The new employment data for the December quarter are out and they’re surprising reading. Now, the media will grab hold of the headline unemployment figure. At 4.6%, it’s up from 4.2% in the September quarter and brings the number of unemployed over 100,000 for the first time since 2003, which is about what everyone expected. But what you have to understand is that’s a bit like asking how empty a glass is – it may be mildly interesting but it doesn’t tell you how much water you’ve got to drink. For that, you have to know the size of the glass or, in the case of employment, you need to look at the number of people looking for work as well as the number employed and the number of hours worked.
And that’s where these figures are surprising. The number of people participating in the labour force actually grew quite rapidly in the December Quarter, mostly due to more people starting to look for work. Labour-force participation rose 0.6% to 69.3%, just about the highest rate on record. The labour force grew by 31,000 to a record 2,296,000, which is not what we usually expect in a recession; usually, people drop out of the labour market, returning to study or retiring early for example.
The upshot of that is while your basic unemployment rate number is up, so is the number of people employed. In fact, there are now a record 2,190,000 people employed, 21,000 or 0.9% more than the September Quarter (note these are all seasonally-adjusted numbers, so seasonal variation is not behind this growth). And that’s the first bit of good economic news we’ve had in some time.
But it’s not quite as simple as that, either. A One News report a few weeks ago said that 10,000 more people had gone on the unemployment benefit in December alone, a more than 50% increase form the low of 18,000 in August. So, more people are looking for work and more people are finding it, but there are not enough jobs for all the added people wanting work and more of those not finding work are going on the dole.
Then, there’s the hours worked figures. They’ve actually dropped, down 1.9% on the previous quarter and 2.8% on a year before. So, what we seem to be seeing is increased underemployment – more people have jobs but they don’t have as much work as they would choose because hours are being cut back. The number of people self-reporting as underemployed (got work but want more hours) jumped from 80,800 to 96,600. That’s backed up by the fact that most of the new jobs in the December quarter were part-time.
So interesting figures. It’s bad but expected that the amount of work is decreasing. It’s probably good, and unexpected, that the work there is to be had is being spread among more people, rather than the number of unemployed being even higher. On the other hand, more part-timers and casual staff means an increasingly vulnerable workforce. And, of course, this is just the beginning. Treasury is expecting another 75,000 people to be unemployed by the end of the year.
[By the way, I saw Corin Darin on One News say ‘with this increase the number on the unemployment benefit has now passed 100,000′. Moronic. The guy obviously doesn’t understand the difference between the unemployment rate, as determined by Stats’ Household Labourforce Survey, and the Unemployment Benefit. Only 30,000 are on the UB. And Darin isn’t the only one to get something so simple arse-backwards, so did this fulltime political, professional political commentator. Goddamit. If our news is that crap how can we expect the general public to be well-informed?]
(all stats from here)
[update: Brian Fallow’s piece is good and covers the same points]