Long-term unemployment soaring

By Leith van Onselen

Fairfax’s Ben Schneiders has penned two good pieces today (here and here) on the growing scourge of long-term unemployment, which has risen some 150% since the GFC hit in 2008:

An analysis of Bureau of Statistics data by Fairfax Media shows that the number of people out of work for more than a year rose to 175,200 people in January, an increase of more than 150 per cent since mid 2008.

…both the young – without skills and experience – and the old, in particular those in declining industries, were being hit by long-term joblessness.

The Bureau of Statistics data shows that the level of long-term unemployment has risen much faster than overall unemployment and nearly one in four people unemployed have been out of work for at least a year…

With more than 780,000 people officially unemployed and many more under-employed, there is simply not enough work for full employment to be even close to being achieved. And yet popularly, any discussion of joblessness still focuses on the idea that the unemployed are “dole bludgers” or “lazy”.

Schneiders’ analysis follows data released earlier this month by the Department of Social Services, which showed that the number of Australians on long-term unemployment benefits – “Newstart” – had increased to the highest level on record in December 2014, with 527,318 Australians on Newstart for more than a year, up 12.7% from a year ago.

Without wanting to sound like a broken record, this data does once again highlight the egregiousness of the Abbott Government’s labour market and welfare policies.

Included among these are its draconian work-for-the-dole measures, which have been proven to be ineffective, along with its plan to make it more difficult for under-30s to receive unemployment benefits, despite youth unemployment tracking at 14% – the highest level since 1998.

Neither measures do anything to increase the long-term availability of jobs, which is the primary problem. That is, unemployment is high because the economy is weak, not because workers are “lazy”.

Further, the Abbott Government is compounding the problem with its open slather approach to foreign working visas. These add to labour supply at a time when labour demand is soft and there is already a large pool of under/unemployed. They also discourage employers from taking on and training local workers, thereby depriving the unemployed of job opportunities.

Unfortunately, long-term unemployment is only likely to get worse as the mining investment boom unwinds and local car assembly shutters. The latter, in particular, will require large scale ‘reskilling’ of the workforce, which is highly unlikely to occur under current policy settings, which discourages on-the-job training in favour of a quick foreign worker fix.

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  1. Yep… Major issues that neither party seems to voice politically. This is a real failure of our political system…

  2. Clearly the system cannot generate enough bullshit jobs to offset loss of the existing manufacturing jobs, population growth and increase in retirement age

    it will take a revolution before politicians figure out that average working hours have to be cut to provide employment for everyone within the existing economic and social model. so system may collapse before they start acting

    youth unemployment is one of the main drivers of social revolutions

    • There is never a shortage of stuff that can be done, of exertion that can bring product to market.

      There is also never a shortage of latent demand, there is only a shortage of real aggregate demand, which is symptomatic of an imbalance between wage share and profit share

      • You make it sound so simple Rusty Penny. Almost as if you have a far greater understanding of macroeconomics than such brilliant minds as Joe Hockey and Wayne Swan.

      • The late-eighties Hawke-Keating budget cemented that though Keating, to his credit, later openly recognised the effect and said he won’t do it again. Too late. The die was cast and then re-made in subsequent leaders’ images.

      • large portion of money people spend at the moment is because they are working long hours so they have no time do it by themself (child care, dry cleaning, house work and maintenance, REA services, gym, all kinds of other pointless services …) imagine how much bullshit stuff they would be able to buy with money saved on these

        simple example: an average Australian trades home on average 4 times in a lifetime, that’s more than an annual wage. People in rest of the world got this long time ago so they either sell on their own or pay agents only $2k-$3k for the job

      • Spot on doctor X. We (regrettably) had to sell our home a while back due to change of circumstances. The agent we employed ‘earnt’ circa 12k for what I’d estimate was about 2 hours of work, at most.

        A lot worse than that is going on everyday all over the country.

  3. “That is, unemployment is high because the economy is weak, not because workers are “lazy”.”

    Hey, don’t be throwing facts at us! Bloody bleeding hearts!

    These people are all bludgers (every single of one them) and no facts, lack of jobs, real life experiences or broken economy will justify them not having work!

    • Damn right! And I deserve a pension despite my assets because I’ve worked hard and paid tax all my life unlike these layabout whipper snappers

    • Well I suppose if you grew up in a world of full employment and then gradually witnessed ever increasing unemployment you would conclude that the next generation is simply lazy.

  4. Looks like the Govt is taking the big stick to wages in Victoria, with a 33% reduction planned.
    The sooner we have 60% plus reduction in wages across the board, across the Nation, the sooner we can look to a sustainable economy.
    We cant even compete with wages in the USA here, let alone Asia. RIO planning on laying off heaps of workers in WA. WW

    • Slashing nominal wages is going after a symptom not the cause(s), and brutish in the eyes of the public.

      The AUD exchange rate is slashing wages (in a global context). It’s dropped from 1.10 to under 0.80 USD in a short period of time and could easily fall another third in the current cycle. You’ve already got half of your wish. Nice to have exposure to other currencies so your savings don’t erode (hello gold, hello USD)!

      The focus needs to be on quality and high value, high tech work. Unfortunately the imbeciles in Canberra think cutting budgets equals improving productivity.

      • Ah MM do you have any suggestions where we may look to start on quality and high value, high tech work.

        Nominal basic wage in Aussie 70K, same wage in the USA 28K

        Maybe Submarines, (not) WW

      • WW – how about biomed, pharmaceuticals, nanotechnology, ag science, high tech manufacturing (not crappy cars – but there is heeaps of things we can get involved in), software (and cryptology)… typically Australia are followers not leaders.

      • MM. all good opportunities but very high failure rate and nominally a 10 year period to pay off before we see benefits . We need something up and running by April. WW

      • Given the rash of mining jobs cut announced today and recently, there will be a handy drop in nominal wages showing up in the data one or two quarters from now, and further drops in the Aussie dollar to come.

      • WW – Rome wasn’t built in a day. If everyone is looking for a quick buck then most will end up in the poorhouse.

        How long do you think it will take to roll back the waste and debt in the last decade?

  5. Maybe if we stopped importing people through migration at breakneck speeds. My wife knows lots of recent arrivals with degrees and experience up the wazoo but can’t find jobs for the life of them.

    Unfortunately their thinking is they need to do more study and get more degrees to get a job, so we end up with people with multiple degrees and masters, just trying to get basically a data entry job.

    Years ago this was never an issue, now we are fostering the belief that you can’t get a basic job unless you do a PhD.

    • No, bankers and liberal voters ate fostering the attitude you can’t be a good worker and citizen unless you have a level of crippling debt that ensures you don’t question your betters

      • That is the conditioning at work. Its because your not educated enough. No its not. Its because your not young, attractive and dumb enough to passively accept ever increasingly shittier jobs.

        George Carlin on the American Dream:

        Education is primarily sold as a consumer commodity not as a tool to enable critical thinking. Still the education wormhole is a perfectly socially acceptable form of unemployment, although it does not attract quite the same level of admiration as property speculators do.

      • It’s not just that cee. People are also forced to work crippling hours (think 7am to 11pm) to get ahead or stay in the job. Massive strain on families. Where i come from in Eastern Europe they would laugh at the daycare culture we have here. There children are raised by everyone in the family and looked after by grandad and grandma and close cousins when mum and dad can’t be there. The result is the happiest children in the world according to a recent survey. I visit regularly and honestly it’s hard to argue this result from what i see. Kids in oz are getting sad and depressed by the time they are 10 yrs old.

    • And what is worse is that the high cost of home ownership means that there is no money to invest in entrepreneurial endeavour. Who can afford to build a business when they are leveraged to 13x household income just to buy a home.

      Our tax structures and Govt policies are geared to investment in property rather than productive endeavour.

      Therein lies our demise.

      • Some work colleagues of mine, only been living here 5 years or so, all know what they are entitled to in terms of taxation benefits and property investment. They are busy building property empires.

    • I know a German couple who are here on 457 visa’s and he is employed as a tunnel engineer on the WestConnex project.

      They rent but are looking to buy – I told them they were ficken Muttern.

      • Ask them about what renting is like in Germany. Once you know how much worse renting is here it will become obvious why even horribly overpriced housing is tempting compared to that. Sure it’s a poor investment but sometimes we buy a house to live in.

    • True that!

      I started frequenting an online expat-forum. There are truck-loads of ppl just applying for skills-based migration program (mostly IT).

      When I tried posting there saying “be careful, you are moving countries leaving your cushy jobs hoping to strike rich/whatever. Things always appear greener on the other side”. The reply from most of them was “..please don’t post negative stuff, why do you want to de-motivate us…” . For me, it was like de-ja-vu i.e. trying to convince a friend at a BBQ from not leveraging to his 3rd property with a household income of 80K!

      In some aspects, these truck loads are good, this will put downward pressure on IT wages. Which is a good thing, especially for ppl like me with skills that are appreciated/in-demand around the world, it will make my move out of Australia little more easier! 🙂

      Sorry for having vested interest, cannot afford otherwise!

  6. wasabinatorMEMBER

    I don’t know what these people are complaining about. The way to gain employment in Australia is a simple 3 step process:

    1. Move to Bengaluru.
    2. Join Infosys.
    3. Obtain 457 visa and land a job at any of the Big 4 banks!


    • Thats a good ploy!

      You will not believe the number of American/European/Australian/Singapore expats living it up in Mumbai, Bengaluru and Delhi. It was an eye-opener during my recent trip

      India is slowly transforming into a research hub! Most ppl with enough knowledge + talent + skill is looking to move there. I am told, I might get my current AUD equivalent salary in Indian Rupees, that would mean, 95% saving compared to 60% (now)

      Ah, yes, most of the low-wage SW maintenance/production-line workers are moving here because thats what Australia is becoming. There is nothing else here!

  7. http://www.watoday.com.au/national/the-quiet-shame-of-the-longterm-unemployed-20150226-13psnl.html

    Of all the headwinds facing us at the moment this is the one that keeps me awake at night. I really feel for the guys in this article. No doubt replaced by 457’s from bangalore.

    then there is


    I cant believe their isn’t a single utterance from anyone opposed to the current government on this 457 issue. I beggars belief.

    • wasabinatorMEMBER

      Probably because so few people left were actually born in Aus now. Weren’t they saying that the percentage of foreign born people living here has now eclipsed the gold rush era? I suspect that has something to do it, as those on 457s won’t be complaining that there are too many people here on 457’s, right? 🙂

      • When the first wave immigrants are supplanted by second and subsequent wave immigrants who cost less they’ll complain, and twice as loudly as the locals.

    • The deflection of public rage about immigration onto asylum seekers is probably Howard’s greatest achievement.