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Why Australia’s Unemployment Rate Doesn’t Tell the Full Story

The official Australian unemployment rate rose from 5.2 to 6.2 per cent last month. But jobs have been hit much harder than this number suggests.

Australian jobs have been heavily impacted by the Covid-19 pandemic. With many businesses going bust or being forced to close because of social distancing restrictions, the Australian Bureau of Statistics (ABS) reported that the national unemployment rate rose from 5.2 to 6.2 per cent from March to April.

Officially, total employment fell by 594,300 to 12,418,700 people last month (the largest drop on record). That’s 4.6 per cent. But unemployment rose by just 104,500 people (to 823,300).

If employment fell by 4.6 per cent, why did unemployment only rise by 1 per cent? Because the unemployment rate doesn’t account for people who leave the labour force altogether. Leaving the labour force means you’ve stopped working and are unable to find or look for a job. For example, if you worked in a tattoo studio and lost your job because the business was forced to close, you wouldn’t be able to search for work because tattoo studios aren’t allowed to open under the current level of restricitons.

This means that about 490,000 people, who lost their jobs and haven’t been able to look for work because coronavirus restrictions have rendered their jobs non-existent, weren’t included in official unemployment numbers.

So really, Australia’s unemployment rate is sitting at just under 10 per cent.

Something this number doesn’t take into account is the rate of underemployment around the country.

The underemployment rate is the number of people who have a job but want to work more hours. This jumped to a record high of 13.7 per cent, up from 8.8 per cent. Most of this increase was made up of workers involved in the Jobkeeper scheme who are working decreased hours (or none at all), but still remain employed.

The ABS also reported that working hours fell by 163.9 million hours last month. The largest decline prior to this was 36 million hours in 2007 in the lead up to the global financial crisis in 2008.

Unemployment may have only officially grown by 1 per cent, but when you take into account workers who have dropped out of the labour force and employees that are working reduced or no hours at all, roughly 20 per cent of Australia’s work force has been heavily impacted by the coronavirus pandemic.

As restrictions begin to lift slowly around the country, employees, particularly in the hospitality and sector, will hope to increase their hours as venues are able to offer dine-in service again, albeit with strict social distancing and hygiene procedures in place.

Because of the unpredictable nature of the coronavirus pandemic, it remains to be seen whether easing of restrictions will lead to employment rates rising, but economists are predicting that unemployment rates will continue to rise, at least for the foreseeable future.

Photography: Jake Roden

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