Unemployment – just the facts please

We are witnessing a continual restructure of the labour market as companies source cheaper labour offshore, the domestic services sector expands, and the workforce continues to casualise.

Seasonally adjusted figures show that employment fell by 5500 jobs in December and unemployment rose to 5.4 per cent. The media love seasonally adjusted numbers because they bounce around. In real terms, the nation's unemployment and under employment rate is closer to 10 per cent, which I will discuss soon.

The ANZ job advertisements dropped by 3.8 per cent in November, a fall for the 10th-straight month.There is speculation that some of the country's blue chip companies are considering redundancies later in the year. There's a surprise (not).

Full-time employment fell by 13,800 people to 8.1 million. Part-time employment rose by 8300 people to 3.4 million, driven by an increase in male part-time workers. That is unusual as the majority of part timers are women. More women and mature age workers are seeking part time work.

What's weird is that the economy is growing by about 3 per cent per year yet unemployment is trending up. The reason is that we can't create jobs quickly enough to get people employed – especially school leavers and people migrating away from construction and manufacturing.

There was a total of 656,400 unemployed people in December, an increase of 16,600. Discounting the media effect of only concentrating on bad news, few people believe these figures reflect the true state of Australia's unemployment numbers, let alone those who are under employed. And they are right.

The methodology the Australian Bureau of Statistics (ABS) uses to determine unemployment figures is woefully inadequate. Back in February 2012, Jonathan Ariel wrote an excellent article in OLO called Unemployment 101: It's time to get REAL, on how the ABS warps the unemployment numbers.

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 … 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...

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 people are 'employed'. This is patently ridiculous. In a country with lagging labour productivity, we need an accurate measure of who is truly unemployed. It's like being told to count sheep and counting only the black ones.

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.

One metropolitan newspaper reported that according to the most recent Labour Force survey, "116,500 (19.6 per cent) of the 589,400 job seekers had been looking for work for more than a year as of July 2012."

We need to rewrite the above quotation and provide a more realistic approximation. It should read more than 240,000 of the one million job seekers have been looking for work for more than a year up until July 2012. About 18 per cent of the workforce, is either unemployed or underemployed. You won't read much about that in the media either.