Finance Finance News Unemployment update: More than 220,000 Australians lost jobs in May
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Unemployment update: More than 220,000 Australians lost jobs in May

May's unemployment numbers made for grizzly reading.
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Prime Minister Scott Morrison has described new unemployment figures as heartbreaking and warns there is a long way to go as the country recovers from the coronavirus pandemic.

The official unemployment rate jumped from 6.4 per cent in April to 7.1 per cent in May – and economists say the actual rate is much higher.

As large parts of the economy struggled under the weight of government restrictions, 227,700 Australians lost their jobs between mid-April and mid-May, according to the Australian Bureau of Statistics.

That marks the second-biggest monthly drop in employment since the ABS began keeping records in 1978 – with the 594,300 jobs lost in April far surpassing the previous record.

Mr Morrison said the economy has recovered slightly since then, but warned that international border closures would slow the recovery.

“It is good to see more and more businesses opening up now, the restrictions are coming off and I think people do get a sense we are on our way back,” Mr Morrison told 2GB radio on Thursday.

He said there was “a bit of a glass ceiling on the economy” when it came to restrictions around overseas travel, which will be delayed until next year.

“I can’t honestly see international travel more generally, people coming from all over the world to Australia again, any time soon.”

The ABS figures released on Thursday show full-time employment decreased by 89,100 over the month and part-time employment dropped by 138,600.

Meanwhile, official unemployment increased by 85,700 to 927,600 people – a monthly rise of 0.7 percentage points.

That figure fails to capture the full extent of joblessness, however, as the ABS counts jobless Australians as unemployed only if they are actively looking for work, and unemployed Australians are currently not required by the government to search for work to receive unemployment benefits.

Many Australians have also given up looking for work and temporarily left the labour force, as so few businesses are hiring.

“This was reflected in a further fall in the participation rate, down 0.7 percentage points to 62.9 per cent,” the ABS said.

“The last time the participation rate was below 63 per cent was in January 2001.”

The ABS said that roughly 2.3 million people – or one in five employed Australians – either lost jobs between April and May or “had less hours than usual for economic reasons in May”.

Underutilisation, which combines unemployment and underemployment, rose to a new record high of 20.2 per cent.

The figures bring the total drop in employment since March to 835,000 people, and come after jobs site Seek revealed on Thursday that the number of job ads across the country in May was down 52.5 per cent year on year.

Words don’t do justice

Indeed Asia-Pacific economist Callam Pickering said words could scarcely do justice to the economic destruction wrought by COVID-19.

He said the official unemployment rate of 7.1 per cent is misleading, as hundreds of thousands of Australians have given up looking for work.

“While employment has fallen by 835,000 since March, unemployment has only increased by 211,000 people,” Mr Pickering said.

“If we treat everyone who lost their job as becoming unemployed the unemployment rate jumps to 11.3 per cent. That gives a better indication of the damage caused by COVID-19.

“In just two months, the unemployment rate rose from 5.2 per cent to 11.3 per cent.”

EY Oceania chief economist Jo Masters said while the hospitality industry is putting on more staff as restrictions ease, other sectors are laying off workers as their pipeline of work runs dry.

“Overall, the unemployment rate is still likely to rise from here, but remain in single digits,” Ms Masters said.

“That said, recessions are felt by households through jobs, and the number of Australians unemployed or not actively seeking employment is incredibly high and will have economic consequences.”