo spatial, other data sources)

The ReferencesBassanini, A., & Marianna, P. (2009). Looking inside the perpetual motion machine: job and worker flows in OECD countries. Retrieved from http://www.oecd.org.

Burgess, S., Lane, J., & Stevens, D. (2000). Job Flows, Worker Flows and Churning. Journal of Labor Economics , 18 (3).

Fox, R. (2009, June). Job Opportunities in the Downturn. Retrieved March 15, 2011, from http://www.fas.ie/NR/rdonlyres/9ABC5EE1-CF20-4AA5-ACA4-C5B81DD9FE5E/793/jobsdownturn96.pdf

Guertzgen, N. (2007). Job and Worker reallocation in German establishments: the role of employers' wage policies and labour market equilibriums. Discussion paper, Centre for European Economic Research, Mannheim.

Ilmakunnas, P., & Maliranta, M. (2001). The turnover of jobs and workers in a deep recession: evidence from the Finnish business sector. Helsinki School of Economics and Business Administration; The Research Institute of the Finnish Economy. Helsinki: The Research Institute of the Finnish Economy.

Lawless M & Murphy A, (2008). Job turnover in Irish Manufacturing 1972-2006. The Economic and Social Review, Vol. 39, No. 3, Winter 2008, pp235 - 256

Li, D. (2010). Job reallocation and labour mobility among heterogeneous firms in Norway. Working Paper, Ragnar Frisch Centre for Economic Research.

http://www.cso.ie/surveysandmethodologies/surveys/construction/Jobchurn.htm

Thank you

John.Dunne@cso.ie