Unemployment figures looking ugly

The ABS released the Labour Force report for January this morning. Unemployment now has a six in front of it. Despite what some may argue this is a policy disaster – Treasury have estimated that the NAIRU is 4.5% – 5%. So the current rate of unemployment is a full percentage point above the NAIRU and tracking up. The other thing that is happening is that the participation rate is declining.*

I have plotted the unemployment rate and the participation rate (seasonally adjusted) from the latest ABS report.

Unemployment - January 2014

One of the comments I made on Sky News the other night is that the law of land currently makes it easier for employees to lose their jobs than to keep their jobs. As much as the current federal government is loathe to change the IR laws this is something they will have to address sooner rather than later if they want to arrest that upward trend in unemployment.

* Yes, I know – somebody is going to say that’s the baby-boomers retiring in large numbers. Maybe. Reports of the baby-boomers retiring in large numbers are now nearly a decade old.

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44 Responses to Unemployment figures looking ugly

  1. How would people retiring be included in the participation rate? I was under the understanding that the participation rate was the proportion of people of working age undertaking work (above some minimum number of hours)?

    If that is the case, then the only retirements that would show up are early ones.

  2. Simple change to improve employment — allow the minimum wage to be set regionally.

  3. Demosthenes

    Reports of the baby-boomers retiring in large numbers are now nearly a decade old.

    The first are hitting their late sixties. We should be at the crest of a wave of retirements.

  4. oldmiseryguts

    What is the definition of ‘participation rate’?

  5. H B Bear

    After six years of hard Labor, an entirely predictable effect of union driven re-regulation of the labour market, unfair dismissal laws and award restructuring.

    Unless you are a Fauxfacts political reporter, of course.

  6. RCon

    Participation rate assesses people of a working age actively seeking work, or in work.

    Unemployment rate only reflects those actively seeking work, so those who have been discouraged and are no longer seeking work (or who have chosen to exit for other reasons) will not show up as unemployed.

    The following sentence doesn’t seem right?

    “One of the comments I made on Sky News the other night is that the law of land currently makes it easier for employees to lose their jobs than to keep their jobs. “

  7. Squirrel

    It’s not looking good, and it will be a miracle if it doesn’t get somewhat worse in the not too distant future.

    A decade, or more, of living high on the hog with easy money, a high dollar, wasteful speculation, and the frittering of vast windfall profits from mining is a party which cannot go on forever. I expect we will get quite a bit more string-pushing and can-kicking from the monetary authority and others, but a bracing period of adjustment is surely on the way.

  8. Infidel Tiger

    As long as it’s unionised, subsidised jobs we’re losing, surely it’s no problem at all?

    I’d like the rate to be closer to 10% after half of Canberra is let go in a mass firing by a guy on a bike with a loud haler.

  9. Milton Von Smith

    Two points to note here:
    1. The chart makes it clear that any reasonable estimate of the current NAIRU should now be above 5 per cent. It may have been 4.5-5 per cent before and during 2007, but something has happened since then to increase the NAIRU. I wonder what happened after 2007?

    2. Equally mysterious is that the trend increase in the unemployment rate begins almost exactly in July 2012. I wonder what happened in July 2012?

  10. Rabz

    As much as the current federal government is loathe to change the IR laws this is something they will have to address sooner rather than later if they want to arrest that upward trend in unemployment.

    Their softcockery on this matter is severely giving me the proverbials.

    Blaming labor for the high unemployment rate (legitimately or otherwise) will wear very thin with voters, very quickly.

  11. boy on a bike

    I’d like the rate to be closer to 10% after half of Canberra is let go in a mass firing by a guy on a bike with a loud haler.

    The working public should be invited along to stand on a balcony and simulate machine gunning them.

  12. Fisky

    Unemployment rose by about 1.5% under the Labor government, so they should not be blaming Abbott for unemployment.

  13. Up The Workers!

    Wise Old Confucius say: “Many hands make light work”.

    His dodgy A.L.P. mate, “Electricity Bill”, gloats: “Many union hands in taxpayers’ pocket, makes light too bloody expensive to work!”.

    Methinks I prefer the Chinaman’s attitude to the union crook’s platitude.

  14. Andrew

    Frisky, “Labor govt” is too broad – they have the GFC defence. Gillard govt – the Gillard term was as bad for employment as the Rudd term. While every other developed country ex Europe saw strong recovery from GFC we had a European style long malaise.

    It started from the start of 2011.

  15. Pete

    This strikes me as not unexpected. Politicians have yet to grasp that there is an ever increasing chasm between domestic labour rates and offshoring technological capability.

    I have drafting plans being done over night in India for $A3.50/hour versus $A30.0o hour here with only a marginal difference in the quality of the work. This must be happening all over the work place and having a commensurate effect on local labour.

    Alan Joyce must be asking why he didn’t try even more extreme versions of this. The fact is that other than a few parts of the resource sector with good endowments (specular hematite, Gorgon or NW shelf) we really don’t innovate or work as hard and produce as much as other economies and we now have industrial relations and a public service structure entirely suitable for the Soviet Union of the 1950′s.

    If the chinese property market finally cracks my bet is 10%

  16. OldOzzie

    Demosthenes
    #1187910, posted on February 13, 2014 at 1:18 pm

    Reports of the baby-boomers retiring in large numbers are now nearly a decade old.

    The first are hitting their late sixties. We should be at the crest of a wave of retirements.

    Hey I’ve done my bit, pre baby boomer (just), retired 9 years now and enjoying every moment

  17. manalive

    Wasn’t the carbon tax going to ‘create thousands of jobs’?

  18. Rabz

    Wasn’t the carbon tax going to ‘create thousands of jobs’?

    It probably has, in some bizarre parallel universe.

  19. Rafe

    It has created a heap of wasted space jobs in the government and a heap more with consultants like Deloitte who advise on the systems required to administer the raft of anti-productive regulatory and tax gathering schemes in place to make our power more expensive.

  20. Rabz

    “Green Jobs”, Rafe – get with the program, Squire!

  21. Des Deskperson

    ‘somebody is going to say that’s the baby-boomers retiring in large numbers’

    Hmm, According to the 2011 census, 25.5% of all persons aged between 65 and 69, and 10.9% all persons between 70 and 74 are ‘in the labour force’, which I assume means they are employed, full time or part time. I haven’t found comparative figures for earlier years, but it looks like a fair number of the older baby boomers are still in the workforce.

  22. The Pugilist

    It has created a heap of wasted space jobs in the government and a heap more with consultants like Deloitte who advise on the systems required to administer the raft of anti-productive regulatory and tax gathering schemes in place to make our power more expensive.

    How many jobs has it destroyed by driving misdirected investments, thereby wasting precious savings?

  23. motherhubbard'sdog

    Simple change to improve employment — allow the minimum wage to be set regionally.

    Good point, Driftforge. Yet the state governments were dumb enough to hand their IR powers over to the feds.

  24. Capitalist Piggy

    The ageing population story may be a decade old, but the impact of ageing was not expected to begin until around 2011. If you assume the first baby boomers were born in 1946, they turned 65 in 2011. The baby boom peaked around 1961 so the ageing population retirement peak will be around 2026. (Assuming that 65 is the retirement age).

    As this table shows, the no. of persons on the age pension increased 2.2% in 2011-12, but in 2012-13 it increased by 3.5%. The trend is definitely up.

  25. Pedro

    Piggy, that answers the question I was going to ask. But I don’t think it is the whole story. I’ll bet a lot of retirees would like some work (daytime soaps are boring after all) and the current climate is not going to help them get it.

    “Wasn’t the carbon tax going to ‘create thousands of jobs’?”

    Yep, where our old factories relocate.

  26. Capitalist Piggy

    Also, I assume the no. on age pensions in that table is a stock figure. At one end are new pensioners, but at the other end are those who die. So I suspect the increase in new pensioners in 2012-13 was actually more than the 3.5% figure suggests.

    FYI, the employment to population ratio for persons aged 65+ has doubled over the past decade from 6% to 12%. So we have this apparent contradiction where on the one hand more people are retiring, but on the other hand more older people are staying in the workforce.

  27. Des Deskperson

    The age employment patterns in the Australian (Commonwealth) Public Service may or may not be relevant to the broader workforce, but they might be of interest.

    In the period between 30 June 2004 and 30 June 2013, the number of ongoing employees aged 60 and over increased form 3056 to 8974, a near tripling, far greater than the overall increase in the size of the service over that period.

    There may be any number of industry-specific issues that have contributed to this and the abolition of the 65 employment age limit in 1999 obviously facilitated it, although there was no particular spike in age employee growth at the time. But clearly, many more people in this particular corner of the workforce are staying on longer and I note it for what it is worth and for any broader trends it may indicate.

  28. stackja

    ALP created this problem.

  29. Squirrel

    “Des Deskperson

    #1188106, posted on February 13, 2014 at 3:39 pm

    ‘somebody is going to say that’s the baby-boomers retiring in large numbers’

    Hmm, According to the 2011 census, 25.5% of all persons aged between 65 and 69, and 10.9% all persons between 70 and 74 are ‘in the labour force’, which I assume means they are employed, full time or part time. I haven’t found comparative figures for earlier years, but it looks like a fair number of the older baby boomers are still in the workforce.”

    If anything, those figures – particularly for the 65-69 group – are a little lower than I might have expected, particularly with reduced returns on “safe” investments and many living costs (utlities, rates, insurances etc.) rising far more quickly than the official CPI figure.

  30. Squirrel

    “Des Deskperson

    #1188236, posted on February 13, 2014 at 4:53 pm

    The age employment patterns in the Australian (Commonwealth) Public Service may or may not be relevant to the broader workforce, but they might be of interest.

    In the period between 30 June 2004 and 30 June 2013, the number of ongoing employees aged 60 and over increased form 3056 to 8974, a near tripling, far greater than the overall increase in the size of the service over that period.

    There may be any number of industry-specific issues that have contributed to this and the abolition of the 65 employment age limit in 1999 obviously facilitated it, although there was no particular spike in age employee growth at the time. But clearly, many more people in this particular corner of the workforce are staying on longer and I note it for what it is worth and for any broader trends it may indicate.”

    The typically more sedentary nature of APS employment, along with relatively flexible conditions for leave, working hours etc. may have contributed to this. Superannuation provisions may also, of course, have been a factor for some.

  31. .

    Abbott must implement the economic policy of the Liberal Democrats if he wants to give the economy any form of revival.

    Howard had jobs and wages growth even with high taxes and eventual waste.

    However, we essentially restricted ourselves from higher living standards until a later date for no benefit.

    We owe to ourselves to cut taxes, spending, regulation and spend, tax and regulate in a less damaging manner.

  32. Pedro

    “FYI, the employment to population ratio for persons aged 65+ has doubled over the past decade from 6% to 12%. So we have this apparent contradiction where on the one hand more people are retiring, but on the other hand more older people are staying in the workforce.”

    It’s not necessarily a contradiction depending on the absolute increase in +65 and possible double counting of people who do not work so much that they lose their pension.

    But I’m not surprised that the healthier oldies of today are more likely to keep working than the decrepit wrecks of yesteryear.

    I think we are going to see quite a bit of people blaming economic slack on the baby boomer retirements and so It’s going to be important for sensible people to get a proper grip on the facts. It would be interesting to see the age profiles of the people in the protected manufacturing jobs. I wouldn’t be surprised if that is biased to the older workers as Des reports for the PS. If so, plenty of them will end up retired.

  33. Mr Rusty

    6% official rate eh?

    So that would be 12% in reality.

    I prefer the IVI (Internet Vacancy Index) as a better guide rather than figures which can be fiddled with a dose of DSP’ing and other dodgy measures, or lack thereof.

    Last time I looked job vacancies were lower than during the GFC and have not even come close to recovering to Howard-era levels.

    No doubt this will all be the fault of the Coalition for not fixing everything within 5 months whilst having their fixes rejected by the Green-Left dominated Senate.

  34. Bigpeteoz

    Chris Bowen predicted in his forward estimates last year a higher rate than what has been reported.

  35. entropy

    Didn’t the preselection forecast employment to rise higher than 6%? Can’t find a link ATM, but if so then it is definitely all the ALP’s work, and shorten should be embarrassed by his hypercritterbowl.

  36. ralph

    Oh’ I thought that with the election of the Abbott government it was going to be “morning in Australia”. The Daily T was also trumpeting the rise in the share market a weeks after the election citing some renewal in confidence. Didn’t last long did it. Privatisation, deregulation and liberalisation will apparently be our saviour. If a minimum wage is not a living wage then it doesn’t work and is not politically or socially sustainable.

  37. Fisky

    Real unemployment rose from 6.1% to 10.4% under Labor according to Roy Morgan. Disastrous government.

  38. blogstrop

    We boomers can’t make up our minds about retirement, so it’ll take us at least twenty years to finalise the move. I’m tapering gradually.

  39. blogstrop

    Ralph, it is morning when compared to the six years of crap obscuring the light 2007-2013.

  40. entropy

    Bolta had linked to it. here it is from 2 August 2013.

    The mini-budget predicts unemployment will rise from 5.6 per cent to 6.25 per cent which would see the jobless queue climb from 709,000 to around 800,000.

    Economists said there will still be new jobs created but not enough to meet the demand from jobseekers as economic growth slows from 2.75 per cent to 2.5 per cent.

    As Hockey said today, unemployment will continue to grow, simply because of demographics, if economic growth is not over 3%

  41. .

    ralph
    #1188541, posted on February 13, 2014 at 7:40 pm
    If a minimum wage is not a living wage then it doesn’t work and is not politically or socially sustainable.

    You have to ask yourself how much tax does a wage earner pay on their labour?

    Their wage bill exceeds their gross wage. The total taxes paid on their wage bill, including taxes paid by themselves and their employers, directly and indirectly, is over one third to over half of the wage bill.

    Add up property taxes, stamp duties, rates, corporate taxes, taxes on insurances, income taxes, taxes on superannuation, excise taxes and duties, payroll taxes and the GST.

    Yet people wonder why things are expensive in this country.

  42. 2dogs

    Wasn’t the carbon tax going to ‘create thousands of jobs’?

    It did, but they are all overseas.

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