The latest July figures for Australia’s labour market reveal the unemployment rate falling from 4.9% to a historical low of 4.6% since 2009. In the midst of a lockdown with thousands being unable to work, this falling unemployment rate incites more questions than causes for celebrations. Despite only 2,200 extra people being employed, the 0.3% decrease in the jobless rate to 4.6% is the lowest seasonally adjusted unemployment rate since December 2008.
The definition for unemployment by the ABS indicates that an individual to be considered as unemployed is not working but looking for work. The recent unemployment rate indicates that Australia’s economy is currently facing a largely shrinking labour force and a decline in the number of officially unemployed people, or those looking for employment. Big falls in NSW in both employment (-36,000) and unemployment (-27,000) with a cumulative fall of the labour force by around 64,000 people. This is strongly evidenced by the fall in participation rate, dropping 1% to 64.9%.
Alex Joiner, chief economist at IMF Investors mentioned when adjusted for pandemic factors, the effective unemployment rate was around 6%. “The number of people on zero hours from being stood down is 181,500 which has increased from 156,500 and 58,200 in June and May respectively”, Mr Joiner said. Hours worked in NSW have decreased by 7% as businesses in lockdown affected areas cut back on operations, coinciding with a rise in the underemployment rate to 9.3%. Analysis by the Institute of Public Affairs revealed small and medium businesses were being particularly hard hit, with 420,000 people losing their jobs or working zero hours between June 26 and July 17.Whilst economic and employment losses were likely to worsen over the coming months, fiscal support should assist in mitigating the impact.
