Australia unemployment at 30-year low, but under-employed also at 5.1%

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Sunday, April 10, 2005

Australian unemployment is at a 28-year low at 5.1 per cent, according to recent figures from the Australian Bureau of Statistics (ABS). This has prompted debate over whether interest rates should increase [1]. However, the number of underemployed still remains high, at 600,000 [2] — that is, around the same 5.1 per cent figure when compared to Australia's labour market of 10 million 3.

Strong job growth

According to the Employment Minister, Kevin Andrews, 1.6 million jobs had been created over the past nine years, including 330,000 over the last 12 months. 4

A report from his department which described the employment market over the 12 months to August 2004, as one of 'solid growth', said total employment increased by 2.1% over that year.

"Advertised vacancies increased for trade occupations, marginally decreased for professional occupations and decreased for associate professional occupations," reads the October 2004 Australian Jobs Update report.

"The strongest numerical rises in employment occurred in Health and Community Services (up 60 600), Construction (up 43 400) and Manufacturing (up 40 900) while the strongest rates of growth were in Mining, Personal and Other Services, and Health and Community Services."

Possible interest rate hike

Although there is widespread speculation, AMP Capital chief economist Shane Oliver told Australian Associated Press that the strong job market did not necessarily mean that the Reserve Bank of Australia would hike up interest rates. 5

"The labour market is one of the last indicators to turn down, so we've already seen the economy slow down - particularly in the housing sector - and you would think that it is only a matter of time that we'll see a slowing in (jobs)," he said.

"I think the Reserve Bank will probably need to see clear evidence of wages growth coming through to inflation before they move again."

Many are under-employed

The still-large under-employed category defined by the ABS includes a wide range of persons — anyone employed for less than 35 hours a week, willing and available to work additional hours. 6 7

A study by The Melbourne Institute found in 2001 that one employed person in six is under-employed, with 5 per cent of available worker-hours unutilised 8. This was associated with part-time employment for females, but with full-time employment for males.

The 2001 study found that part-time workers seeking full-time employment felt negative effects, "not far short of those attributable to unemployment".

Number of long-term unemployed has increased over past ten years

Roughly 60% of the half-million-odd eligible for unemployment benefits in February were denoted as long-term unemployed, according to the Department of Employment and Workplace Relations. 9 Less were long-term unemployed in February than at the same time last year. In 2004 there were 1.43 long-term unemployed for every short-term unemployed, while in 2005 there were 1.34 10.

But ten years ago, there were fewer long-term unemployed than short-term, with 1.07 short-term unemployed to every long-termer 11.