Posted: November 10, 2005

Slow down hits labour market

The Australian Bureau of Statistics (ABS) released the October Labour Force data today and it confirms the trend towards a declining labour market. The official unemployment rate is now 5.2 per cent which means the 'rule of thumb' broader labour underutilisation rate (including hidden unemployment and underemployment) will be once again into double figures (roughly double the official rate). The total number of unemployed increased by 9,000 and now stands just shy of 550,000

This is the second successive month that employment has fallen. All the pundits have been predicting growing employment but total employment fell by 19,800.

Most disturbing is that there has been a marked deterioration in full-time employment which normally signals the start of a prolonged downturn. Full-time employment fell by 60,800 in October, which is the largest month of job's loss since the 1991 recession and the fourth largest in history of recorded data. This was offset somewhat by a rise of 41,000 in part-time employment further suggesting that the Australian economy has become adept at creating numerous low-paid, insecure and casualised jobs in the service sector.

The unemployment rate would have risen further had not the labour force participation rate declined. The economy is under a major cost assault from the petrol prices and the fiscal drag emanating from the budget surplus obsession of the Federal Government is adding to the slowdown. The unemployment is symptomatic of there being too few jobs and the extra spending is required. While the Government is claiming their industrial relations changes which were bulldozed through the lower house today will create tens of thousands of jobs, the reality, apparently borne out by a Treasury Cabinet Briefing that the Treasurer refuses to release says otherwise. The matter is clear - the only way the IR changes will increase employment is if they reduce the desire to save by the private sector. It is hard to see that happening.

The Government should respond to this deterioration and announce that they intend to introduce a Job Guarantee. That is the sure way to reach full employment.

Blog entry posted by bill