![\"may_2009_ur_3_recessions_index\"](\"https:\/\/billmitchell.org\/blog\/wp-content\/uploads\/2009\/06\/may_2009_ur_3_recessions_index.jpg\" "\\"may_2009_ur_3_recessions_index\\"")
<\/a><\/p>\nWhile the unemployment rate has risen as has the broad labour underutilisation rate it is worth noting that total employment fell in net terms by only 1200 or 0.1 per cent. The ABS Labour Force publication says that “Full-time employment decreased by 26,200 to 7,643,100 and part-time employment increased by 24,500 to 3,150,000.” So this is not a major contraction of jobs but certainly when the underemployment estimates are taken into account it does represent a major contraction of hours of work on offer.<\/p>\n
The following table shows that since the unemployment rate started to rise from February 2008, total employment has actually risen by 0.5 per cent (57.6 thousand) with part-time employment growing by 3.7 per cent (111.2 thousand) and full-time employment falling by 0.7 per cent (53.7 thousand).<\/p>\n
In net terms, 77.5 thousand male full-time jobs have disappeared while female full-time employment has risen. Very strange!<\/p>\n
Further, both males (38 thousand) and females (73.3 thousand) have accounted for the rise in part-time employment.<\/p>\n
In net terms, total male employment has dropped 39.5 thousand jobs while females have gained 97.1 thousand jobs. This is quite a different pattern to the one that we saw in 1991.<\/p>\n
So the economy is shedding full-time workers and replacing the hours with casual and part-time jobs. Most of these job losses will be coming from Manufacturing which is faring very badly at present whereas most of the job gains will be in the retail areas that are benefiting from the fiscal stimulus packages.<\/p>\n Of note, the ABS has published its broader underutilisation estimates – including underemployment – in this month’s data making a break in its previous practice of providing annual estimates.<\/p>\n The Labour Force publication defines labour underutilisation as:<\/p>\n \n… the extent to which available labour is underutilised – either through unemployment or underemployment. The extent to which available labour is underutilised is of interest from a number of perspectives. From an economic perspective, there is interest in the amount of spare capacity in the labour supply and its potential to contribute to the production of goods and services – there is a strong correlation between movements in unemployment and underemployment over the economic cycle. From a social viewpoint, there is concern that people whose aspirations for work are not being met may suffer financially, personally and\/or socially.\n<\/p><\/blockquote>\n In other words, we should be worried about it!<\/p>\n Since the start of the deterioration (February 2008), male underemployment has risen from 269.2 thousand to 399.2 thousand, which in rate terms is a rise from 4.4 per cent to 6.4 per cent (May quarter). Female underemployment has followed a similar path rising from 391.9 thousand (7.7 per cent) to 471.6 thousand (9.1 per cent).<\/p>\n In total there are now 870.8 thousand workers (7.6 per cent of labour force) who report not having enough work.<\/p>\n When underemployment (870.8 thousand) is combined with official unemployment (651 thousand) we get over 1.5 million workers with not enough work or a staggering 13.5 per cent of the available labour. This underestimates the total labour slack because it does not include those who have left the labour force or not entered it because they didn’t see any opportunities.<\/p>\n The data means that labour market is adjusting hours of work on offer more than it is laying off workers at present. This is the typical pattern early in a downturn but the magnitudes involved this time are significant. Over the current cycle and extra 220 thousand employed workers are being forced by lack of economic activity to endure less hours of work that they desire. <\/p>\n The underemployment is also unevenly dispersed across the spatial landscape with the larger states bearing the brunt – NSW (14.2 per cent), Victoria (14.4 per cent), Queensland (12.8 per cent), South Australia (13.6 per cent), Western Australia (11.8 per cent), Tasmania (12.6 per cent), Northern Territory (6.6 per cent) and ACT (8.6 per cent).<\/p>\n This graph is taken from the ABS Labour Force publication (page 4) and shows the evolution of broad labour underutilisation since May 2001. You can see how sharply the sum of unemployment and underemployment has risen in the last 12 months.<\/p>\n How does this spike in total labour underutilisation compare with previous recessions? The following graph replicates the first unemployment rate index graph but instead uses the CLMI<\/a> estimates for broad labour underutilisation (except that we have used today’s ABS estimates for 2009 because the CLMI estimates for the current quarter requires data that will not be released until next week). So once again the time series are indexed to 100 at the lowest unemployment rate for the respective quarter.<\/p>\n The green line is the ABS quarterly labour underutilisation series which shows that the rate of overall deterioration in the labour market is somewhere between the 1982 and 1991 recession. Meaning we are not out of the woods yet!<\/p>\n<\/a><\/p>\n<\/a><\/p>\n