Contributed by Joe Montero
The claim that Australia’s unemployment rate went down from 5.9 in March to 5.7 in April is not true.
My short response is based on the latest jobs figures from the Australian Bureau of Statistics (ABS) and the focus is on April this year. In criticising the above claim, I have referred to a few facts, mostly provided by the ABS, but not included as a matter of policy. After reading what is said here, readers are encouraged to visit the ABS site and find out more for themselves. Two further references have been included at the end of this article.
The reasons it is important to answer the the official government figures is that they are wrong and calculated by various means,to underestimates what is really going on.
To begin with, anyone who has worked an hour during the period of the survey is considered to be employed. There is also the inconvenient omission that the number of full time employed decreased by 11,600. Those in part time work increased by 48,960 and 37, 400 changed their jobs. According to Roy Morgan, the small increase in jobs claimed was driven by the rise in part-time work.
These figures alone make a mockery of the given fall in unemployment. Another omission is that the hours actually worked fell by 2 million.
These facts don’t suggest a fall in the unemployment rate or an increase in the number of real jobs.
There is more. The proportion of the workforce that retired from work in April was 1 percent higher than it was for the previous month. Job vacancies that occur because of this are not new jobs.
How does all this match up with the fall in the unemployment rate by 0.2? It doesn’t.
The labour force participation rate needs to be looked at. It is calculated as employed plus unemployed, divided by the working age population minus those institutionalised. If the number of employed and unemployed are calculated wrongly, the result is not a proper representation of what is going on and the estimate of the labour force participation rate will also be wrong.
According the ABS, to be included in the labour force participation, the unemployed must be actively seeking for work, defined as having contacted a prospective employer in the 4 weeks relevant to the survey. In addition, only those who are registered with an employment agency are counted.
Centrelink is also involved in vigorously breaching those on Newstart. This often means deregistration until the issue is resolved. These people will not be counted as unemployed, so long as they are not on the system. Centrelink keeps the actual numbers close to the chest, but it is known that a large proportion of those on the benefit are breached each year.
Those who do want work, but because of the inability to find it, have been forced to take on study or are being helped to survive by others are not counted. Some have not been able to survive the hoops that Centrelink places in front of them to continue to be on Newstart. Married women, who do not qualify for payment and therefore do not bother registering with Centrelink, because their husband is working, are severely unrepresented.
Put these factors together and it turn out that there is a significant part of the population that wants to work and would accept a job, if one was available. They are not considered, because under the policy on which the ABS operates, they are not regarded as economically significant enough.
There are various alternative calculations using official data and including those groups currently not included. I have made similar calculations from time to time and have found a consistent pattern that puts the real rate of unemployed is at around double the official statistic. For last April, this would take it to around 9 to 12 percent. This matches well with other alternative calculations.
If underemployment is included, Morgan suggests that the real unemployment rate is 17.6.
The difference is not only major, but it is important. Economically significant, because it reveals an important and wasted resource for the nation’s economic wellbeing. Developing proper policies to provide all with the opportunity to work needs the full extent of available information.
A more real understanding of unemployment is also necessary to deal with the associated problems and working towards the elimination of poverty.
Australia’s population is growing at around 1.4 percent per year and the workforce by 2.3 percent. This is 552,000 people. They do not enter the employment statistics, because they are either newborns, or migrants who do not qualify yet. They will in the future and if Australia does not have its act together, the unemployment problem is going to be much worse than it is today.