June’s apparent employment recovery was something to be pretty pleased about at the start of July, even though the nation knew it was all a bit sketchy. Still, 210,800 new jobs and ‘only’ 69,300 additional unemployed persons was something to hang onto and evidence if nothing else that the Australian economy knows how to recover, when it can do so.
That is important, because right now, the Australian economy and the employment associated with it, are not in recovery mode. Despite the relatively good cheer to be taken from the June employment data, the unemployment rate was still 7.4%, the under-employment rate was 11.7% and labour under-utilisation was hanging around the 20% mark (actually 19.1%).
The fragility in June’s employment data was on plain display. The numbers displayed below will be sorely tested by the current situation in Victoria. Estimates suggest around one quarter of one million additional people will be unemployed as a result of the hard lockdown in Victoria.
Fig 32
To go straight to the dashboard and take a closer look at the data, click here.
Every job is a human story, and while we celebrate the additional employment, we also need to take account of the unemployment data. The simple fact, as we see below, is that unemployment rose in June, to 7.4%. Less than was expected, but well above what we desire, and far less than would have been the case without the JobKeeper program.
Fig 33
To go straight to the dashboard and take a closer look at the data, click here.
Decidedly human, but also undeniably economic, the combined scourge of excessive unemployment and underemployment (people seeking more work) provides the labour under-utilisation figure. As we can observe here, the number of people in this precarious state contracted in June – good news – but remains at 19.1%. As we have said before, that is a lot of under-utilised capacity for the economy as a whole, and a large amount of money not hitting the consumption economy, to aid the recovery.
Fig 34
To go straight to the dashboard and take a closer look at the data, click here.
To understand underemployment a little better, we can examine the per capita measure of hours worked per month. Below we can see that from the long-term average of 85.7 hours per month, Australians slumped to the historic low of an average 76.9 hours in May, before recovering to 79.9 hours in June. In the forty years this data has been assembled, there has never been a worse period than this.
Fig 35
To go straight to the dashboard and take a closer look at the data, click here.
Looking further ahead, the changes to employment stimulus through the JobKeeper program will see more people become unemployed, and probably see more people working inadequate hours.
Treasury expects the number of unemployed to reach 10.75% by December, with the likelihood that the under-employment rate (people looking for more work) will also rise. The only saviour there may be people who simply give up, which would be reflected in another decline in the participation rate.
As Matthew Cranston wrote in the Australian Financial Review, if Australia has 1.4 million unemployed people among its ranks, wages growth will also tumble. Forecasts now suggest growth in 2019-20 was just 1.75% and in 2020-21 will be just 1.25%, both would be the lowest on record.
In June we saw the possibilities of ‘bounce back’ in employment levels. But the base under that rise was never firm, and so we can expect to see the subsequent slump come. History will probably record June employment numbers as something of a dead-cat bounce moment.
As Cranston pointed out:
“In the recession of the early 1990s, it took about seven years for the unemployment rate to fall from its peak of 11.2% in 1992 to below 7 per cent.”
That is very grim news for many households and for the nation.
