The Labour Force data yesterday certainly raised some questions from journalists – both written and radio media. Some journalists are definitely starting to question the idea that everything is going okay and recovery is progressing. I did several media interviews yesterday and most were interested in the idea that focusing on the unemployment rate – which was unchanged – is an sure way to making a deluded assessment of how grim things are at present.
Glenda Korporaal’s piece in Job joy disguises under-employment in the The Australian this morning said:
… there is an increasing recognition that to judge their real economic impact, the jobless numbers need closer scrutiny, given that one only has to work an hour a week to be counted as employed.
She quotes me as follows:
“The afterglow from last week’s national accounts figures has now gone with the retail sales figures and the labour figures showing that the Australian economy is far from healthy,” University of Newcastle labour economist professor Bill Mitchell said yesterday.
“We are now starting to see hidden unemployment rise as people are dropping out of the workforce. The economy is only just hanging on by the skin of its teeth with strong fiscal support.
“We think of a recession as having massive unemployment. In this recession there is massive underemployment. It is a moot point about which is better, given that working one hour a week is counted as being employed.”
With the lag between the state of the economy and the job market, Professor Mitchell argues it could take 18 months before Australia sees any significant recovery in employment growth.
He estimates that the true underemployment rate is about 15 per cent when discouraged workers are added to those not working as many hours as they want.
The story also concluded that:
The good news is that weaker economic figures this week are a reminder that the health of the Australian economy is still very dependent on flow-on from the economic stimulus incentives. The world economy,with the exception maybe of China, is still weak.
Although the Reserve Bank is still expected to put up interest rates in the not too distant future, this week’s figures should be a warning that the economy is still fragile and workers are still all too vulnerable
That’s progress – from News Limited too.
You can hear a segment I did either this morning on either the ABC Radio shows AM or The World Today on underemployment, a third stimulus and interest rates. It depends on scheduling and other stories which one will carry the interview.