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Unemployment by COVID exploded

By John Haly  

Locking down the economy to save lives in a pandemic comes at the cost of unemployment, but how much, is the issue. Measuring that unemployment in Australia has been the focus of much dissent of late, in both social and mainstream media. The variations post-COVID have been extreme and rigour in methodology and measurement primarily abandoned.

Headlines like the ABC’s “Almost a million Australians out of work due to coronavirus; RBA tips economy to take 10pc hit”, are common. The Reserve Bank and Bankwest Curtin Economics Centre asserted similarly, “unemployment rate will rocket from 5.1 per cent past the 1992 high of 11.1 per cent as quickly as August before hitting 12.7 per cent in May 2021.

ABS instability

Meanwhile, the underfunded and understaffed ABS produced statistics on unemployment that needed readjusting between January and May of 2020. Between 5.1% to 5.2% for any given month, raising or dropping unemployment estimates month to month anywhere between 5,500 to 10,900. The month of February shifted from 689.9K (5.1%) on the 19th of March by an additional 10.9K to 709.8K (5.2%), by the 16th of April. The adjacent chart shows the other four adjustments. Data accuracy was problematic under COVID-19.

ABS’s Unemployment website record of changes to unemplyment figures in 2020

Apparently, the ABS had stopped surveying the whole of March during the lockdown. By the 14th of May, the ABS announced that unemployment had only risen from 5.2% (718.8K) in March to 6.2% (823.3K) in April. No trend estimates for April were released, despite being widely perceived as an underestimate. If this is to be considered valid, then this constituted a percentage of drastic unemployment which had previously been unseen, … since September of 2015 – when it was last 6.2%. In the middle of a Pandemic with apparently massive job losses, we were expected to believe it was as “catastrophic” as most of 2014 and 2015. Although if you look back far enough, it was much worse (as unemployment exceeded 6.2%) in the first half of 2003, back as far as the time ABS kept records, using the redesigned sample methodology developed, back in 1992.

6.2%? Really?

To everyone’s surprise, a certain level of healthy scepticism has arisen about the ABS statistics. There were dozens of social media posts that bandied the “one hour a week” rule for defining employment, as a criticism.

Questioning of Sen. Michaelia Cash 19th Sept 2019 at Doorstop Canberra

The idea that anything over one” hour a week constitutes “employment” arose from a question raised by a journalist to Michaelia Cash. The reaction to Cash’s “one hour a week” measure of employment is problematic because neither was, the question well-posed nor the answer, accurate. The problem is the “one hour in a week” rule is a misnomer. Statistically, that is true of what is known as the “reference week”, BUT the ABS also takes regard of the four weeks before the end of the reference week. So “what counts as full-time work” is not measured in any one week, neither do they count your work history for only a week. Besides, no one works for merely one hour a week as Greg Jericho is quick to point out. It is far more likely the minimum is at least a single work shift a week. Although, Greg’s focusing on the “one hour a week”, ignores the other points of exclusion.

You also have to be actively looking for work during those four weeks to be counted as unemployed. Other exclusions include working without pay in either a family business or farm during the reference week. Steve Keen in “The Australian”, of all places:

Herein lies the problem with spin in economic data: sometimes the spin turns your way, sometimes it doesn’t. The ABS uses the internationally sanctioned definition of unemployment, which is similar to Tom Waits’ definition of being drunk: you have to be really, really out of it to qualify. Not only must you not be in employment, but you can’t have done even one hour of paid or unpaid in the four weeks prior to the survey. Nor can you be discouraged by the absence of available jobs either — you must have applied for something in the previous four weeks — and you must be available to start immediately.”

This explains why – for the ABS – unemployment is only 6.2%. The Lockdown by Scott Morrison announced on the 13th of March began on March 16th – after his Church’s Pentecostal conference was over. Closures of pubs, clubs, cafes and restaurants weren’t mandated till the following Monday. Further closures of Auction houses, real estate auctions, eating in shopping centre food courts, amusement parks, play centres, etc., were not decided on, till later that week. Wage subsidy packages were decided on, by the end of March.

So, given people have to be unemployed for four weeks to begin to registering to the ABS as “unemployed”, many former employees, would not have even been designated as “unemployed” in April. Also one needs to factor in, that Jobkeeper “hid” people who were later fired in April or thereafter.

International vs domestic

The ABS unemployment methodology is often criticised for the wrong reasons. What people don’t understand is the methodology championed by ILO that ABS has a context – international comparisons. That is the correct context. The “I” in ILO stands for International not Intra-national.

As a stand-alone domestic measure, it is fundamentally flawed—realised by the concession that there is an element of “hidden unemployment” that is not measured by the ABS methods. There is also a concept of “discouraged job seekers” and “underutilisation”. All these additional descriptions are an admission that the ABS does not wholistically measure Australian unemployment. The ILO standard was never designed to be used to measure the internal or domestic unemployment of any country.  Alan Austin often uses ABS statistics to compare nations but continues to demonstrate that, there is more to Australian unemployment than just the 5+% the ABS has been claiming in recent years.

Australian domestic employment

The ABS does not adequately measure real domestic unemployment. The government frequently engages with these measures to deceive the public as to the actual extent of domestic unemployment. This is where the non-internationally comparative Roy Morgan’s statistics should be used. They are a far more accurate measure of real domestic unemployment in Australia. Roy Morgan is quite capable of defending its methodology. Comparing Roy Morgan and the ABS shows that the ABS has become increasingly misaligned.

Roy Morgan vs ABS statistics on unemployment

Charting Roy Morgan’s employment statistics for over a decade and adding the Department of Employment’s IVI statistics for job vacancies reveals several long-standing trends.

  1. Full-time work has been falling as a portion of Employment in Australia, and Part-time has been rising.
  2. The rate of entry into the workforce is not matched by employment growth.  Unemployment now at 15.3% from 6.3% in April 13 years ago as illustrated by the gap between workforce and employment.
  3. There have never been enough job vacancies to fill the unemployed’s needs for work.
  4. There was no robustness in the economy for jobs to survive any emergency that might disrupt it.

Workforce, employment and job vacancies in Australia over 13 years

This graph shows a stark drop in full-time employment when pandemic lockdown occurred, but not so for part-time employment. While these are early days to track significant reductions, there is another explanation.

Corporation’s human capital is often hard and expensive to acquire. Expertise that marches out the door from an enterprise can be irreplaceable, especially in high-end jobs. Drilling down into the IVI stats for job vacancies reveals numeric disparities between entry-level jobs and highly skilled positions.

The combination of managers, professionals, technicians, social workers, clericals, etc., represent the largest portion of job vacancies whereas labourers, machinery operators, drivers and low skilled jobs are a much smaller proportion. I’ve outlined these proportions previously via Anglicare’s Jobs Availability Snapshot.

Shifting full-time workers to part-time helps employers retaining critical staff when their business recovers. The ACA promoted this as an option for keeping staff, and the JobKeeper legislation enables that approach.

Australian under and unemployment

Still, where is our recovery going to come from when you consider the figures of this graph on under and unemployment and job vacancies? Consider:

  1. Given the enormity of under and unemployment (24.7%), how can our economy recover?
  2. Given the trend in falling job vacancies to less than half what it was at the beginning of the year, from where is employment going to come?
  3. Given Australia has been in a per-capita recession since late 2018 where is the pre-existing economic robustness for a functional recovery?
  4. Given the previous falls in business & consumer confidenceWage rates and household saving, and rises in CPIUtility pricing, through household debt where is the cushion for a soft landing?

Under & unemployment and the poor job vacancy opportunities in Australia

The methodology for unemployment measurements during the great depression of the 1930s was different from how we measure today. Pointing out that unemployment reached a record high of around 30% in 1932, is problematic as we are not using comparable measures. That hasn’t stopped the media from making the comparison, and it is not that far fetched, given the enormity of the problem.

Poor economic indicators for Australia leading into 2020

This article was originally published on Australia Awaken – Ignite your Torches.

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13 comments

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  1. New England Cocky

    “[A] certain level of healthy scepticism has arisen about the ABS statistics” ….. and the economic competence of the Scummo Sacked from Marketing COALition Liarbral Nazional$ misgovernment to manage the national financial affairs for the benefit of Australian voters.

    Truly it may be said that having doubled the national debt, thrown COVID-19 money at corporations while ignoring families, foreign workers, foreign students, casual and part-time employees Wishie Washie Joshie has not clear idea of what is required to be a functional Treasurer.

    “We’ll all be rooned, said Harrahan, “Before this misgovernment is out”.

  2. Andrew Smith

    Good analysis, but why doesn’t it surprise me coming from the ABS catering to a mostly data and financially illiterate population and audience?

    Statistics, graphs and charts are now central to political and commercial PR to misinform Australian voters and consumers. A physicist with blog The Quixotic Quant has done deep dives into ABS and also Core Logic property price data to conclude that much round population and housing has ‘the integrity of custard’, both inflated, regarding population:

    ‘Not the slightest mention, flag, warning, column change, name change, or label can be seen anywhere near the actual spreadsheets available for download. So with almost no exceptions users tend to string it together on one axis, in sequence, in one line, in one colour, blithely ignorant of the fact that they’re plotting two different bits of data which are “not comparable” according to the producer of the data.

    It’s hard to overstate how bad that really is. It’s the kind of slop which hung-over first-year uni students cobble together on the bus on the way to a tutorial which requires attendance but doesn’t grade exercises. If they do it in assignments, they fail. Yet all of Australia’s leading economists are doing it relentlessly, if accidentally.’

    https://www.quixoticquant.com/post/the-missing-million/

    The above is from blog about the sub-optimal (and inflated) NOM net overseas migration and population data, but his several other related blog posts make for interesting reading, but has not posted for several years.

  3. andy56

    Well if you do your own , its more accurate than the ABS bullshit. 25million people, 2.5million out of work, thats 10% in my books. Or 20% of the work force (13million). Its basic stuff so you have to wonder how the ABS arrives at its 6-7% unemployment. If the modeling they use is so far out, maybe its time to put it out with the trash and start again from first principles. Seriously, we just got economic news to say the last quarter was down. On any brain surgeon metric, am i surprised? There’s a couple of “experts” , one in the age and one in the guardian who like to show their skills by throwing charts at us all the time. Sure most of the mud they throw is directed at the government, but they dont fool me. They are just as perplexed as the next ” classically” trained economist.
    Its all because they still see the economy as the end game instead of a TOOL.
    We are fast approaching that time in our development where we are close to taking the next step. Neoliberalism has run its coarse, no matter how much the marketing guy pushes. You can only pretend to fix the core problems for a while but it catches up. 7rs of LNP and 7 years of economic decline, you cant escape the facts. In this modern world economy. economy of scale means that commodities will be very cheap or given away. 60months interest free proclaims HN. There just isnt enough demand to employ everyone. A UBI is the only logical step. If after 50yrs we still have 5% unemployed, the system is screwed. Lets see how many economists can join the dots. Hint, the info you need is readily available so no need to disturb the ABS

  4. Phil Pryor

    Liberals lying, lazy, leaderless sham government is ruining this nation, Turds dressup, as chocky, shit in sandwiches, rubbish not worth recycling, inhuman incapable ingrates, not worth a painful pee, that’s Morrison’s misfits, momgrels, morons, mad dogs and mudskulls. The thieveing, rorting, propaganda, rigging, matey bumboy presents, the rotten right wing ratbag raving rubbish is sickening, unfair. Retreat Australia unfair, under these political perverts.

  5. paul walter

    This a good article, much thanks to the writer. sharing.

  6. ajogrady

    What is a myth?
    A myth is an unproved or false collective belief that is used to justify a social institution or a political party.
    This is particularly true of the myth that the L/NP are good economic managers. Nothing could be further from the truth. Australians and Australia are going to bear witness to this in the coming months and years.
    Labor, helped by China’s massive expansion program at the time, got Australia through the GFC with the best economy in the world and a currency exchange rate of $1.10 at one stage. This time our government has turn its back on China and Labor is not in power. It will be interesting to compare the outcomes and watch the myth being busted forever.

  7. andy56

    Anyone notice the Chinese tourists wont be coming back in a hurry? Thats another industry to go to dust – Permanently. Didnt i warn that the chinese were going to hit us with a silent stick. I fear recovery will be a long long time coming under this mob. The two great dangers we face are declining demand and declining interest by china. One can argue that china saved us from the GFC , but what if they decide to stick a finger up at us?
    Still the government is proudly displaying its insensitivity by saying china is wrong, we are no threat. Clearly they still dont understand china’s displeasure. If you dont know what the problem is or you cant admit it, how are you going to find a solution. Public displays of ” I’ll tell my mommy on you” make us look stupid, foolish and weak.
    We are entering the twilight zone of economics, homebuilder is just the tip

  8. A Commentator

    So, just out of interest, should Australia’s foreign policy be determined by-
    1. Does China like us?
    2. Will Chinese tourists continue to visit?

    I think a little more substance would be helpful.

    We’ve had enough of foreign policy determined in accordance with US expectations, there’s no needs to migrate to one that appeases the Chinese leadership.

    A recession is the best time to rebalance our foreign and trade policies. During times of expansion, there are too many vested interests to achieve a rebalance.

    Change to a more ethical foreign policy now.

  9. andy56

    A commentator. A prostitute doesnt get picky when she is hungry.
    Foreign policy is what ever gets us over the line.

    A recession is the best time to rebalance? What do you suggest is a more ethical foreign policy?
    A more ethical foreign policy would start with calling out your favourite country for being an arsehole. A more ethical policy would be not to tie aid grants in the asia pacific . A more ethical policy wouldnt make it so financially crippling for asians to come here. A more ethical policy would recognise Taiwan. A more ethical policy would tie exports to china with more ethical behaviour by china. A more ethical policy would distance ourselves from american policy. A more ethical policy would mean dropping the sub contract. A more ethical policy means no more arms sales ANYWHERE.
    But we know already it wont happen. The current mob wants china’s money and then slags them. The current mob want to suck up to trump so we can then lose our markets to america. We want the money so desperately, ethics dont matter. Just ask Rio Tinto if ethics stopped the destruction of the historical site.
    working really well at the moment. I would have thought times like these its best to shut the fuck up and plan an escape route.

  10. DrakeN

    andy56,

    Equating international, or even most, trade with prostitution is an apt metaphor.

    “Whatever it takes” guides the majority of people engaged in trade and politics.

  11. Henry Rodrigues

    Not only is Scummo useless at telling the truth, he’s fucken useless at adding up numbers. No doubt he’ll claim he’s just following the ABS guide to stupidity, but they’re not elected, he is. And his little gap toothed numbers man Friedup and fired up , is worse than a man with no fingers, who can at least use that disability as an excuse. When they’re finished handing out vast sums of money to their favourite charities like the rich bludgers, big business and coalition voters, they’ll hand over a wrecked economy to Labor to fix. Only question in my mind is, will Josh achieve, Best treasurer in the world, status. Nah, I don’t think so.

  12. Gangey1959

    Thank you AIMN and John H for those stats.
    A56. You’ve just about nailed it.
    Australia needs to let go of the septic skirt tails, and set our own course, in our own interests.
    As far as the lying dragon is concerned, yes, it’s expenditure is of benefit, but not at the cost of Australia’s soul.
    The prc demanded Qantas not call Taiwan an independent country, or else lose the profitable chinese routes, and alan joyce rolled over.
    The prc did their thing a few years ago over baby formula, an Australian company’s (which was not even remotely involved) share price took a major hit, and in 2019 some chinese billionaire or other bought said company for a song, with sfa’s goverment approval.
    At the start of the epidemic in china, 2 chinese real-estate companies in Australia were “ordered” by the prc to drop everything and buy-up and send back by private charter ALL of the medical PPE that they could lay thier hands on in Australia, just as Covid19 was taking hold here.https://www.thechronicle.com.au/news/staff-emailed-to-hoard-supplies-for-china/3989814/
    European countires were being sent sub-standard PPE from china. https://www.bbc.com/news/world-europe-52092395

    I carry on a lot about our reliance on china for everything. Maybe I get a bit steamed up about it, but the howard government fta’s were not good for me, and in my opinion Australia either. I had a quite successful home printing business in the 90’s and early 2000’s. Almost overnight, my major clients were able to buy their finished garments cheaper than I could buy a blank T-Shirt. The stress of trying to survive cost me everything.

    I started work in the 80’s, when Australia made everything we needed, and exported the rest. Our products were GOOD. Remember Sidchrome ? We can do it all again, just different. It’s going to take some expansive thinking, some social experimentation, and a whole lot less of “It’s all MINE” from the ones with the money. Fewer fta’s and a more protected economy.
    And a new government. The one braincell shared between sfa and team dumfuk is just not enough.

    That’s where the recovery will come from.

  13. Mrs Wobbly

    Statistics can be manipulated showing as, only what is wanted to be shown at the time of release, lies, or truth what ever helps the cause. With large levels of unemployment these figures are excellent just what “fascists” want, a pool of worker “ants” to be available on demand, with no rights or a liveable wage, If your not happy or don’t like the pay arrangements, of poverty rates or unsafe working conditions then complain, that it’s too “bad” your sacked, with plenty more worker “ants” needing work, at the ready to be exploited, then eventually someone will conform to these fascists arrangements and except poverty rates as normal. Fascism’s agenda is to drive down wages and conditions of Australian workers, for the benefit of the “minority“ of wealthy masters and donors of these LNP fascists. This injustice of fascism makings billions, for the wealthy masters, while exploiting Australian’s, other countries workers of their basic human right, an affordable existence. Remember how Rinehart wanted to exploit third world worker, by bringing them to Australia, she lobbing her fascists mates in the LNP of fascism, to change laws around visas, exploitation of these third world worker, by trying bring them to Australia at poverty rates to benefit Gina growing wealth, at what ever the cost to humanity. If not for daddy ‘Lang’ wealth where would Gina be? I’d like to think becoming exploited for $1 a day as a mine worker “ant’’ with 12 hour shifts, and no conditions or rights, and no fascists mates to bail her out her poverty trap, just condemn her, as that is what she thinks is acceptable for other working people’s, she is happy to condemn to poverty for her huge profits off the back of working poor at ‘’slave’’ labour rates of pay, disgusting woman !

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