August 2019 Unemployment Data: Looking Beyond the 5.3% Official Unemployment Rate

By Denis Bright

The latest August 2019 employment data shows the Australian labor market in a transitional stage. The federal treasury is awash with funds from the senate’s rejection of tax reductions for larger companies. Commodity export prices are largely buoyant. However, the federal LNP is firmly committed to delivery of a balanced budget for 2019-20. This means fewer possibilities for fiscal expansion, including injections of funding for TAFE programmes to overcome skill shortages in the workforce.

Time will tell if the notch in jobless rates for August 2019 from the latest ABS data is of lasting significance.

Employment Minister Michaelia Cash was still positive about the employment trends.

However, the new employment data contained some regional blackspots in both regional and outer metropolitan areas of SA, WA, Queensland and Tasmania.

In this time of economic transition, the Australian Government has warned local aluminum producers to hold off on announcing increases in exports to the US:

The Morrison government has warned aluminium producers, including Alcoa and Rio Tinto, to rein in surging exports to the United States to avoid US President Donald Trump imposing trade restrictions on Australia.

The warnings were issued after the Australian companies exploited an increased demand for aluminium created by the imposition of tariffs on their foreign rivals last year, from which Australia was exempted.

The consequent surge in Australian metal entering the US market prompted fresh tariff threats from the Trump administration over recent months, forcing the Morrison government to act.

“All of the players in the industry were aware that when the exemption was granted [in 2018], it was clear that there should be no surge,” said a senior source familiar with the issue.

The current unemployment rate of 5.3 per cent on both trend and seasonally adjusted data may look like a respectable number. It translates into 4,100 additional unemployed people in the past month. A seasonally adjusted unemployment level of 716,800 people in August 2019 looks much more threatening than a clean percentage figure of 5.3 per cent.

There is also the over-looked under-employment rate of 8.6 per cent in seasonally adjusted terms which translates into a national figure of 1.16 million.

Many short-term unemployed or underemployed people are kept off the Newstart benefit registers until they have used up accumulated assets or the assets of their parents/guardians if they are still dependents at home under 22 years of age. Even a short period of unemployment can be financially devastating (Department of Numbers Social Data 2019):

Fortunately, the National Commission of Audit is quite upfront about the different allowances paid to unemployed Australians:

To receive Newstart Allowance a person has to be unemployed and aged over 22. As at January 2014, the payment rate of Newstart Allowance was $501.00 per fortnight for single people, or $452.30 each for a couple (Department of Human Services, 2014).

Youth Allowance (Other) is paid to unemployed people aged 16 to 21. Youth Allowance (Student) is paid to similarly aged people who are still engaged in education. People aged 16 to 22 are encouraged to pursue education as a priority over work. As at January 2014, the payment rate for Youth Allowance (Other) was $414.40 per fortnight for a single person aged 18 and over and living away from home (Department of Human Services, 2014).

Newstart Allowance is paid to a variety of people – a large proportion of recipients are now either principal carer parents, have a partial capacity to work, are mature aged or have some combination of these characteristics (Joint Interagency Submission, 2012).

Compulsory Work for the Dole Schemes (WFTD) kick in after specified periods on Newstart and include the options of involvement in Green Army and other environmental programmes, participation in Defence Force Reserves and assignment to registered employers.

Administrative controls and means tests ration the availability of Newstart Allowances until accumulated savings are exhausted. These exemptions conveniently depress the Newstart rolls and enable political leaders to project a favourable glow on job statistics. Taking less than satisfactory jobs become an imperative as means test controls erode savings.

In its submission to the Senate Standing Committee on Education and Employment, the ACTU spoke up for cleaning staff who choose to remain outside collective bargaining arrangements for employment (ACTU 2018):

The Australian Council of Trade Unions (ACTU) welcomes the opportunity to provide a submission to this inquiry. The ACTU is the peak body of the Australian union movement and the largest and most representative body of Australian workers.

We have long held concerns about the parlous state of worker’s rights in the cleaning industry – an industry in which wage theft, wage stagnation, insecurity and poor working conditions are entrenched features. For many years the twin influences of outsourcing and the industrial relations systems’ focus on technical employers rather than those who actually set wages and conditions have created powerful rationales within the cleaning industry for worker exploitation. Most workers in the industry are employed by an entity that has been forced to bid for work doled out by large corporations who have huge incentives to keep prices low. Many are attempting, within the current I.R framework, to bargain with an entity that, despite being their employer, has absolutely no control over the amount of money available for wages or the conditions they work under.

Large retailers, who essentially control the wages and conditions of cleaners through their contracting, have been able to establish the legal fiction that they are detached from the workplace entitlements of workers in the industry – leaving them with all of the power and none of the responsibility.

Casual employment has fostered a return to piecework in pizza delivery and in the black kitchens which prepare food for home delivery services encouraged by multinational providers. ABC News Online (7 September 2018) noted the plight of contractors involved in pizza delivery by bicycle:

Only four Domino’s Pizza stores “fully complied” with workplace laws, following an investigation by the Fair Work Ombudsman into 33 of its stores across Sydney, Melbourne, Brisbane and Adelaide.

Newly appointed ombudsman Sandra Parker said Domino’s head office needs to take action, as its store network continues to have problems complying with workplace legislation.

“The Fair Work Ombudsman has worked with Domino’s head office for several years to try to promote a culture of workplace compliance,” Ms Parker said.

“We expect better from a major network like Domino’s — it should not be up to the Fair Work Ombudsman to find and alert businesses to the systemic issues identified.”

FWO inspectors found that, during a one-month period, 20 out of 874 workers had been underpaid by a total of $1,978.

This was in addition to Domino’s record-keeping breaches, unauthorised deductions and not paying workers delivery allowance, leave entitlements and additional hours worked.

They also issued 17 formal cautions to Domino’s, putting it on notice that further workplace breaches may result in financial penalties.

Mainstream reporting usually overlooks the plight of dependent young people living at home. Newstart Allowances are affected by both the income and asset levels of parents. The income threshold for reduced Newstart Allowances commenced with a combined parental income of $53,000.

A staff member at the Office of the Minister for Human Services, Stuart Robert, advised that the allowance rate for dependent unemployed people commenced at $249. 20 -per fortnight and increased to $299.80 per fortnight between 18-24 years.

These miserable payments have been associated with a reduction in the national register of Newstart Allowances (Article by Sarah Martin for The Guardian Online 12 August 2019):

Figures released by the Coalition on Sunday showed 42,000 fewer people were receiving Newstart and Youth Allowance in 2018-19 compared with the year before, equivalent to a drop of 5%, with the government using the figures to push back against calls to lift the benefit.

But the data, obtained by Guardian Australia, shows that the results are patchy across the country.

In about 10% of geographic areas the number of people claiming the benefit has increased, with remote unemployment hotspots among those getting worse in the past year.

In the Northern Territory, Palmerston recorded a more than 20% increase in the number of people claiming Newstart or Youth Allowance, jumping from 1,119 to 1,366 individuals – an increase of 247.

In the outback NT communities of Katherine and Barkly there was a more than 16% spike in the number of people on benefits, while the Darwin suburbs, Litchfield and East Arnhem Land all recorded an increase of more than 3%.

In outback South Australia, which includes the remote Indigenous communities of the Aṉangu Pitjantjatjara Yankunytjatjara (APY) Lands, more than 2,000 people are claiming Newstart or Youth Allowance, with the number up about 5% year on year.

Other communities showing a spike included Jimboomba and Beaudesert, south of Brisbane, up 5.2% and 4.5% respectively.

The skill trap which affects disadvantaged communities in Australia demands more inclusive access to TAFE Courses. Particular attention must be given to a review coursework fees and Youth Allowances for younger students who are living at home. Current Youth Allowances are well short of one third the Henderson Poverty Level as noted by the Submission from the National Union of Students (NUS) before the 2019-2020 Budget was tabled.

The Australian Education Union (AEU) has been proactive in its support for TAFE Campuses to address skill shortages in the Australian economy where concessional fees are available to disadvantaged students.

In contrast, commercial providers are less generous about concessional arrangements even if they have online options for remote areas (Lynda.com):

The price for SIR50116 Diploma of Retail Leadership course is $4,420 if you pay upfront, or we have interest free payments with no deposit and no interest for 24 months where you can get started for just $50 a week.

The drift to the US model of fee charging commercial colleges over TAFE programmes is keeping school-leavers and retrenched staff in a skill-shortage trap because of an inability to muster the upfront fees necessary to enrol in coursework.

Both Australian and US Commercial Colleges use slick promotion to entice school-leavers into accredited coursework as shown by an endless round of promotional videos from Lincoln Tech in Tennessee:

From pizza delivery rorts to outrageously expensive training programmes without guarantees of future employment, it is largely professional trade unionism which stands out in promoting more just models for future workplaces.

The alternative is always to allow the victims of abuse to feel personally responsible for their current dilemmas when legal advocacy from trade unions is available to challenge entrenched abuses in the land that lead the world in the Australian Harvester Judgement of 1907.

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Denis Bright (pictured) is a member of the Media, Entertainment and Arts Alliance (MEAA). Denis is committed to citizens’ journalism from a critical structuralist perspective. Comments from Insiders with a specialist knowledge of the topics covered are particularly welcome.

 

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