Is unemployment really 6.4%?

I’m about to do an interview on the Labour Force and unemployment. I guess with everyone away on holidays, it’s time for a few of us old stagers to be called upon to inform everyone about what’s going on while they’re at the beach.

So I’ve downloaded the Labour Force data which I almost never do any more and what a surprising set of data. Most interesting to me was that the participation rate has fallen from 65.8% as it was in November 2010 to 65.1% in November this year. This comes to a loss of 131,000 persons from the working world. Since these people have disappeared into the not-included-in-the-labour-force category, which usually means they have become discouraged workers, if we add them back in, the total number of unemployed is actually around 780,000. Much different again from the 650,000 officially recorded.

Had the participation rate stayed constant, the unemployment rate would now be something like 6.4%, very different from the published 5.3%. Feels more accurate as well, since that is why the RBA is bringing interest rates down. They know just as every business survey has been showing. The economy is into a downwards turn. 2013 will be a year of surprises, I feel, and after the Americans go over their fiscal cliff who knows what the New Year may bring.

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47 Responses to Is unemployment really 6.4%?

  1. Rafe

    Add people transferred to Disability, students uselessly kept on to year 12, uni students wasting space on campus…

    And what about youth unemployment? the news this morning placed this about five times the average.

  2. Gavin R Putland

    The ABS labour force underutilisation rate is 12.5% (trend or seasonally adjusted). Roy Morgan Research estimates 10% unemployed and 8.1% underemployed, giving an underutilisation rate of 18.1%. But, by using the narrowest possible definition of unemployment and by defining full employment as the NAIRU, we have normalized depression-like levels of unemployment.

    To improve this situation, we need to get rid of taxes that cause the cost of hiring a worker to exceed the worker’s take-home pay. The U.S. FairTax bill and my “Draft Federal Budget Speech” address this need in different ways.

  3. jumpnmcar

    Tell me where all the Tradies have gone.
    AIG-HIA Performance of Construction Index (pdf).
    Remembering anything below 50 is decline.
    Good news, decline has slowed.
    If you read anything in that link, let it be the last bit.

  4. Alice

    Agree Rafe

    Unemployment for young males to twenty five now at 20%.

    That is a damn disgrace but what is the option here? Reign inspending? Kick them off the dole and back into their mother’s arms while they go to uni (dont tell me or my husband about that one – there are mothers and fathers all over this country doing what we are doing).

    LIsten I am not complaining about any party or their performance here because it is both parties pursuing the same miserable policies – we may as well follow the US off the fiscal cliff.

    They have vapid corrupted politicians on both sides of their game where the lobby money is what reall speaks volumes and where all one party does when it gets in is try to destablise the other party ( by whatever means fair or foul).

    The very essence of our governments have become a mockery of government.

    Further it does no good at all ordinary people like who come here waving flags yelling “red” no “blue” no “red” etc!! Just like a football crowd.

    If you cant see what the problem is you cant see the elephants in the rooms (and the restaurants, and at dinner parties at mansions, and in corporate headquarters, and in lobbying firm offices, getting their way and stuff everyone else). They arent shouting “red” no “blue”. They happily pay either colour.

  5. brc

    If the unions had their way, the unemployment rate would be 80%, that being the number of people not currently covered by a union.

    I suspect the reason the unemployment rate isn’t as low as it feels like it should be is that a lot of people have flexibility in their working arrangements, which means they are technically still employed, but perhaps not as much as they would like.

    Which, of course, the unions fight against day after day. They would rather see unemployment go up than employees working out their arrangements with employers.

  6. candy

    The under-employed is a problem too; youngsters who get say 30 hours per week one week but the next few weeks is down to 10 hours or something per week. Hard to be independent of mum and dad under those circumstances and make plans.

  7. Rabz

    ‘Is unemployment really 6.4%?’

    Yes – and the budget surplus is for 2012-13 is $1.5 billion.

    Oh, wait…

  8. brc

    @candy yes, underemployment is an issue, but it sure is better than unemployment. My point being that while lots of people with lots of work is better, having brittle labour markets due to arcane workplace rules creates unemployment when a full time job can no longer be justified. It’s better to have people keep the engagement and scale back the work until it picks up again.

    In other words, thankfully the Fair Work mess doesn’t capture the entire workforce, or manage to take it right back to 1950s where the unions wanted things.

  9. John A

    Let’s see…
    650,000 is 5.3% making a workforce of about 12,264,000 at the lower participation rate.

    Adding back the 131,000 discouraged gives a workforce of 12,395,000 and unemployed of 781,000, giving an unemployment rate of 6.293%, which is close to the “something like 6.4%”.

    OK, I’m satisfied the basic maths works. Now let’s see if Mr Swan can manage the same sort of arithmetic ability…

  10. Toiling Mass

    Now let’s see if Mr Swan can manage

    Just that much is up with “If pigs could fly”, “If rain was beer” or “If my uncle was a woman”.

  11. Mk50 of Brisbane

    Rafe, two of my lads who came up with us from Canberra to Brisbane had to go back to Canberra to get work. After a year of effort, one of them got a part time job. Both are now back in Canberra and have jobs (social networks are wonderful things).

    People I know at the Gold Coast routinely say that youth unemployment is at least one in four, and many with jobs can only get part time.

    20 years of feckless squandocracy by the howling incompetents of the ALP has left QLD a disaster – they pissed the entire mining boom up against the wall and (just to ensure that everyone got it in the freckle sans lube for long after the bastards lost power) also ran up gargantuan debts.

    Now the state ALP hold their meetings in a Tarago and try to make cheap political points about frantic efforts to fix the screaming cataclysm they left behind.

    Every QLD ALP front bencher for the last two decades should be waiting in a tumbril for their meeting with the headsman.

  12. Alice

    nrc

    If you really thought this one out properly

    “If the unions had their way, the unemployment rate would be 80%, that being the number of people not currently covered by a union.”

    You might think differently.Since the 1970s unions and workers rights have been smashed apart by corporations and their lobbying power for “flexible labour” which means in egnlish, l;abour that has no rights and no power to bargain.

    This alone has contributed to the inequality nwe see today and all you folks who argue against union power are helping inequality every day get worse.

    Now I suspect many of you are part of the middle class, or part of the upper middle class who once benefitted from collective bargaining but dont want to admit it.

    So now you act as bellhops for the very rich (calling for fleixible casual labour) and them alone????

    Is that it? Fucking traitors.

  13. Alice

    and nso what is your mate Campbell Newman doing aboit it? Jack shit.
    He has sacked heaps of people who had jobs and is now building monuments to his own skinny arse on public owned buildings which he is tearing down to erect pgalluses in the sky for him and his mates (no doubt donating mates)

    Are you people Blind? Is he any worse than Bligh’s givernment or are they both the same – being led like sheep by the nose by ratings agencies.

    Fuck Newman. He is as big an asshole as the rest of them.

  14. Alice

    And You MC5- want to trun this into a
    vote red” no “vote blue” competition…

    you idiot

  15. Alice

    Candy is on the ball.

    MK50 you are not.

  16. candy

    Alice
    Hopefully the nursing home closure episode is a one off and LNP won’t ride roughshod over the vulnerable again.
    It’s probably going to work out better in the long run – better facilities and more economically run. But the way it has been done, so fast without warning, has not done Mr Newman any favours.
    Care of the Aged is an emotive issue.

  17. candy

    Alice – just talking about Mr Newman and the issues – laying off of some Health staff and closing of nursing homes. Bit off the track of the thread. (sorry).

  18. Alice

    Candy

    I agree with you. I think Campbell Newman is opushing an idelogical agenda, not necessarily the one that is best for the people of QLD.

    I also think Bligh pushed an idelogical agenda, not necessarily one that was best for the people of QLD.

    I am tired of politicians pushing ideological agendas that belong more to the failed US ratings agencies than to the people that live here.

    Ive had a gutful and it isnt just one party that does it.

  19. stackja

    And how many go on to the age pension?

  20. Alice

    Candy

    The day a true conservative gets back in to run a goivernment properly in thius country is the day I will be happy.
    I dont want the slash and burn mentality and to see vital services get cut out oif existence.

    I dont want to see conservatives using the language of hate or the opposition using the language of hate and I want to see government working together (not like the US who are so divided they are dysfuntional) to deliver what people want, for a change.

    I dont think it is too much to ask. Government isnt a game. We have now 20% of male youth unemployed. Enough is enough. Something isnt working and they should be looking at what isnt working, instead of pointscoring their various vitrioles in the media every damn day.

  21. Mk50 of Brisbane

    MAlice is off her meds again….

  22. Alice

    MK50

    Im old enough and cynical enough that I dont need meds and nor do I need a fan club political party to join thinking they are going to save me….unlike you.

    When will you learn they are all crap at the moment? They are not doing what the people want. They are doing what their big dontors want….and the rest of us can apparently get stuffed.

    Its fucked!! (and I dont need meds to keep me calm thank you).

  23. Rousie

    Perhaps a rabbit hole Alice.
    Things will make a lot more sense down there.

  24. Alice

    Rousie
    Is that the best you can do?

  25. Alice

    Rousie

    I shouldnt be unkind.

    The day you really learn that nothing makes sense in politics these days, except the politics of individual personal greed, is the day you will be better off.

  26. Rousie

    Well done Alice.
    First thing you’ve written tonight that I understand.

  27. Splatacrobat

    It’s not meds MAlice needs MK50, I think its full moon time of the month.

  28. 2dogs

    While the ghost of WorkChoices scares the Libs from doing anything from doing anything on IR laws, I do see one faint glimmer of hope.

    The DLP is likely to hold the balance of power in the next senate. They could well force their IR laws through. Now this “guild” thing seems a little bizarre, and I am not exactly sure what it means (or if they do either), but at this stage, almost anything would be better than what we have now.

    I think it means:

    1. A new form of incorporation, controlled by employees, to be introduced; and,
    2. Such new corporations to be governed by a separate IR system.

    As such, it may provide some competition to the present union dominated centralised award system.

    Does anyone know? Is this just wishful thinking on my part?

  29. blogstrop

    I think Campbell Newman is opushing an idelogical agenda, not necessarily the one that is best for the people of QLD.

    Sorry, Alice, you’ve really jumped the shark with that one. The nation is recovering from the worst bout of ideological flu (most states and the feds at the one time were Labor) and you come up with that!

  30. PaulW

    The calculation of un and / or under employment seems to be subject to all sorts of interesting arithmetric algorithms.

    Perhaps as an alternative we can look at the total welfare spend. After all we are providing welfare to folk who either are not working or need assistance as they cannot work enough to survive.

    Therefore if we looked at the year on year (or month by month) spend on all welfare payments, including but not limited to; the dole, new start, baby bonuses. I do not know them all but perhaps someone more knowledgeable than I could investigate?

  31. Gavin R Putland

    2dogs wrote:

    Now this “guild” thing seems a little bizarre, and I am not exactly sure what it means (or if they do either)…

    Trade unions by another name, whose demise was lamented by Pope Leo XIII in his encyclical Rerum novarum. Henry George called him out.

  32. Alice

    Something isnt working and they should be looking at what isnt working, instead of pointscoring their various vitrioles in the media every damn day.

    You’ve lost me Alice, the Trade Union Party isn’t working but voters have to wait for an election to fix it. It should be all over by Christmas next year.

  33. Alice, employees most vulnerable to employers (i.e. market forces) are those who are labour commodities. That is, those who are unskilled and who otherwise have nothing to differentiate themselves from other potential employees. Most of us learn the hard way that we need to develop our skills and knowledge so that we become greater than the sum of our qualifications. The way to make oneself not expendable is to turn our employers from knowing the extent of our capabilities to not knowing the extent of our capabilities, so that they feel that they cannot afford to lose us.

    Successful businesses make market forces work for them. If employees want to be successful, they should do the same.

    The aforesaid unskilled, commoditised labour need unions in the absence of unique skill sets, but that of course comes at the expense of other unskilled workers in the form of unemployment. Only market forces can deliver full employment at a structural level.

  34. 2dogs

    Yes Gavin, but Trade Unions with subsidiarity would be a vast improvement on what we have now.

  35. m0nty

    LDP holding the balance of power? Haaaaaaaahahahahaaaa!

  36. Jarrah

    “LDP holding the balance of power? Haaaaaaaahahahahaaaa!”

    Maybe time for new glasses, m0nty?

    The DLP is likely to hold the balance of power in the next senate.

  37. m0nty

    Either is a joke, Jarrah. But yes, typo noted. :-)

  38. Tel

    Good article on comparison between Roy Morgan’s Unemployment metric and the ABS. Roy Morgan is always higher (because their methodology rolls in some underemployment into the metric) and in recent years the difference between these two methodologies is getting larger.

    http://www.macrobusiness.com.au/2012/04/unemployment-gulf-revisited/

  39. Hristos

    Perhaps its better to focus on the path of unemployment rate over time, rather than any particular rate. Also, its probably more meaningful to look at the number of jobs created.

    Walk around shops and you will see positions vacant, especially in the hospitality industry. Seems to me that there are jobs, if you look and are willing to work.

  40. Tel

    State space trajectory for ABS6202001 but not updated recently (cos I’m too lazy). Similar stuff with various other metrics might be worth considering.

    http://lnx-bsp.net/ABS_6202001_state.png

  41. 2dogs

    Given I linked to the DLP’s site Monty, I don’t know how you could have thought it a typo.

    I was not joking. The scenario for them to acquire the balance of power in the senate is explained here. DLP senator John Madigan will be a continuing senator at the next election.

  42. Grey

    Talk about cherry-picking
    November 2004 participation rate : 63.7
    November 2006 : 64.8
    October 2007 (change of govt) 65.0
    November 2008 : 65.1

    I think we should take a moment to salute the Rudd/Gillard administrations for consistently providing greater employment options than the Costello government (figurehead: John Howard).

  43. Tiny Dancer

    Well done Grey. How to lie about stats.

  44. Participation rate is now a furphy as it’s been fudged to exclude people on disability pensions of which, last time I checked, there were around 800,000 (more than the official unemployment figure).

    Ooh, ooh, me back…give me a pension, it’s cacked.

  45. paul

    Unemployment stats are like inflation stats. They are incredibly flexible depending on where the news-cycle needs to be taken.

  46. candy

    “800,000 (more than the official unemployment figure).”

    The disablity is nearly 70% of minimum wage plus discounts on electricity, rego, etc. so a lot of unemployment can be hidden there.

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