Australian labour market – labour wastage rate rises above 15 per cent!

The economic news leading into today’s ABS labour force release was poor. Last week, the national accounts for the June-quarter was released and showed a marked slowing in the Australian economy during that quarter. Many commentators claimed the data wasn’t accurate and would be revised upwards. I don’t think that is the case. Yesterday, there was terrible data released relating to the drop in consumer confidence. And today’s release of the – Labour Force data – for November 2014 by the Australian Bureau of Statistics is consistent with that news. The labour market is weak and getting weaker. Employment is stumbling along and dominated by part-time employment growth. Unemployment continues to rise. Underemployment has rocketed up as working hours have fallen over the last month. The broad ABS labour underutilisation rate – the sum of unemployment and underemployment – is now at 15 per cent. That is a crisis. But the government still claims it needs to cut net public spending. For what purpose? To reduce the fiscal deficit even though this will cause a massive loss of national income and a further rise in unemployment and underemployment. And … as the current evidence suggests, the fall in activity will kill tax revenue and the fiscal deficit will rise anyway. It would be better if the government accepted its responsibility as the currency issuer and stimulated the economy with a job creation plan.

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