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Australian underemployment is the highest in modern times

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The desire for more hours has risen as full-time work wanes. Photo: AAP
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Underemployment is at its highest level since records began in the 1970s, but you won’t have heard it on the TV.

Thursday’s headlines were instead dominated by news that Australia’s official unemployment rate had fallen from 5.7 per cent in April to a four-year low of 5.5 per cent in May, based on the popular ‘seasonally adjusted’ measure.

Economists and politicians seized on this unexpected surge in full-time employment as a sign that the labour market and the broader economy were improving.

“Fifty-thousand Australians went out to get a job in May and they got one under the economic policies of the Turnbull government,” Treasurer Scott Morrison told Parliament.

“The unemployment rate now has fallen to 5.5 per cent, lower than what we inherited from the Labor Party back in 2013.”

Mr Morrison was using the seasonally adjusted measure, the usual number quoted by politicians and journalists.

However, the measure preferred by the Australian Bureau of Statistics – trend – had the unemployment rate unchanged at 5.7 per cent.

Worse still, the ABS itself drew special attention to the fact that the share of workers wanting more hours was at the highest level since modern records began in 1978. This was widely ignored.

underemployment chart abs

The trend estimate of underemployment worsened from 8.7 per cent in December-February to 8.8 per cent in March-May, which means 1.1 million Australian workers are crying out for more hours.

ABS chief economist Bruce Hockman said this figure was an important reminder of “spare capacity” in the labour market.

“The underemployment rate is an important indicator of the spare capacity of workers in Australia, and has risen for the sixth consecutive quarter to a historical high of 8.8 per cent,” Mr Hockman said.

The ABS prefers trend estimates because it says they are less volatile than seasonally adjusted numbers.

Thursday’s record-high underemployment was a symptom of growing casualisation, which many believe has deleterious effects on wages, job security and conditions.

The ABS defines a person as underemployed if they are part-time and want more hours, or if they are usually employed full-time but were forced for economic reasons to work part-time the week they were surveyed by the bureau.

Even during the 1990s recession the underemployment rate never exceeded 7 per cent.

And despite the headlines welcoming the creation of “50,000” new full-time jobs, the long-term trend of destruction of full-time positions saw no abatement in the latest quarterly data.

full time jobs vanishing

Since the late 1970s, the share of men with full-time jobs has fallen from 95 per cent to 80 per cent. Women have suffered too, with their share of full-time jobs falling by roughly the same amount, from 66 to 53 per cent.

Labor’s employment spokesman Brendan O’Connor told reporters he welcomed the improvement in the (seasonally adjusted) jobless rate, but he also voiced concerns about rising underemployment.

“What we do know is that too often we see people struggling to get work. We have one of the highest numbers of underemployment in this country – 1.1 million Australians are desperately looking for more work and cannot find it,” Mr O’Connor said.

“We have increasingly precarious employment. We have more people employed without sufficient hours. There’s been a very significant decline over time of the average per capita hours for Australians. That’s why you’re seeing the high underemployment number generally, over 1.1 million.

“We’ve [also] got a wage recession in this country. We have the lowest wage growth in more than 20 years and that is a real problem. That’s why people are struggling. That’s why there’s household debt increasing. People are struggling to make ends meet because wages are falling in real terms.”

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