Unemployment, What Is It?

 By Jason Fittler

The unemployment rate fell from 5.3% to 5.2% last month.

So why is everyone crying foul of Campbell Newman? If unemployment is down then for every job lost, more than one was found.

There was in fact a decreased in the number of people unemployed by 13,900 so things are getting better… or are they?

The job participation rate fell from 65.2% to 65.1% which means that less people are now looking for work. This would include a number of self employed people in the construction industry who do not consider themselves unemployed even though they do not have any job on at present.

We can expect that a larger share of population, will consider themselves out of the work market. This will have the affect of distorting the figures.

Full-time employment decreased by 4200 jobs while part-time employment increased by 18,100 jobs. In real terms it means that the number of hours work has decreased which will correspond to a decrease in the take home pay. This will impact the spending patterns of the people affected.

When the Australian Bureau of Statistics (ABS) determine if you are employed they ask the following questions. If you were given a job today, could you start straight away? Have you taken active steps to look for work? If you answer no then you are considered employed.

If someone is on maternity leave they would therefore be considered employed. It is interesting to note that the ABS unemployment figures are not the same as the data that Centrelink collects on the number of people receiving unemployment benefits. As such you could be on unemployment benefits but considered employed.

If you are under age 22 you are not entitled to receive Newstart Allowance. As such you would not be included as unemployed.

Perhaps what we should be looking at is the under-utilised Labor rate, this is the percentage of the population who would like to do more work if available.

I was unable to obtain the figures for 2012, but back in 2011, for woman it was 12.8% and for men 8.9% at the same time the unemployment rate was for women 4.4% and men 4%.

I would expect that the under-utilised Labor rate would be much higher now given the increase in part-time work and the loss of full-time work.

What does this all mean?

The devil is always in the detail. Although the headline figure looks like things are improving, the reality is that people are working less hours, taking home less money and more have given up trying to find work.

This will lead in the short-term to less retail spending and a slowdown in our economy.

Things are getting tough for the individual and household budget, you can expect them to get tougher yet.