The Australian Bureau of Statistics released their latest – Persons Not in the Labour Force, Australia – release for September 2012 last week (March 7, 2013). This is an annual publication and provides a detailed breakdown of the demographics of those not in the labour force and the reasons for that status. In particular interest to me is the information the data provides on discouraged and marginal workers. The data allows us to reconstruct the labour force data, under certain assumptions, to generate a very broad indicator of labour underutilisation in Australia, which includes official unemployment, underemployment, and hidden unemployment. What this indicator reveals is that Australia is enduring massive wastage of labour and statements by the Federal Treasurer and other Ministers that we are close to full employment should be treated with the contempt they deserve. That is the subject of this blog.

Today’s release by the Australian Bureau of Statistics (ABS) of the Labour Force data for January 2013 reveals that the Australian labour market continues to slide. While total employment rose modestly (very), full-time employment fell for the third consecutive month and working hours also fell. The small rise in unemployment would have been much worse had not the participation rate fell again. The unemployment rate remained unchanged at 5.4 per cent but would have been at least 0.1 per cent higher had the participation rate not fallen. So both unemployment and hidden unemployment rose. The rate of employment growth is not sufficient to even keep pace with the underlying population growth. The data is not consistent with any notions that the Australian labour market is booming or close to full employment. The most continuing feature that should warrant immediate policy concern is the appalling state of the youth labour market. My assessment of today’s results – a failing economy with further weakness to come. The Government realised late in 2012 that its obsessive pursuit of a budget surplus was going to fail. It should now go one step further towards becoming economically responsible and reverse the direction of fiscal policy by introducing some significant direct job creation. The budget deficit is too low in Australia by perhaps 2-3 per cent of GDP.

A few weeks ago the Federal government admitted that its obsessive pursuit of a budget surplus in the coming year at a time when private spending is still relatively weak was doomed. The slowing Australian economy had undermined its tax base as was always going to happen. The problem is that in trying to impose fiscal austerity the economy has suffered and the labour market is not producing enough jobs to even match the underlying population growth. Today’s release by the Australian Bureau of Statistics (ABS) of the Labour Force data for December 2012 reveals that all the evils on the demand and supply side of the labour were aligned – total employment fell, full-time employment fell, unemployment rose, participation eased and working hours fell. It is certain that underemployment rose given the drop in working hours. In other words, the data is unambiguously bad. The unemployment rate rose to 5.4 per cent. The data is not consistent with any notions that the Australian labour market is booming or close to full employment. The most continuing feature that should warrant immediate policy concern is the appalling state of the youth labour market. My assessment of today’s results – a failing economy with further weakness to come. The Government should wake up to itself and even if only motivated by the federal election later this year it should reverse the direction of fiscal policy and introduce some direct job creation by way of employment-targetted stimulus.

Yesterday, the third-quarter National Accounts data revealed that real GDP growth is trailing behind the underlying population growth which means that per capita incomes have been falling. Today’s release by the Australian Bureau of Statistics (ABS) of the Labour Force data for November 2012 reveals that employment growth is also failing to keep pace with the underlying population growth and the only reason unemployment is not skyrocketing is that more workers are dropping out of the labour force as a result of the lack of job opportunities being created. The data is unambiguously bad. The unemployment rate fell to 5.2 per cent but only because the participation rate fell. The fact that workers are giving up looking for jobs is a portent of a very sluggish labour market. So unemployment fell but hidden unemployment rose. The trend performance of the labour market is flat and these monthly shifts are merely fluctuating around that flat trend. The data is not consistent with any notions that the Australian labour market is booming or close to full employment. The most continuing feature that should warrant immediate policy concern is the appalling state of the youth labour market. My assessment of today’s results – worrying with further weakness to come. The government has in the past few weeks insisted it will pursue its budget surplus obsession and announced further cuts in discretionary net spending. Not only will that act of fiscal vandalism fail but in doing so it will further undermine a very weak labour market.

The headlines this morning in Australia (economic policy wise) focused on the Government’s Sunday meeting where government departments in Canberra were instructed to find more spending cuts before Xmas as part of a renewed slash and burn of the Australian economy so that the Government can keep forecasting a budget surplus for the coming financial year. A few hours later, several major data releases from the Australian Bureau of Statistics came out, which showed that the Australian economy is slowing – fairly significantly. The latter clearly demonstrates the folly of the former. But try telling that to a government that preaches to us about its economic credentials yet designs and implements its major economic policy initiatives based, purely on what it perceives to be in its political best interest. It is wrong about the former and, as events turn out, will also not achieve the political capital it is aiming for. The spending cuts are causing the economy to slow, which is defeating its quest for surplus. As a result it will be damaged for “failing to keep its promise” even though that promise was the height of vandalism. That tells you how unsophisticated the policy debate and knowledge about economic matters is in this country. it is also clear that the Australian economy is a long way from full employment. So today I examine one of the arguments that the conservatives use to refute my last conclusion. I consider the argument that the increased involvement of females in the labour force over the last 30 years has pushed up the unemployment rate that we consider to be consistent with full employment to around five per cent. That claim is not tenable.

Today’s release by the Australian Bureau of Statistics (ABS) of the Labour Force data for October 2012 reveals a labour market that remains weak, with employment growth failing to match the underlying population growth. The unemployment rate remains steady at 5.4 per cent because the labour force barely grew as a result of a continuing decline in the participation rate over the last 12 months. The fact that workers are giving up looking for jobs is a portent of a very sluggish labour market. So unemployment fell but hidden unemployment rose. The trend performance of the labour market is flat and these monthly shifts are merely fluctuating around that flat trend. The data is not consistent with any notions that the Australian labour market is booming or close to full employment. The most continuing feature that should warrant immediate policy concern is the appalling state of the youth labour market. My assessment of today’s results – worrying with further weakness to come. The government has in the past few weeks insisted it will pursue its budget surplus obsession and announced further cuts in discretionary net spending. Not only will that act of fiscal vandalism fail but in doing so it will further undermine a very weak labour market.

Today’s release by the Australian Bureau of Statistics (ABS) of the Labour Force data for September 2012 reveals a labour market that is weak and failing to produce jobs to match the pavce of the underlying population growth. Many commentators are suggesting today’s figures are not that bad – but that just shows how far we have lowered our expectations of what good is. It is unambiguously bad when an economy that is meant to be in the throes of the once-in-a-hundred-years mining boom cannot even generate employment growth to match the population growth. It is true that participation rose this month which added to the rise in unemployment. But the trend performance of the labour market is flat and these monthly shifts are fluctuating around that flat trend. The data is not consistent with any notions that the Australian labour market is booming or close to full employment. The most continuing feature that should warrant immediate policy concern is the appalling state of the youth labour market. My assessment of today’s results – worrying with further weakness to come. The government has no case to make for its pursuit of a budget surplus in the next fiscal year.

Today’s release by the Australian Bureau of Statistics (ABS) of the Labour Force data for August 2012 reveals a deteriorating labour market with all the indicators of merit in decline. Total employment fell, labour force participation fell and hours worked fell. Unemployment fell but only because the decline in the labour force outstripped the decline in employment – which means that the decline in unemployment was due to an increase in hidden unemployment. A decline in unemployment driven by a rise in hidden unemployment is not virtuous. Certainly this data is not consistent with any notions that the Australian labour market is booming or close to full employment. The most continuing feature that should warrant immediate policy concern is the appalling state of the youth labour market. My assessment of today’s results – worrying with further weakness to come. The government has no case to make for its pursuit of a budget surplus in the next fiscal year.

Today’s release by the Australian Bureau of Statistics (ABS) of the Labour Force data for July 2012 reveals a fairly flat labour market with modest gains in employment and hours worked which were sufficient to outstrip the underlying labour force growth and so unemployment fell by 2,500. That decline in unemployment was aided by a declining participation rate. In other words, some of the decline in unemployment was due to a modest increase in hidden unemployment. Certainly this data is not consistent with any notions that the Australian labour market is booming or close to full employment. The most continuing feature that should warrant immediate policy concern is the appalling state of the youth labour market. My assessment of today’s results – positive outcome but very weak (mostly flat) trend. The economy is just creeping along when it comes to creating jobs.

Last month my Labour Force commentary was entitled – Australian labour market – good signs but wait for the reversal. It didn’t take very long for the reversal to come, although I caution anyone drawing trends from month-to-month variations in this sort of data. Today’s release by the Australian Bureau of Statistics (ABS) of the Labour Force data for June 2012 reveals a weakening labour market with all the negative signs concurring – falling full-time employment, falling participation, falling hours worked and rising unemployment. If the labour force had not have contracted due to the falling participation rate, the unemployment rate would have been closer to 5.5 per cent rather than 5.2 as officially recorded. Certainly this data is not consistent with any notions that the Australian labour market is booming or close to full employment. The most continuing feature that should warrant immediate policy concern is the appalling state of the youth labour market. My assessment of today’s results – weak and weakening.