Labour force participation rates are falling around the world signalling the slack employment growth that has accompanied the aftermath of the Global Financial Crisis. It is clear that many workers are opting to stop searching for work while there are not enough jobs to go around. As a result, national statistics offices classify these workers as not being in the labour force, which had had the effect of attenuating the official estimates of unemployment and unemployment rates. These discouraged workers are considered to be hidden unemployment. But the participation rates are also influenced by compositional shifts (changing shares) of the different demographic age groups in the working age population. In most nations, the population is shifting towards older workers who have lower participation rates. Thus some of the decline in the total participation rate could simply being an averaging issue – more workers are the average who have a lower participation rate. This blog investigates that issue for Australia as part of a project aiming to get more accurate measures of hidden unemployment.

Regular readers will know that for some years we have been documenting the parlous state of the youth labour market in Australia. In an environment where fiscal cuts are being justified as looking after the future as the population ages, the most glaring thing that will undermine our future prosperity is the lack of attention policy makers are giving to the youth unemployment problem. The media has only just started to register that our ‘future’ workers are growing into adults having never worked nor gained the requisite experience to deliver high productivity outcomes. The personal future of this cohort is bleak. Recently, the Brotherhood of St. Laurence as (finally) launched a national campaign My Chance, Our Future to “draw attention to the crisis of youth unemployment in Australia”. Better late than never I suppose but what took them so long.

Today’s release of the – Labour Force data – for May 2014 by the Australian Bureau of Statistics confirms, once again, how weak the labour market is. All the talk recently from the financial markets and the government about how the economy has ‘turned the corner’ and the lean times are behind us are plainly wrong. Today’s data confirms the stagnant situation that we have been witnessing for the last few years. Employment growth was negative and unable to keep up with the underlying population growth and unemployment rose modestly as a result. The participation rate fell again and held the rise in unemployment down by around 0.2 points. Workers are exiting the labour force because there are not enough job opportunities available. As a result, hidden unemployment rises as well. underemployment has risen since February by 0.2 points and the broad labour underutilisation rate (sum of underemployment and unemployment) stands at 13.5 per cent or more than 1.65 million workers. If we add the workers who have exited the labour market due to the lack of job openings then the total labour wastage will be well above 15 per cent. The other on-going disaster is the teenage labour market and that group fell further behind this month. The policy settings are wrong and the politicians are moving in the opposite direction to what is needed.

Today’s release of the – Labour Force data – for April 2014 by the Australian Bureau of Statistics confirms, once again, how weak the labour market is. All the talk recently from the financial markets and the government about how the economy has ‘turned the corner’ and the lean times are behind us are plainly wrong. Today’s data confirms the stagnant situation that we have been witnessing for the last few years. Employment growth weak and barely keeping pace with the underlying population growth and the participation rate falling. The only reason the unemployment rate hasn’t risen is that workers are exiting the labour force because there are not enough job opportunities available – unemployment becomes hidden unemployment. This is the last major data release before the Federal government unveils its fiscal statement next Tuesday. The talk has been tough and the need to ‘repair the sick budget’. Trying to reduce the government deficit given how weak private spending is tantamount to vandalism on a large scale. The fiscal deficit should be expanded significantly at present. It is not a ‘patient’ but a set of accounting numbers. The real pathology is the lack of job opportunities. That needs ‘repair’, which means more not less spending is required. If only there was a credible political opposition.

Today’s Australian Labour Force commentary comes from Toronto, Canada where it is just after midnight (00.16). Today’s release of the – Labour Force data – for March 2014 by the Australian Bureau of Statistics tells us that last month’s data, which depicted a strengthening labour market was an aberration. Today’s data brings us back to the stagnant situation that we have been witnessing for the last few years. Employment growth weak and barely keeping pace with the underlying population growth and the participation rate falling. Many commentators are expressing surprise that the unemployment fell by 29.9 thousand but a close examination of the impact of the decline in participation shows that all of that unemployment fall is due to the participation effect. There is nothing good in it at all. Further, full-time employment declined sharply further emphasising the on-going weakness. It remains that employment growth has been around zero for nearly two years and there is an upward bias in unemployment.

Today’s release of the – Labour Force data – for February 2014 by the Australian Bureau of Statistics can be taken in one of two ways. Either the strong full-time employment growth and rising participation rate is a turning point and the economy is improving or the ABS will revise the data downwards and things won’t look so rosy next month. That is the problem of data that exhibits (at times) big monthly shifts that are not reliable. But let’s hope it is the data shift is signalling better times to come. Full-time employment jumped (suspiciously) by 80,500 thousand, the largest monthly change since August 1991 and in the months that followed things fell apart quickly. The participation rate rose by 0.2 points this month, which meant the employment growth was unable to prevent unemployment from rising. The unemployment rate rose (on rounded figures) to 6 per cent from 5.9 per cent and is 50 per cent above the previous low in February 2008. A month’s employment growth is a good thing but there is no cause for celebration. Monthly hours worked fell in February and taken together with the growth in full-time employment and the plunge in part-time employment, one could easily suspect that the high-end hours part-time jobs have been converted into full-time jobs (which is a good thing) but overall the labour force worked less. It remains that employment growth has been around zero for nearly two years and there is an upward bias in unemployment.

Today’s release of the – Labour Force data – for January 2014 by the Australian Bureau of Statistics recorded a second consecutive month of negative employment growth and the unemployment rate rose to 6 per cent with participation constant. Full-time employment continued to contract. The data confirms that there needs to be a major rethink in the macroeconomic policy settings in favour of stimulus. Employment growth has been around zero for nearly two years and there is an upward bias in unemployment. The situation will worsen unless the Government shows some leadership and increases its net spending and targets employment creation. The problem is that the Government is becoming obsessed with ideological pettiness (attacking unions, welfare recipients, refugees etc) and failing to meet the challenges that it faces in an appropriate manner. It has even been caught out lying in recent weeks about the reasons that the SPC Cannery is now struggling and Toyota are to close car manufacturing. Moreover, it is now being urged by the IMF to cut the government deficit in the upcoming May fiscal policy statement (aka ‘The Budget’). Neither the Government nor the IMF seem to be grounded on this planet at the moment.

Today’s release of the – Labour Force data – for December 2013 by the Australian Bureau of Statistics shows that employment growth is now negative (again), unemployment is rising (slightly) and the participation rate fell sharply, which cushioned the rise in unemployment. The data confirms that there needs to be a major rethink in the macroeconomic policy settings in favour of stimulus. Employment growth has been around zero for nearly two years and there is an upward bias in unemployment. The situation will worsen unless the Government shows some leadership and increases its net spending and targets employment creation. The problem is that the Government is already demonstrating its lack of leadership credentials across a range of policy portfolios.

Yesterday, the Australian Bureau of Statistics released the latest – International Trade in Goods and Services – data for November 2013 which told us that the national economy is slowing. We learned that while exports were aout steady, imports (particularly consumption goods) fell for the fourth consecutive month and capital and intermediate goods imports rose, which suggests that explanations relating to the switching of the commodities (mining) boom from the investment to export stage are not accurate. The data tells us that household incomes are being squeezed by rising unemployment which generally means that import spending will drop. The irony is that the trade deficit fell, which means that the drain on growth from the trade sector is now lower (that is, this is a stimulatory move) despite it being driven by sluggish growth. Today, the ABS released its – Job Vacancies – data for the November-quarter 2013 and it confirmed that the labour market continues to slide backwards in the face of subdued private spending and the national government’s penury. This is all in the context of conservatives coming out and slamming gay marriages, single mothers, women who seek abortions and the meagre number of labour market protections that remain in place. It is all about priorities I suppose. The current government is suggesting their priorities are to further the well-being of the well-to-do and chip away at what assistance is available for the disadvantaged Australians.