Unemployment

Dob in a bludger

March 5, 2021 by James J. Morrison W.G. Dupree Leave a Comment

Morrison announcement of “permanently increasing the rate of working-age payments by $50 a fortnight from 1 April 2021” received a lacklustre response. The Australian reporting about the lead-up to this said, “The base rate of JobSeeker is currently $570.80 a fortnight. But pressure has been mounting on the government to raise the rate with the $150 coronavirus supplement for welfare recipients ending in late March.”

Small bickies

Australian Welfare no longer in last place.

The Australian Council of Social Service’s disappointed response reported that they would have preferred $25 extra a day rather than a week. The cheapest coffee I can buy around in my suburb is $4, an extra $3.57 a day is hardly enough. It has, although, lifted our unemployment allowance from 37.5% to 41.2% of the national minimum wage. That means we will no longer have the lowest level of unemployment benefits as a percentage of the average salary in the OECD. Fifty dollars lifts us above Greece to second-last place. Mind you, the original Covid Jobseeker supplement incrementally lifted the unemployed for the first time, above the Henderson Poverty line.

Welfare payments and the poverty measures of Australia

Paying such low levels “under the false pretence of encouraging more unemployed Australians to look for jobs” has no evidentiary basis. The international market demonstrates it has the opposite effect. Higher unemployment payments internationally are more often correlated with lower unemployment rates. More money flowing into Jobseeker generates spending in the economy, and drives demand. The multiplier effect of which, our country in recession has shown it desperately needs to boost the economy.

Training?

Despite the Coalition undercutting higher education, Michaelia Cash supported the idea that after six months on Job Seeker, recipients undergo training to help them get a job. Department of Employment figures show the smallest job market in January were the unskilled labourers (8.1%), Sales Workers (7.7%), Machinery Operators and Drivers (5.9%). This collection of low skilled jobs (37,975) are in rare supply in the Australian economy. Therefore, any Jobseeker training to elevate them to the skill level needed to widen their prospects would require extensive TAFE/University level education; well beyond “approved intensive short courses“.

Dob ’em in.

These were not the only changes Morrison implemented to job welfare. That Australian article also reported, “Under a raft of welfare reforms, Employment Minister Michaelia Cash said employers would be able to dob in unemployed Aussies who don’t take up jobs they are offered.” A move even Business groups denounced, let alone the welfare groups and unions. Social media references to “Dob a bludger!” accompanied curiosity as to the probability of emerging hotlines for “Dob in a wage thief” for businesses that were “accidentally underpaying workers“. Further suggestions provided ideas to establish hotlines for dob in a rorter, silencer of whistleblowers, white supremacist and sexual predators. It is tantamount to licensing abuse and employee exploitation which already occurs in industries like farming, retail and service.

Get off the couch!

The prevalent attitude towards the unemployed by politicians suggests that the unemployed are dominantly lazy, and distracted by Netflix as Nationals leader Michael McCormack claimed, or on drugs as our currently on leave, Attorney-General Christian Porter claimed when Social Services Minister. Several Federal ministers like David Littleproud MP, Senator Michaelia Cash, Senator Gerard Rennick, and Colin Boyce MP attacked the unemployed demanding they “get off the couch“, and get farmhand jobs that Australians discovered were not available. Others would suggest this patronising attack on people who, because of a recession and the pandemic, are without work, is merely targeting “low hanging fruit“. These Federal Ministers all would have us believe jobs are plentiful.

They are not alone in spouting propaganda that jobs are readily available. Minister for Families and Social Services Anne Ruston, in a Triple J Hack interview with Avani Dias on the 23rd of February, repeated the fallacious claim. That there are “plenty of jobs” in her region. This was demonstrably wrong. Based in Renmark, her territory in the Murray had 8,364 people on Jobsearch in Jan 2021 but only 626 job vacancies (13 times less than the people looking for work). That ratio is better than the national average (approx 18x), so perhaps she might have had something to boast about if she had only bothered to tell the truth.

What Jobs?

Statistical variations of Unemployment reported.

It isn’t easy to be finding a job in our economy, as reflected by any measure or methodology:

– jobs claimed by ABS (254,400 jobs), Dept of Employment (175,100 jobs), Seek (182793 jobs);

verses

– the unemployed registered by Jobseeker (1.236M people), ABS (877,600 people) or Roy Morgan (1.68M people). {All Stats currently published as of the end of Feb 2021 for January 2021}

These measures demonstrate that irrespective of what stats you accept, there are far more unemployed than available jobs. Beyond understanding the basics of how unemployment is measured, it is crucial to understand what some methodologies do not appraise.

The difference between ABS and Roy Morgan’s stats are considerable, and while the government and Main-Stream Media lean heavily on the ABS measure, we should appreciate what it represents. I have for a long time explained the ABS’s shortcomings from it’s

exclusions of anyone doing any work in a month,
exclusions for unpaid work in a family business,
exclusions of foreign workers through 12/16 rule,
hiding the increasing gig / part-time economy,
exclusions of persons unable to take up immediate work,
hiding unemployment via the government PaTH program.

Subsets

These exclusions mean that what the ABS measures is not our internal domestic unemployment, but a subset of the numbers of unemployed for reasons of international comparison. A long time economic analyser of ABS statistics, Alan Austin, expressed similar conclusions, to that of my recent article on this subject.

To be clear, ABS measures a subset of our internal unemployment, as are JobSeeker numbers. The disparity between them illustrated in the variations graph depicts the entire period over which Job Seeker has existed. ABS’s subset, guided by the ILO methodology, facilitates international comparison, but does not measure any country’s national unemployment numbers. These stand in stark contrast to Murdoch and Nine Media’s claims that unemployment is a single whole digit percentage rate. Roy Morgan reveals unemployment hasn’t been under 10% since February 2020, and neither has under and unemployment been under 20%.

So ABS’s claimed 877,600 unemployment numbers are a subset of the domestic reality. Similarily ABS claimed a 2.08 million subset of under and unemployed. Alan Austin and I are in enthusiastic agreement that “It might be time for the unemployment rate published by Australia’s Bureau of Statistics (ABS) to be put out to pasture.” Alan continued affirming “the steam engine that is Roy Morgan’s real unemployment rate”. Roy Morgan shows in January 2021, unemployment is 1.68 million people, and adding underemployment reaches 3.118 million souls looking for a decent job. The Department of Employment’s IVI job vacancy report for January reveals that over three million people in Australia are competing for 175,100 jobs. Nearly 18 people for every job advertised, and we are not even beginning to deal with the logistic issues of job searching.

Location, location, location.

Beyond Australia’s 19 cities, over 100K population, there are 1700 towns with populations between that and a thousand people. Spreading 175,100 jobs across a continent representing 5% of the earth’s landmass, when the towns are dominantly coastal, represents the first challenge to job seekers. An “off the back of an envelope” averaging for any given town/city would tell you that more than 100 jobs in a given population centre mean you are probably living in a city. Which might mean less than ten jobs advertised in that region will be for unskilled labour (8.1%). That’s not a nuanced presumption, as industry and commercial activity vary considerably from place to place, and I’ve given no consideration to rural areas. Still, one might understand that job locality has to be one of the most considerable obstacles for the unemployed.

The government’s expectation announced on the 23rd of February is “job seekers will be required to search for a minimum of 15 jobs a month from early April, increasing to 20 jobs per month from the 1st of July“. Purely considering the subset of the unemployed on Jobseeker (1.236M people) generating 15 applications per month creates 18 million letters and has the potential to cover every advertised job in Australia 105 times until July, when it will be 141 times. Given the likelihood of the number of jobs existing in your city or town as aforementioned, just how long will it take any given unemployed person to run out local employers?

Limitations to employment are locality and factors such as job requirements for education and/or skills, competition for work, financial limitations/burdens, physical/mental impediments, security clearances, pay awards not commensurate with needs and employment discrimination and/or exploitation.

Nobody in the coalition government is prepared to concede they are failing the unemployed. The party of “Jobs and Growth” has in reality been expanding “Unemployment and Recession” for years and no policy the government has implemented in Morrison’s $9B Social Security Safety Net seems capable of changing that path.

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Unemployment by Covid exploded

June 4, 2020 by James J. Morrison W.G. Dupree Leave a Comment

Locking down the economy to save lives in a pandemic comes at the cost of unemployment, but how much, is the issue. Measuring that unemployment in Australia has been the focus of much dissent of late, in both social and mainstream media. The variations post-COVID have been extreme and rigour in methodology and measurement primarily abandoned.

Headlines like the ABC’s “Almost a million Australians out of work due to coronavirus; RBA tips economy to take 10pc hit”, are common. The Reserve Bank and Bankwest Curtin Economics Centre asserted similarly, “unemployment rate will rocket from 5.1 per cent past the 1992 high of 11.1 per cent as quickly as August before hitting 12.7 per cent in May 2021.”

ABS instability

ABS's Unemployment website record of changes to unemployment figures in 2020 — ABS’s Unemployment website record of changes to unemployment figures in 2020

Meanwhile, the underfunded and understaffed ABS produced statistics on unemployment that needed readjusting between January and May of 2020. Between 5.1% to 5.2% for any given month, raising or dropping unemployment estimates month to month anywhere between 5,500 to 10,900. The month of February shifted from 689.9K (5.1%) on the 19^th of Mar by an additional 10.9K to 709.8K (5.2%), by the 16^th of Apr. The adjacent chart shows the other four adjustments. Data accuracy was problematic under Covid-19.

Apparently, the ABS had stopped surveying the whole of March during the lockdown. By the 14^th of May, the ABS announced that unemployment had only risen from 5.2% (718.8K) in March to 6.2% (823.3K) in April. No trend estimates for April were released, despite being widely perceived as an underestimate. If this is to be considered valid, then this constituted a percentage of drastic unemployment which had previously been unseen, … since September of 2015 – when it was last 6.2%. In the middle of a Pandemic with apparently massive job losses, we were expected to believe it was as “catastrophic” as most of 2014 & 2015. Although if you look back far enough, it was much worse (as unemployment exceeded 6.2%) in the first half of 2003, back as far as the time ABS kept records, using the redesigned sample methodology developed, back in 1992.

6.2%? REALLY?

To everyone’s surprise, a certain level of healthy scepticism has arisen about the ABS statistics. There were dozens of social media posts that bandied the “one hour a week” rule for defining employment, as a criticism.

Questioning of Sen. Michaelia Cash 19th Sept 2019 at Doorstop Canberra

The idea that “anything over one” hour a week constitutes “employment” arose from a question raised by a journalist to Michaelia Cash. The reaction to Cash’s “one hour a week” measure of employment is problematic because neither was, the question well-posed nor the answer, accurate. The problem is the “one hour in a week” rule is a misnomer. Statistically, that is true of what is known as the “reference week”, BUT the ABS also takes regard of the four weeks before the end of the reference week. So “what counts as full-time work” is not measured in any one week, neither do they count your work history for only a week. Besides, no one works for merely one hour a week as Greg Jericho is quick to point out. It is far more likely the minimum is at least a single work shift a week. Although, Greg’s focusing on the “one hour a week”, ignores the other points of exclusion.

You also have to be actively looking for work during those four weeks to be counted as unemployed. Other exclusions include working without pay in either a family business or farm during the reference week. Steve Keen in “The Australian”, of all places:

“Herein lies the problem with spin in economic data: sometimes the spin turns your way, sometimes it doesn’t. The ABS uses the internationally sanctioned definition of unemployment, which is similar to Tom Waits’ definition of being drunk: you have to be really, really out of it to qualify. Not only must you not be in employment, but you can’t have done even one hour of paid or unpaid in the four weeks prior to the survey. Nor can you be discouraged by the absence of available jobs either — you must have applied for something in the previous four weeks — and you must be available to start immediately.”

This explains why – for the ABS – unemployment is only 6.2%. The Lockdown by Scott Morrison announced on the 13^th of March began on March 16^th – after his Church’s Pentecostal conference was over. Closures of pubs, clubs, cafes and restaurants weren’t mandated till the following Monday. Further closures of Auction houses, real estate auctions, eating in shopping centre food courts, amusement parks, play centres, etc., were not decided on, till later that week. Wage subsidy packages were decided on, by the end of March.

So, given people have to be unemployed for four weeks to begin to registering to the ABS as “unemployed”, many former employees, would not have even been designated as “unemployed” in April. Also one needs to factor in, that Jobkeeper “hid” people who were later fired in April or thereafter.

International vs domestic

The ABS unemployment methodology is often criticised for the wrong reasons. What people don’t understand is the methodology championed by ILO that ABS has a context – international comparisons. That is the correct context. The “I” in ILO stands for International not Intra-national.

As a stand-alone domestic measure, it is fundamentally flawed—realised by the concession that there is an element of “hidden unemployment” that is not measured by the ABS methods. There is also a concept of “discouraged job seekers” and “underutilisation”. All these additional descriptions are an admission that the ABS does not wholistically measure Australian unemployment. The ILO standard was never designed to be used to measure the internal or domestic unemployment of any country. Alan Austin often uses ABS statistics to compare nations but continues to demonstrate that, there is more to Australian unemployment than just the 5+% the ABS has been claiming in recent years.

Australian Domestic Employment

Roy Morgan vs ABS statistics on unemployment

The ABS does not adequately measure real domestic unemployment. The government frequently engages with these measures to deceive the public as to the actual extent of domestic unemployment. This is where the non-internationally comparative Roy Morgan’s statistics should be used. They are a far more accurate measure of real domestic unemployment in Australia. Roy Morgan is quite capable of defending its methodology. Comparing Roy Morgan and the ABS shows that the ABS has become increasingly misaligned.

Workforce, employment and job vacancies in Australia over 13 years

Charting Roy Morgan’s employment statistics for over a decade and adding the Department of Employment’s IVI statistics for job vacancies reveals several long-standing trends.

Full-time work has been falling as a portion of Employment in Australia, and Part-time has been rising.
The rate of entry into the workforce is not matched by employment growth. Unemployment now at 15.3% from 6.3% in April 13 years ago as illustrated by the gap between workforce and employment.
There have never been enough job vacancies to fill the unemployed’s needs for work.
There was no robustness in the economy for jobs to survive any emergency that might disrupt it.

This graph shows a stark drop in full-time employment when pandemic lockdown occurred, but not so for part-time employment. While these are early days to track significant reductions, there is another explanation.

Corporation’s human capital is often hard and expensive to acquire. Expertise that marches out the door from an enterprise can be irreplaceable, especially in high-end jobs. Drilling down into the IVI stats for job vacancies reveals numeric disparities between entry-level jobs and highly skilled positions.

The combination of managers, professionals, technicians, social workers, clericals, etc., represent the largest portion of job vacancies whereas Labourers, Machinery operators, Drivers and low skilled jobs are a much smaller proportion. I’ve outlined these proportions previously via Anglicare’s Jobs Availability Snapshot.

Shifting full-time workers to part-time helps employers retaining critical staff when their business recovers. The ACA promoted this as an option for keeping staff, and the JobKeeper legislation enables that approach.

Australian Under and Unemployment

Under & unemployment and the poor job vacancy opportunities in Australia

Still, where is our recovery going to come from when you consider the figures of this graph on under and unemployment and job vacancies? Consider:

Given the enormity of under and unemployment (24.7%), how can our economy recover?
Given the trend in falling job vacancies to less than half what it was at the beginning of the year, from where is employment going to come?
Given Australia has been in a per-capita recession since late 2018 where is the pre-existing economic robustness for a functional recovery?
Poor economic indicators for Australia leading into 2020

Given the previous falls in business & consumer confidence, Wage rates and household saving, and rises in CPI, Utility pricing, through household debt where is the cushion for a soft landing?

The methodology for unemployment measurements during the great depression of the 1930s was different from how we measure today. Pointing out that Unemployment reached a record high of around 30% in 1932, is problematic as we are not using comparable measures. That hasn’t stopped the media from making the comparison, and it is not that far fetched, given the enormity of the problem.

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