Indications that the participation rate is falling and so the level of unemployment is seriously under-estimated. Of course even without that correction the official figures over-estimate the level of employment, given the very small amount of working time required to count as “employed”.
Normally, the potential workforce in Australia (civilians 15 years and over) grows by about 240,000 people a year. At a 66 per cent participation rate, about 160,000 join the labour force and 80,000 are classified as “not in the labour force” (including retirees, students, home carers).
Of the 160,000 in the workforce, about 5 per cent, or 8000, are unemployed. This unemployment rate measure is usually a fairly sensitive indicator of when and where workers are moving from the ranks of the employed into those of the unemployed or in the opposite direction.
But this is the normal picture and the current statistics are anything but normal. In the 12 months to August 2012, only 47,200 joined the labour force and a massive 190,600 people were added to those not in the labour force. These 47,200 new workers were joined in employment by 10,000 persons who had been unemployed 12 months earlier, implying an extra 57,200 jobs were created during the year to August.
So, labour force growth was about 110,000 less than we would expect, and these potential workers went into the group regarded as not in the labour force, as hidden unemployed or discouraged workers, instead of joining the labour force, either as employed or unemployed. If they had been chasing a job and joined the labour force as unemployed persons, then our unemployment rate would have been about 6.2 per cent instead of 5 per cent in August.
Don’t miss Judith in The Weekend Australian.