Australia’s rat wheel jobs market spins furiously

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By Leith van Onselen

Fairfax’s Matt Wade is the latest to question the Turnbull Government’s boast of record jobs growth, claiming it amounts to little when the population is also increasing so fast:

As Malcolm Turnbull keeps reminding us employment has increased by more than 400,000 in the past year “the largest number on record”.

That’s very good news but it hasn’t made much difference to the unemployment rate. The latest figures put the rate at 5.6 per cent, exactly what it was six months ago.

So what’s going on? The Reserve Bank puts it this way: employment growth has been “strong enough to absorb growth in the working-age population, although not high enough to reduce the unemployment rate further”…

When you have a growing population like ours you need be hitting record levels all the time just to keep up – that goes for jobs as well as spending on things like infrastructure and social services.

The actual number of Australians out of work hasn’t shifted all that much. Over the past year the total number unemployed has edged down from about 739,000 to 730,000 (in trend terms).

It is strange how little attention is given to that figure…it seems modern Australia is quite comfortable about having more than 700,000 people without a job…

These days, politicians don’t talk much about unemployment… The United States (4.1 per cent) Britain (4.3), New Zealand (4.5) and Germany (3.6) all have unemployment rates well below ours…

The latest trend figures showed 94,000 Australians have been out of work for two years or more, the highest in 18 years.

Also, there has been a sustained rise in the share of jobless Australians who are experiencing long-term unemployment – those who are out of work for 12 months or more.

Excellent analysis. Yes, employment growth of 400,000 over the past year is incredibly strong:

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But this jobs growth has been matched almost perfectly by a commensurate increase in Australia’s population, which is projected to continue indefinitely:

Accordingly, Australia’s unemployment rate is higher than the OECD average:

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Australia’s labour underutilisation rate (unemployment plus underemployment) remains elevated:

As has the number of unemployed persons:

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Whereas real wages growth has been falling:

Therefore, while jobs growth has been superficially strong, it is not translating into higher living standards. Quite the opposite in fact, once broader impacts like worsening traffic congestion are taken into account.

Australia’s rat-wheel economy is spinning furiously but going nowhere.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.