As I promised over a week ago the Labor Force results for August have been released by the Australian Bureau of Statistics. On the surface things appear to be great, as the unemployment rate has remained steady at 5.8%. Drudging through the figures though reveals another story, with a lot of things not painting such a rosy picture. Whilst they are a sign that things are stabilizing and won’t be as bad as some predictions they’re still far from the kind of green shoots many would like to see before breaking out the champagne. In fact the results were something of a turning point for me, as a metric that I believed was valueless for measuring an economy’s performance outlines the problem perfectly.
The first thing that crops up when looking at these recent figures is that in fact Australia’s working population decreased by 0.2%. This was offset by a decline of the same amount in those looking for work, which is what kept the figure steady. Other metrics remained steady as well, although this is likely due to the fact that all the people who can work are still working. The shocking metric that did it for me was the one of underemployment.
I’ll be the first to admit initially I felt that the use of this metric was an attempt at shifting the goal posts that the doom and gloomers were using in their arguments against me. Every time a sign of economic recovery comes about I always hear of some new metric that if you watch the trend over the past few years shows that we’re all doomed and there’s nothing we can do about it. So I was fairly sceptical when they started spouting underemployment and wrote it off for a good while. Then I came across the statistic in the Labor Force results and decided to have a look into the ABS’ methods and what it could mean for the workforce at large. In essence underemployment refers to people who have the ability and want to work more hours but simply can’t because the work is unavailable. Looking at the current statistics for this quarter pegs this rate at 13.9%. That figure in itself doesn’t mean a whole lot but the trend says quite a bit:
You can probably guess where I’m going with this. Since 2001 the underemployment metric was trending down quite nicely. This is as you would expect in economic good times where there is quite a lot of work available for anyone who wants it. However around 2008, when the GFC started to rear its ugly head, it started trending back up and did so at quite a high rate. This was as result of employer’s reaction to the GFC as it measures not only those losing their jobs but those who have had their hours cut but still remain employed.
The one good thing that we can take away from these figures is that while underemployment might be on the rise people who are still employed currently are much better placed when things begin to turn around. Many of those who lost their jobs will be finding it hard to break back into their industry whilst the GFC continues to unfold, but those who still have some employment can easily have their hours ramped back up when times come good. This bodes well for our economy as heavy losses of jobs means a much slower recovery once the crisis has abated. Nothing slows economic development more than the workforce trying to re-establish itself.
The figures made for some good reading for me and I’d urge you to have a look around so you can see what they mean for you. Working in Canberra means I’m often isolated to the employment troubles of the country (thank you Australian Public Service) but these figures really brought it home. I can only hope that the next quarters figures show underemployment steady, but only time will tell.