Is it really possible that over 2 million Australians are unemployed?

This week the Australian Bureau of Statistics revealed it releases unemployment rate of 7.4% for June.

Amongst the bad news was the good news that the number of employed people increased and the participation rate increased – in other words more people were seeking work as the restrictions imposed by Covid-19 started to ease around Australia. Jobs

But the latest Roy Morgan data suggests the “real” unemployment rate is much higher.

According to Roy Morgan Research, in June 14.5% of the workforce (2.05 million Australians) were unemployed.

This is 42,000 fewer than May, however, this slight improvement was largely cancelled out by the rise in under-employment, now at 10% of the workforce (1.41 million), and up 37,000 on a month ago.

This means a massive 3.45 million Australians (24.5% of the workforce) were either unemployed or under-employed, an improvement of only 5,000 on May according to the latest Roy Morgan employment estimates.

Compared to early March, before lockdown, there are an additional 1.03 million Australians now unemployed (+7.2% points).

The latest Roy Morgan employment series data for June shows:

  • The workforce in June was 14,106,000 – comprised of 12,058,000 employed and 2,048,000 unemployed Australians looking for work. The workforce total is down a small 22,000 since May;
  • 12,058,000 Australians were employed in June, up 20,000 from May including 7,934,000 employed full-time, up 26,000, and 4,124,000 employed part-time, down 6,000;
  • 2,048,000 Australians were looking for work in June, down 42,000 from May, driven by a fall in the number looking for part-time work which fell 39,000 to 1,144,000 while 904,000 were looking for full-time work, down 3,000;
  • Roy Morgan’s unemployment figure of 14.5% for June is more than double the current ABS estimate for May 2020 of 7.1%. However, the ABS figure for May estimated a large decline in the size of the workforce since March which they said was down 655,000. If the ABS workforce estimate for May had matched that in March the ABS unemployment figure would have been 11.5% (1.58 million).

Roy Morgan Unemployment & Under-employment (2019-2020)

UnemploymentSource: Roy Morgan Single Source January 2019 – June 2020. Average monthly interviews 4,000. Note: Roy Morgan unemployment estimates are actual data while the ABS estimates are seasonally adjusted. 

Michele Levine, CEO Roy Morgan, says life around Australia is slowly returning to a ‘new normal’ – however, the re-imposition of restrictions this week in Melbourne shows COVID-19 still poses a significant and ongoing threat to lives and livelihoods:

“Roy Morgan’s unemployment measure for June shows 2.05 million Australians were unemployed (14.5% of the workforce) with an additional 1.41 million (10.0%) under-employed. In total a massive 3.45 million Australians (24.5% of the workforce) were unemployed or under-employed – virtually unchanged on May.

“The monthly drop in unemployment was driven by the decline in NSW with unemployment dropping to 12%, down 1% on May, and clearly the lowest of any State. Unemployment also declined in South Australia but was largely unchanged, or slightly up, in other States. Businesspeople Waiting For Job Interview

“The small changes in unemployment and under-employment in June illustrate just how much new growth is required to provide jobs for the more than 1 million Australians now unemployed that were working prior to the COVID-19 shut-downs enforced in mid-March.

“In addition there has been sobering news over the last week as around 350 new cases of COVID-19 have been announced in Melbourne – an average of about 50 per day. This new spike has forced suburb-by-suburb lock-downs around Melbourne and if new infections continue to roll in there is a strong possibility the entire city may again be forced back onto Stage 3 restrictions.

“The developing situation in Victoria demonstrates that while in recent weeks many have considered the worst of COVID-19 may already be over, there is always the chance the virus can pose a renewed threat that does more damage to lives and livelihoods and the economy more broadly.

“These continuing threats mean it is vital the L-NP Government does not withdraw the support provided to the economy before it reaches a sustainable level. As well as the more than 1 million Australians forced out of work due to the COVID-19 pandemic there is an even greater cohort, according to the Australian Treasury around 3.5 million working Australians, relying on the JobKeeper wage subsidy due to run out at the end of September.

“The L-NP Government must give serious consideration to extending JobKeeper for an additional period as the economy adjusts to a more fragile economic landscape than we have seen for decades.”

Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on

Metropole

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Kate Forbes

About

Kate Forbes is a National Director Property Strategy at Metropole. She has 15 years of investment experience in financial markets in two continents, is qualified in multiple disciplines and is also a chartered financial analyst (CFA).
Visit www.MelbourneBuyersAgent.com.au


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