I hate to say it, but the spectacular events that hit the headlines
aren't necessarily the things most worth worrying about. The big news on
the economy this week was the spectacular jump in the unemployment rate
from 6 per cent to 6.4 per just during July. Not a big worry.
Question
is, what does it prove? That the economy fell into a hole around the
middle of the year? Doubt it. There's little other evidence that it did
and a lot that it didn't.
That the slow upward creep in
unemployment we've been seeing for about two years may have accelerated?
Doubt that, too. Again, the other economic indicators aren't pointing
that way.
(Indeed, some economists have been wondering if
unemployment was close to peaking. So far this year employment has grown
by an average of 15,600 jobs a month, compared with just 5100 a month
last year.)
That the unemployment figures are volatile from month
to month and this is an unexplained statistical blip that should be
corrected next month? Seems a bit too big for that.
Truth is it's hard to know what the problem is. Easier to be sure when we've seen another month or two's figures.
But
my guess is it's a once-only upward step in the measured rate of
unemployment, caused by a seemingly small change in the questions that
people in the Bureau of Statistics' monthly survey are asked so as to
ascertain whether they've been "actively" seeking a job if they don't
have one.
The change - made partly because of the switch to
searching for jobs on the internet rather than at Centrelink - seems to
have led to more people being classed as unemployed and fewer as "not in
the labour force".
If this guess proves right, it's not so
worrying. It doesn't change reality, just the way we measure it. In any
case, we've long known that the official measure of unemployment is very
narrow and understates the extent of the problem.
That's why the
bureau publishes every quarter a broader measure of unemployment, which
takes the official unemployment rate and adds the under-employed -
people with jobs who aren't working as many hours a week as they'd like
to - to give the "labour force underutilisation rate".
The figures
for May show narrowly measured unemployment of 6 per cent, and an
underemployment rate of 7.5 per cent, to give a broader measure of 13.5
per cent.
Less spectacular than this month's jump in the official
rate but, to me, more worthy of worry is news that hasn't hit the
headlines: the rapid worsening in teenage unemployment.
Whereas so
far this year the trend rate of overall unemployment has risen by 0.2
percentage points, the trend rate for people aged 15 to 19 has risen by
2.8 percentage points to 19.3 per cent.
Note, this doesn't mean
almost one youth in five is unemployed. Most people that age are in
full-time education, so aren't in the calculation. Turns out about one
in 20 of all 15 to 19 year-olds is unemployed and looking for a
full-time job.
Many people have it in their heads that
unemployment rises because people lose their jobs and employment falls.
That's true only in recessions. It's rare for employment to fall - it
fell only briefly even during the global financial crisis.
No, the
main reason unemployment rises outside of recessions is that the
economy isn't growing fast enough to employ all the extra people joining
the labour force from education, as immigrants or as mothers rejoining.
That's
what's been happening over the past two years. And young people -
particularly those who leave school or training too early - have borne
most of the burden of insufficient job creation. We should be doing much
better by them than Work for the Dole and denying them benefits for six
months to keep them hungry.
But there's nothing spectacular about
this quiet suffering, so it doesn't hit the headlines. Much better to
scandalise over factory closures, which surely signal the end of the
world. So let's look at the facts on retrenchment, courtesy of a Bureau
of Statistics study.
About 2 million people left their jobs over
the year to February 2013 (the latest period for which figures are
available). About 60 per cent of these left voluntarily and 21 per cent
left because of their illness or injury, leaving 19 per cent - 380,000 -
who left because they were retrenched.
That's a rate of
retrenchment of 3.1 per cent. The rate hit 4 per cent in 2000, but then
fell to a low of 2 per cent in 2008, just before the global financial
crisis, then increased sharply to 3.1 per cent in 2010, where it has
pretty much stayed since.
Over the year to 2013, all industries
experienced retrenchments, but the most were in construction, 65,000;
retailing, 40,000; and manufacturing, just under 40,000.
But the
number of people employed in particular industries differs a lot so,
judged by rate of retrenchment, utilities and construction come equal
first with 6.4 per cent, then mining with 6 per cent, pushing
manufacturing into fourth place with 4.5 per cent.
The rate of
retrenchment is consistently higher for men because men tend to dominate
those industries where retrenchment rates are higher, whereas
retrenchment rates tend to be lower in industries dominated by women
workers, such as education and health.
The likelihood of being
retrenched falls as your level of educational attainment rises. We're
more conscious of older workers being laid off but, in fact,
retrenchment is greatest among workers aged 25 to 44.
And what
happens to people who're laid off? For those retrenched over the year to
February 2013, half were back in jobs by the end of the year, leaving
29 per cent unemployed and 21 per cent not in the labour force.
