Australian Labour Force – bad and getting worse

Today’s release of the – Labour Force data – for August 2013 by the Australian Bureau of Statistics tells me two things. First, it presents the case for why we had to change our federal government last weekend. The Labor Party had abandoned their responsibility for keeping unemployment low. Their obsession with achieving a budget surplus (they failed) deliberately undermined employment growth and has led to tens of thousands of Australians losing their jobs. Second, the new conservative government is going to have to shed its own ideological obsession with cutting deficits if it is to create an environment of robust employment growth and reduce unemployment. Its deregulation mantras will just make matters worse. I am not confident. We had the three evils in August – contracting employment, rising unemployment and a contracting labour force (via a further fall in the participation rate). Employment growth has negative now been negative for the last three months (a recession!) and in August both full-time employment and part-time employment contracting. Total employment is now lower than it was 6 months ago. Unemployment is rising towards 6 per cent as the weak employment growth fails to keep pace with the underlying population growth. Hidden unemployment also rose as more people gave up looking for work in an environment where job opportunities are shrinking rapidly. The broad labour underutilisation data from the ABS for the August quarter (released today) show sharp rises in both unemployment and underemployment. The broad rate of labour wastage is now 13.7 per cent. Add to this the impacts of the falling participation rate and the figure would be above 15 per cent. This data signals an urgent need for fiscal stimulus to reverse the negative trend. Unfortunately, with both sides of politics are locked into an austerity mindset the situation is likely to deteriorate further.

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