A part-time “working” nation

Since the end of the recession we “had to have”, Australia’s official unemployment rate has continued to tumble. Ongoing economic growth, coupled with an increased level of labour market flexibility has helped create a host of new jobs to service the Australian economy.

In December 2004, the official unemployment rate sunk to just 5.1 per cent - the lowest rate in 28 years. However, today’s labour market is a very different place to 28 years ago. Perhaps the only constant has been the measure used to determine the level of unemployment.

The ongoing “casualisation” of the labour force, complicated by the large numbers of hidden long-term unemployed, underemployed and “demotivated” jobseekers, has left the labour market at a critical juncture. It’s important that while celebrating the low unemployment rate, the Federal Government’s employment agenda keeps sight of the big picture. As Australia’s full-time employees spend longer hours at work, the ranks of Australia’s part-time “working” nation continue to grow.

The difficulty stems from the way we measure unemployment in Australia. The Australian Bureau of Statistics (ABS) counts people as employed even if they spend as little as one hour per week working, and spend every subsequent hour actively seeking a job. If one million Australian employees were involuntarily shifted from full-time to part-time hours tomorrow, there would be no impact upon the official rate.

Official unemployment fell to just 520,000 people in December 2004. However, if we were to take into account the unemployed and underemployed currently excluded by this measure, a lack of work remains a major financial burden for more than 1.5 million Australians. And given that there are one million households where one or more adults work living below the poverty line, we start to see the new phenomenon facing Australian workers: a job is no longer a guaranteed path out of poverty.

That 87 per cent of the jobs created in the 1990’s paid less than $26,000 a year, or that 2 out of every 3 jobs created in the last 3 years pays less than $600 per week, is perhaps the best illustration of the fact that a job is no substitute for good employment policy.

The main reason that these new jobs pay so badly is that the majority of the growth has been in part-time employment. In fact, for every four new part-time jobs, only one full-time position is created. As a result of this trend towards part-time employment there were, by July 2004, 2.8 million part-time workers in Australia - 29 per cent of the labour force. Compare this figure to the Australian workforce circa 1978, where 85 per cent of employees - and 96 per cent of male employees - worked full-time.

The effect of the explosion in part-time employment is that a huge number of Australians are now underemployed: 610,000 of them, according to the latest available ABS figures. The number of underemployed persons has increased more than threefold during the past two decades, with a corresponding increase in the official underemployment rate from 2.6 per cent in 1979 to 6.2 per cent in 2003. Meanwhile, full-time employees are working longer hours than ever before.

Underemployed workers are defined as persons working part-time who would prefer to work more hours plus those who usually work full-time, but who are currently working less than 35 hours per week.

Data collected by the ABS shows that most underemployment is of a long-term nature, with the average duration of insufficient work being 57 weeks. The average number of extra hours that under-employed people would prefer to work per week is 16.2, with most of the underemployed preferring to work full-time.

Consecutive Federal Governments’ policies with respect to labour market flexibility have contributed to this trend towards part-time work, and the concurrent fall in conditions and job security. While labour market flexibility has created new opportunities for those seeking part-time employment, this has largely been at the expense of full-time work.

Rural Victoria is one of the areas that has been hardest hit by this trend. Despite Victoria’s surpluses and private sector prosperity, there are fewer jobs in Victoria’s towns and rural areas now than in 1990.