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.