What’s the real unemployment rate? What has Omicron done?

What's the real unemployment rate in Australia?

We know the official unemployment rate is close to 4%.

We also know that the Australian Bureau of Statistics count people working an hour or so a week as employed.

That doesn't make a lot of sense to me so I am always interested in Roy Morgan's unemployment figures.

And the latest Roy Morgan employment series data shows 1.2 million Australians were unemployed in January, down 51,000 from December (8.2% of the workforce), and a further 1.23 million Australians (8.4% of the workforce) were under-employed, down 198,000 (down 1.4% points).

Roy Morgan’s unemployment figure of 8.2% for January is 4% points higher than the ABS estimate for December 2021 of 4.2%

Workforce dropped by 133,000 in January as Omicron variant kept people out of work:

According to Roy Morgan, the Australian workforce in January was 14,580,000 (down 133,000 from December) – comprised of 13,379,000 employed Australians (down 82,000) and 1,201,000 unemployed Australians looking for work (down 51,000).

The contractions in those both employed and unemployed in January are no surprise given the millions of Australians forced to isolate themselves during the month due to either being infected with Omicron or being a close contact of a confirmed case.

Employment in January was just below its record high reached in December:

Roy Morgan report that Australian employment fell by 82,000 to 13,379,000 in January with full-time employment decreasing by 52,000 to 8,765,000, and part-time employment down by 30,000 4,614,000 as the highly contagious Omicron variant played havoc with Australia’s employment markets during the month.

Unemployment dropped in January to its lowest since before the pandemic began and 1,201,000 Australians were unemployed (8.2% of the workforce), down 51,000 from December with fewer people looking for full-time work (down 93,000 to 464,000) although there was an increase in those looking for part-time work, up 42,000 to 737,000.

Roy Morgan Unemployment & Under-employment (2019-2022)

Source: Roy Morgan Single Source January 2019 – January 2022. Average monthly interviews 5,000.
Note: Roy Morgan unemployment estimates are actual data while the ABS estimates are seasonally adjusted.

Roy Morgan’s unemployment figure of 8.2% for January is 4% points higher than the ABS estimate for December 2021 of 4.2%.

However, the ABS figure for December counts as employed an additional 38,700 Australians who were working zero hours for ‘economic reasons’ and 46,300 Australians who were working zero hours for ‘other reasons’ – such as being forced out of work by mandatory lockdowns or forced isolation due to catching COVID-19 or being a close contact of a confirmed case.

If these 85,000 non-workers are added back the ABS unemployment estimate for December increases to 659,000 (4.8%).

The ABS also claims there are 918,000 Australians (6.6%) under-employed for a total of over 1.5 million unemployed or under-employed (11.4% of the workforce) – an estimate which is still way under the latest Roy Morgan unemployment and under-employment estimate of 18.2%.

Under-employment dropped in January as millions of Australians were forced to isolate

In addition to those who were unemployed, 1.23 million Australians (8.4% of the workforce) were under-employed – working part-time but looking for more work, a decrease of 198,000 (down 1.3% points) from December.

In total, 2.43 million Australians (16.6% of the workforce) were either unemployed or under-employed in January, a decrease of 249,000 from December.

Roy Morgan suggests that compared to early March 2020, before the nation-wide lockdown, in January 2022 there were over 250,000 more Australians either unemployed or under-employed (+1% point) even though overall employment (13,379,000) is now over 500,000 higher than it was pre-COVID-19 (12,872,000).

Michele Levine, CEO Roy Morgan, says the surge in the Omicron strain of COVID-19 in January caused havoc for Australia’s employment markets with millions of Australians forced into isolation during the month:

“The latest Roy Morgan employment estimates for January show unemployment down 0.3% points to 8.2% and under-employment down 1.3% points to 8.4%. The good news is that unemployment is now at its lowest since the pandemic began in March 2020.

“However, although the drop in unemployment is good news, the Omicron strain of COVID-19 also led to declines across the board during January. As well as a decline in unemployment there were also a significant decline in employment, down 82,000 to 13,379,000. This decline was broad-based with full-time employment down 52,000 to 8,765,000 and part-time employment down 30,000 to 4,614,000.

“The highly infectious nature of the Omicron strain led to over 2 million Australians contracting COVID-19 during the month of January. However, this infectiousness of Omicron also means the spread of the virus peaked in mid-January and has since declined rapidly over the last few weeks.

“Looking forward Capital City CBDs should see more people returning to work in the office as the threat of catching COVID-19 recedes over the next few months. The roll-out of the COVID-19 booster program is also continuing with around 50% of Australians now having received their vaccination ‘booster shot’.

“These trends suggest that employment growth in Australia should resume and with 1.2 million Australians unemployed (8.2% of the workforce) and 1.23 million under-employed (8.4% of the workforce) there are over 2.4 million Australians currently looking for work or looking for more work.

“This high level of under-utilised labour is a big part of the reason wage growth in Australia has remained subdued over the last few years and continues to remain well below that seen overseas in countries such as the USA and UK. The latest ABS Wage Price Index shows annual wage growth of 2.2% in Australia is less than half the wage growth seen in the UK of 4.2% (Office of National Statistics) or the USA of 4.5% (Bureau of Labor Statistics).

“To increase wage growth in the Australian economy jobs and improved employment opportunities must be found for the over 2.4 million people either unemployed or under-employed. The Australian economy has now experienced a high level of labour under-utilisation for several years and it’s over six years since fewer than 2 million Australians were unemployed or under-employed (1.99 million in September 2015).”

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About Michael Yardney Michael is the founder of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.