The underemployment question

Yesterday’s strong employment numbers from the ABS stoked an interesting debate in the comments about what degree of underemployment Australia suffers. To help the debate along I’ve drawn up the following table from the ABS Underemployed Workers report. It is annual only and from Spetember 2010

It clearly shows two things. First, that labour markets in mining, utilities and finance were tight. Second, labour markets in retail, tourism and administration were not.

To my mind this is also more fodder for the argument I’ve made before that the macroeconomic approach to addressing specific labour shortages has a serious flaw. People either don’t want, or can’t, retrain fast enough. So they remain underemployed. Targeted programs via immigration and subsidised training look like they could do a lot of good.

Another suggestion is that the ABS start doing this damn thing monthly.

David Llewellyn-Smith

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

Latest posts by David Llewellyn-Smith (see all)

Comments

  1. Didnt the Reserve Bank just give the ABS a great kick in the pants a few months back over how they publish their stats far too infrequently? Quarterly and Yearly when other developed nations equivalent bodies are monthly.

    Agree, target programs are too under-utilised. ‘Skills shortages here but over supply there’ examples seem to be getting more common all the time.

    • Yes this is true but pretty sure it is related to funding from the government – and not the fault of the ABS.

  2. Another suggestion is the ABS could do a more frequent breakdown by sectors, which I believe only happens quarterly.

  3. Feh.

    If labour is hard to come by, employers can always hire people and train them. It’s simply be a matter of parting with the cash to do so.

    Importing cheap labour from other countries is nothing more than a government subsidy to businesses already doing well.

  4. I would like to also see Centerlink provide data quarterly, in regards to the amount of people on DSP / Careers Pensions, and any other pension not related to old age pension. I’ll continue to beat my drum that a percentage of these people should be classified as unemployed, and not on any other welfare that hides the true unemployment rate.

    (I have a relation on a DSP, wife on careers P, both are able bodied and can work, but prefer to live off welfare, but both moved from Newstart because they couldnt be bothered in finding work and also filling in paperwork every fortnight. Makes me angry. They are unemployed, plain and simple, but not in the Government and ABS eyes.)

  5. If you include the health service, retail, finance and few others the numbers underemployed is over ten percent of the workforce. Add to the unemployment figure you have over 15% receiving insufficient income to meet rapidly rising daily costs. Hence why banks are now bringing back loose regulations around income and employment. I can almost guarantee that low doc loans and 100% loans will be reconsidered in the very near future. Lending figures have now started to spike, up to end of February was looking very bad, now sudden up tick. However, one think to note mostly refinances or increases for debt consolidation and renovations not too many new purchases. I have taken ten applications in last week only two purchases. So don’t let the spruikers get you excited about the increased finance figures for March or April all is not as it seems.

  6. Not sure I agree with your targeted programs via subsidised training. Its a dangerous business for government to get into picking winners. Powerful industries such as mining need to do more to attract workers and invest in training, rather than waiting until a crisis develops for government to pick up the tab.

    Regardless, the whole argument around targeted programs via subsidised training is more relevant to occupations in high demand lists published by Skills Australia rather than a specific ABS table.

    • Mining companies employ a range of skilled administrative/engineering staff and experienced mineworkers. The real shortages occur in booms when expansions, major upgrades and construction of new plant and facilities are undertaken. The mining companies contract these works to engineering construction companies which have their own staff, they in-turn contract specific stages to other companies down the supply chain; and so on and so on – until you get to the basic labour hire companies which provide extra manpower.

      Mining is cyclical. Difficult to train a workforce solely for boom-times. When the boom is over you have a lot of geo’s, engineers, construction managers and skilled tradesmen with nowhere to go – another problem which is even more difficult to deal with.

      The real issue – Australia is and always has been heavily reliant on its natural resource base which is as said cyclical in nature whilst gradually eroding its once solid manufacturing sector.

      We are entirely subject to the global winds of change.

    • We have seen quite a few mine related positions advertised locally recently. I find it surprising that they implicitly stated that previous mining experience is essential; given that mines are supposedly expanding, surely all experienced personnel are employed. Machine operators (plant & truck drivers) in particular cannot need a great deal of training or qualifications. Say a month on the job training and a weeks study, a week maybe of site induction/safety training?
      Could a mining person please answer this. Surely the multi billion dollar miners could afford to train a few redundant construction workers or tourist coach drivers.

  7. There seems to be a connection between skills shortages within professions that incurr huge Hec’s debts to study within that profession.
    Maybe an ‘education and training tax’ on superprofits to tertiary educate young Australians for business that don’t offer cadetships.

  8. australias jobs have been shifting over seas for years, its going to be a green utopian society here sun tanning and government will look after everybody dont sweat it, just have faith.

  9. Just a note on the resource led mining boom wrt the long term sustainability of the jobs created…the majority of the new jobs created are construction related…designing and building the infrastructure needed to meet export demand. Once you have the infrastructure in place….then the size of the workforce actually required to run the expanded production is much smaller (10-20%). Also, due to the costs of maintaining mine, rail and port workforces in remote locations, both BHPBIO and RioT are currently looking to automate as much as possible of the process of digging, transporting and shipping ore. E.g. remotely operated ore trains and trucks. If that is successful then we can expect even fewer people will be needed to run the export chain.
    For the big LNG trains under construction, the workforce numbers in the 1000s to build them, but only in the hundreds to run them.
    As a specialist employee of a engineering consultancy I now head a group of 60 specialists…it was just 5 people 4 years ago…an unprecedented boom in our specialist area. BUT we are entirely focussed on environmental approvals, baseline and monitoring studies during construction. Once all infrastructure has been approved and constructed then the great majority of our specialist people will no longer be needed here in WA. We can already see that things here in the West will start to taper off from 2013 onwards and the construction boom will end around 2015. At that point we have to find work interstate or overseas to maintain the current workforce…..or downsize back to about 5-10 people(the most likely scenario).

  10. Russel

    Interesting point. The other issue is how many of the extra 55 people that have been employed for the next 4 years have committed themselves to huge mortgage repayments for at least the next 10-20 years. Will they find work again at the same rate of pay, let alone work at all.

    • Probably 60-70% of them have mortgages, and there are some that also have investment properties…which makes some sense from a negative gearing perspective while they are earning 6 figure salaries….but of course also assumes there will be significant capital gains from holding those properties. I often counsel against running up debt, but they think I am an old fool….as everyone knows the boom will never end…and house prices always double every 7 years.

  11. Interesting comments Russell. It reminds me of studying the accelerator in my Economics course many years ago. I haven’t seen it mentioned for several decades. Basically it demonstrated that an increase in capital construction to meet higher demand would lead to a disproportionate rise in spending but if the rate of expansion was not maintained then a contraction would occur. Based on this I have wondered for some time whether/when the mining states might go from boom to bust, even if the demand for minerals remains high but does not grow.