Employment has just gone over a cliff IV

Updating my guesstimates of unemployment during the COVID-19 crisis.

The ABS released unemployment data for June this morning.

So – some good news. The number of hours worked rose in June compared to May. More work was done. This is good thing.

Using the same technique as the last two  months, I guesstimate the unemployment rate to be 7.55%. The last time Australia had a 7.5% unemployment rate was August 1998. All the usual caveats apply. But this is a good news story. Getting people back to work is going to be the biggest policy challenge facing Australia (and the world) over the next few years. Making sure that the hidden unemployment generated by JobKeeper doesn’t become actual unemployment is something that should be keeping all politicians up at night.

Posts in this series: AprilMay, June.

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10 Responses to Employment has just gone over a cliff IV

  1. a reader

    Gut feel says that if you excise Victoria from that, the numbers in July will be great. I only excise Victoria because of Dictator Dan’s insane lockdown policies. Where everywhere else is sort of undoing the worse excrescences, Dan is putting them back with a vengeance

  2. David Brewer

    On my other two methods:

    1. The 94.8% of people employed in March worked a total of 1.79 billion hours. June hours are 1.67 billion. 94.8*1.67/1.79 = 88.4. Therefore the effective June unemployment rate is 100-88.4 = 11.6%.

    2. Since March, underemployment has risen from 8.8 to 11.7%, a rise of 2.9%. I had previously assumed 75% of this rise as disguised unemployment. But as people go back to work that proportion probably falls. Assuming 50% of underemployment is still disguised unemployment would add 1.4% to the unemployed rate. Also taking account of the participation rate falling from 66% to 64%, the true unemployment rate in June would be 7.4+1.4+(66/64-1) = 7.4+1.4+3.1 = 11.9%.

    But as Sinc says the real question is how much unemployment is being hidden by JobKeeper. That is very difficult to guess as it’s not just a matter of the employment numbers themselves but about how many businesses are being artificially kept alive by the subsidies. These need to start coming off soon, and in a way the mess in Victoria strengthens rather than weakens the case for phasing them out quickly. It is no good keeping zombie businesses going in tourism and other sectors that may not recover for years, and that may never look the same as they did before this madness.

  3. From where I sit, the goal appears to be destroying the middle class outside of the public service.
    It’s working.
    When the MC is full of public servants, the bureaucracy can be a formidable barrier to upward social mobility.

  4. Entropy

    My observations after attending a Qld conference of financial advisers including Q&A with regional bank managers is that
    while the GFC heavily impacted only a couple of sectors in Australia, business closure was about 10% in those sectors after three months, in the case of COVID-19 every sector is impacted, but at this point business closures (as in never to open again) is about 1%.

    They attribute this to scoMo’s jobkeeper and in Queensland the job support loans offered by the qld government (Banks appeared supportive of these loans as I suspect it avoids them lending carry in finance businesses that may never open again) . The big fear is what happens when jobkeeper ends.

    All criticised jobseeker making it impossible to employ low skilled workers.

    And yes, public servants have been immune from the impact so far. In Queensland this will change after October when the day of reckoning comes and whichever government is formed while having guaranteed four years on the government benches, so they will go hard.

  5. John Bayley

    …whichever government is formed while having guaranteed four years on the government benches, so they will go hard.

    I love your optimism…but do not share it, alas.

    Our local MP (Labor) has repeatedly stated that the QLD government’s record on ‘job creation’ is ‘outstanding’. She believes that adding more employees in the public sector is equivalent to jobs in the private sector.

    Given the incestuous relationship between the ALP and the unions, especially the public sector ones, I fully expect a returned Headlesschook government to double down on employing still more public servants.

    And if, by some miracle, the LNP wins, they may not grow the public service to the same extent, but they will not sack anyone, either, because they are terrified of repeating the ‘Newman experience’.

    It will require a full-blown fiscal crisis before anything will change.
    And I expect the same outcome federally, although now that the politicians there have the fig leaf of MMT to cover their bad spending habits, they will print, print and print some more.

    Because if Japan can have debt to GDP at ~250%, then surely it must be a good thing for us, too.

  6. Struth

    The optimism of the academic…………………………………

    Now lets take into account one basic fact.
    Even if Australia completely opens up to the way it was prior to the Marxist/globalist takeover, it will be opened up by the Marxists/globalists who took over.
    Now when a government/s have thrown the rule of law to the shit house, still signed up to destroy Australia at the UN (global socialists) and not a coal fired power station exists, and we get power only when the sun shines on Wednesdays before lunch……..is this a country you will be investing in?
    That a government decreed lock down can be lifted by government it can be reinstated.

    I won’t be buying anymore trucks, that’s for sure.

  7. Struth

    Making sure that the hidden unemployment generated by JobKeeper doesn’t become actual unemployment is something that should be keeping all politicians up at night.

    You are a funny man.

    You bait and troll…..good work.

  8. Bruce

    Then, there are all the young folks whose apprenticeships have imploded because of the collapse of their employers / trainers.

    Or old buggers like me who will NEVER be retrained and whose long-term careers have evaporated. Very little appears to have been systematically “mothballed” so, in the event actual physical workplaces are re-opened, how much deterioration will have occurred to facilities and equipment. Can anyone “insure” against force majeure?

    Consider places like major theatrical venues. By the time they are allowed to re-open, thousands of pieces of electrical equipment and cables will be “out of test”. Hydraulic systems and lifts, etc will need to be totally overhauled. The arty-wankers are getting all bitter and twisted in their own special way, but their “enabling” tech types have also been hammered hard.

    How many of my contemporaries have “checked out” in convenient “road accidents”, “mis-medication”, etc. already? How “convenient would such occurrences be for all the wanna-be social “engineers”?

    This Wu Fly rock show will turn out to have been a “live” social experiment, funded by the “Guinea-pigs’ themselves. The perpetual, “deep and meaningful” question is not, “What does it all mean?”, but this:

    “Who is doing what, to whom, and who is paying for it?”

  9. Bruce

    See also:

    “There are two periods of the human experience that are hell to live through. The first is adolescence as no one will pay attention to what you have to say as you don’t yet know anything. The second is old age because no one will pay attention to what you have to say as you know too much”.

  10. Entropy

    Consider places like major theatrical venues. By the time they are allowed to re-open, thousands of pieces of electrical equipment and cables will be “out of test”. Hydraulic systems and lifts, etc will need to be totally overhauled.

    Is that the case? One of my sisters and her husband run a very successful fire service business and they and their staff have actually been busier as compliance monitoring/certification has continued as per the schedule after an initial blip as every one looked to suspend stuff before realising it would cause more problems to not keep up to date.

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