Unemployment 101: It’s time to get REAL

In addition to the re-classification of people on welfare benefits, countless Australians who sought more work, or wanted to get work, did not fit the official definition of unemployed. This was because the Australian Bureau of Statistics Unemployment Estimate, narrow that it is, classified and still classifies an unemployed person as part of the labour force only if, when surveyed, they have been actively looking for work in the four weeks up to the end of the reference week and if they are available for work in the stipulated week.

That instantly cuts out those who have long ago become disenchanted with the process of looking for a job as well as those only passively looking because they are growing frustrated with each passing day.

A true measure of the unemployed would include all those not working regardless of their efforts to find jobs, the duration of their exclusion from the workforce and irrespective of any welfare camouflage they are asked to wear by the government.

"Underemployment" is another critical issue that also needs to be correctly measured and currently is not.

The ABS estimate does not take into account people who have been employed for a few hours of part-time work per week but would like to work more hours. To the ABS, these folk are happily ‘employed’. The Australian Council of Social Service (ACOSS) estimated that by taking into account "hidden" and "underemployment" the real level of joblessness is approximately double that given by the official data.

Surely such people must be included in any measure of the jobless, if the government want an accurate feel of the nation’s economic pulse.

Regrettably, the AFR chose not to publish Morgan’s revelations. Perhaps Fairfax didn’t want to get on the wrong side of the then Minister for Employment, Tony Abbott. Or perhaps Morgan’s logic offended the publication’s bias. Who knows? What is known is that no politician will willingly change a common indicator that will make him look worse, no matter the public interest.

Gary Morgan calls his patently valuable concept the ‘Roy Morgan Unemployment Estimate’ but sadly it is rarely mentioned in the press. I prefer to call it the Roy Morgan Estimate of Aggregated idle Labor (REAL) as in REAL Unemployment Index.

The REAL Unemployment Index, currently 10.3 per cent is far, far more meaningful than the government manufactured ABS statistic, which is not ‘wrong’ per se, but too narrow to truthfully convey much of real value.

While the media and the government portray the most recent jobs number — 5.1 per cent unemployment — as good economic news, more sober minds understand what's really going on.

One such mind is Newcastle University Centre of Full Employment and Equity’s Director Professor William Mitchell. But then again, Mitchell isn’t your run-of-the-mill commentator as his blog bears out.

Amongst other observations, on 15 February Mitchell was quoted in the Daily Telegraph as calling for a class action by a “union of the unemployed” to haul the sorry derrière of the RBA’s Governor into court to explain why the RBA now uses unemployment as a policy tool rather than a policy target. Good luck with that. Really, good luck.

Truth in statistics is in the gift of the media and not politicians. If we’re ready to fight for the truth, that is.

Unless we command politicians to reveal the accurate levels both of Australia’s use of labour and its underuse of available labour, we will never get a handle on just how good or how miserable the state of the labour market really is.

When it comes to unemployment, it’s surely time to get REAL.