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The story behind the latest unemployment figures

The government sent out the troops to spruik the latest jobs growth figures but, as always, they are not telling the whole story.

The ABC headline proudly announced “Unemployment rate drops to 5pc as full-time jobs boom rolls on”.

That is misleading in several ways.

Despite the ABS suggesting that “The trend data provide the best measure of the underlying behaviour of the labour market”, the Treasurer (along with the media) is quoting the much more volatile seasonally adjusted figure of 5% rather than the trend estimate which shows unemployment unchanged at 5.2%

To give you an idea of how unreliable monthly seasonally adjusted estimates are, whilst suggesting that 5,600 jobs were created, the ABS states that they can say with 95% certainty that total employment change was somewhere between 54,800 jobs lost to 66,000 jobs created in September.

The labour force, which includes the total number of employed and unemployed persons, increased by 261,500 persons over the last year which would imply that we need about 21,800 new jobs a month just to keep up.

As others have pointed out, the only way that the creation of 5,600 jobs in a month can lead to a supposed 0.3% drop in the unemployment rate is if the participation rate dropped – which it did by 0.3%.  Most analysts suggest the 5% figure is “a little too good to be true” and likely to bounce higher in the remainder of the year.

The latest ABS release contains an analysis of underemployment that seems at odds with claims of a “full-time jobs boom”.

As of September 2018, Australia’s trended underemployment rate (the proportion of underemployed to the total labour force) remained high in historical terms at 8.3%, but below the peak of 8.8% recorded in March 2017.  Over the last four years, the rate has seen minimal fluctuation, remaining between 8.3% and 8.8% in trend terms.

Over the last ten years, part-time employment has increased from 28.3% to 31.6% of total employment and the underemployment ratio has increased from 6.3% to 8.8%.

Josh Frydenberg said “In terms of the participation rate, more women and more seniors are in the workforce and over the year we have seen another 100,000 jobs created for young people.”

What he doesn’t mention is that one in ten working women (10.7%) want more hours.

And of course there are more seniors in the workforce.  From July 2017, the age at which you can access the age pension started rising, affecting anyone born on or after 1 July 1952.

For young people aged 15-24, the underemployment rate is 18.1%.  The unemployment rate for this group remained steady at 11.2% in September 2018.

Over the last 20 years, the age groups on the lower and upper extremities have seen the largest growth rate in their total underemployment; underemployment for over 55s increased 275%, for 15-24 year olds 83%, while total underemployment increased 78%.

Picking through a report to find a figure that makes you look good might be a good political tactic but it does nothing to inform good policy making.


15 comments

  1. SteveFitz

    Thanks Kaye Lee – The figures always looked fishy. Casualising the workforce and underemployment make the jobless figures look great but, the end result is broad reaching poverty. Another despicable act of deceit by the LNP.

  2. paul walter

    It’s about what I thought.

    It has disgusted me that msm, including the ABC and Guardian have pursued to the very gates of hades, the myth of improved employment, to the point a person feels so nauseated at the big lie.

  3. New England Cocky

    Perhaps some/all of the tax minimisation paid to foreign owned multinational corporations could be restricted to spending only jn Australia, then we would have jobs growth in service industries …. but no weekend service thanks to the over-time wage cut by the RAbbott Turdball Morriscum LNP misgovernment.

  4. Robyn Cleland

    Lies $ more Lies unemployment is down yeah right .

  5. Frank Smith

    And has the population increased over this period?

  6. Don Kelly

    I have just completed participation in a monthly ABS labour survey which I had to complete each month for six months. At the end of this survey I was contacted by an ABS representative to complete a phone survey which was a bit more complex. At the of this survey I asked the rep. about the sharp decline in the participation rate figures that were released in the latest data. He told me that those numbers include stay at home mothers with young children and pensioners. We are an ageing nation but I would expect many people in the electorate would instantly believe that non participation was another word for ‘dole bludgers’.
    We always have to be careful interpreting month to month labour force movements given the way the ABS Labour Force Survey is constructed and implemented.
    I believe that a better approach would be to compare the seasonally adjusted total hours worked with the total number of people that worked those hours and instead of only considering the latest monthly figures, we should consider the period from the beginning of the year up to and including the latest monthly figures. I have analysed the period Jan. 2018 to Sept. 2018 (9 months). The totals were obtained from the ABS website; the total hours worked on average per worker during this period was 1253 hours spread over 189 working days. I then considered the Award hours / day (7.6 hours/day) for comparison purposes. 189 x 7.6 = 1436.4 award working hours. (1253/1436.4) x 100 = 87.6% of the Award Working week of 38 hours = 33.3 hours / week on average. And the government and some commentators are telling us that 5% unemployment is ‘full employment’.

  7. Kaye Lee

    Don,

    The ABS gives that figure.

    “Monthly hours worked increased by 1.8 per cent over the past year. The average hours worked per employed person was 138.9 hours per month, or around 32 hours per week.”

    Interesting that trend employment increased by 2.4 per cent but average hours worked increased by only 1.8%.

    In September last year the average hours worked per employed person was around 139.6 hours per month, or around 33.2 hours per week. Employed people have lost 1.2 hours per week on average over the last year.

  8. Don Kelly

    Would have saved me a lot of time had I found those figures myself Kaye. I have only worked it over the year to date. Even so the workers are not getting the Award hours of work.

  9. Michael Taylor

    Howard tried everything he could to cook the books.

    Unemployment levels weren’t coming down so he created a perception that they were.

    My department used to have access to the Centrelink database, which was accessed monthly to get the unemployment figures. Certain “businesses rules” were applied that filtered out “unwanted” data, the end result being the the number of people on Newstart.

    Before Howard, the Newstart population was basically all people on Newstart. What Howard did was to filter out the Newstart recipients that had their payments temporarily suspended. That is, if your payments were suspended for eight weeks then under Howard’s new business rules you weren’t on Newstart.

    Therefore, because you’re not receiving Newstart due to suspension, your unemployment status was hidden out of site.

  10. Max Gross

    Understand this: ABS do NOT count the number of people trapped on Newstart (aka Nostart).

  11. SteveFitz

    Based on those figures Kaye, the average worker, on average wage, has lost $1,500 p.a. straight out of the back pocket. And the LNP will turn around and say: – “Yeah, but see what we have done – We have reduced how much tax people pay” – And in their usual inimitable form take credit for that.

  12. Marlene Hodder

    I would like to know if the number of people working for the dole and on CDP are counted as employed, i.e. is this included as jobs for all these people who are technically unemployed?

  13. james sharrett

    And their claiming 1 million new jobs were created in the 5 years they have been in, full time or part time, casual, temporary ?

  14. Kronomex

    What annoys me no end, sometimes leading to swearing crankily, is the magic wand notion regarding employment figures being “seasonally adjusted”. It may have some validity but on the whole it’s just the fudging of figures to create a false image.

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