Today I have analysing the ABS Gross Flows data which reveals the underlying dynamics in the labour market that combine to give us the unemployment rate and other labour market aggregates. The current downturn is revealing itself to be quite different (so far) to the 1991 recession. While the chances of an unemployed person finding a job have fallen in a similar way to 1991, the chances of an employed person losing their job has not deteriorated markedly in the current recession, in contradistinction to what happened in 1991. The difference is in the hours data that we analysed yesterday. In 1991, the labour market contracted largely via unemployment whereas this time around it is contracting via underemployment. The flows data also reveals fundamental differences between Australian and the US in the sense that the American labour market is contracting more traditionally at present compared to our “underemployment” recession.