Is unenployment really as low as the ABS tells us? The answer is: NO!

One of the parameters I track to see how our economy is fairing is our unemployment rate.

I also track jobs growth.  

Australian employment has grown solidly over the past year with nearly 200,000 jobs created (about 15,000 per month) split evenly between full-time and part-time employment.

And this is good for our economy and one of the pillars that underpin our property markets which are currently lacking confidence.

So we are creating jobs, but what’s our “real” unemployment rate?

Much higher than the ABS would want us to believe according to Roy Morgan Research who say unemployment was 9.4% in September off two-year high

 The latest data for the Roy Morgan employment series for September shows:

• • The workforce which comprises employed and unemployed Australians is now 13,420,000, up 246,000 on a year ago;  
• • 12,164,000 Australians were employed in September, up 192,000 over the past year;
• • The increase in employment was driven by equivalent increases in full-time employment which was up 97,000 to 7,694,000 and part-time employment which increased 95,000 to a record high 4,470,000;
• • 1,256,000 Australians (9.4% of the workforce) were unemployed in September, an increase of 54,000 on a year ago (up 0.3%);
• • In addition 1,127,000 Australians (8.4% of the workforce) were under-employed, working part-time and looking for more work, a fall of 169,000 in a year (down 1.4%);
• • In total 2,383,000 Australians (17.8% of the workforce) were either unemployed or under-employed in September, a fall of 115,000 in a year (down 1.1%);
• • Roy Morgan’s real unemployment figure of 9.4% for September is significantly higher than the current ABS estimate for August 2018 of 5.3%.

Source: Roy Morgan Single Source October 2005 – September 2018. Average monthly interviews 4,000.

Expert commentary:

Michele Levine, CEO Roy Morgan, says the Australian economy has created almost 200,000 jobs over the last year however many of these are part-time jobs with part-time employment hitting a new record high of nearly 4.5 million in September: 

“The Australian economy has grown strongly over the last year with nearly 200,000 jobs created at a rate of just over 15,000 new jobs per month. However there were almost as many part-time jobs (+95,000) as full-time jobs (+97,000) created. As a consequence part-time employment in Australia has hit a new record high of nearly 4.5 million in September.

“In addition to the new jobs created a further 54,000 Australians entering the workforce were unable to find a job and became unemployed. Now 1.3 million Australians are unemployed in September equivalent to 9.4% of the workforce and up 0.3% on a year ago.

“A further 1.1 million Australians (8.4% of the workforce) are under-employed meaning a total of 2.4 million Australians (17.8% of the workforce) are unemployed and looking for work or employed part-time and looking for more work (under-employed). Total unemployment and under-employment in Australia has now exceeded 2 million for three straight years since September 2015.

“As we’ve noted previously the persistent high level of unemployment and under-employment in Australia isn’t because jobs aren’t being created, it’s because the workforce continues to grow at a faster rate than the growth in employment. Not only is the expanding Australian workforce not providing enough jobs to reduce unemployment but the long-term trend of an increasing casualisation of the Australian workforce is continuing. 

“Three years ago in September 2015 of the 11.7 million Australians employed over two-thirds (or 67.4%) were employed full-time compared to less than a third (32.6%) that were employed part-time.

“Analysing the breakdown of employment in September 2018 shows of the 12.2 million Australians employed now 63.3% are employed full-time (down 4.1% points on three years ago) while 36.7% are now employed part-time (up 4.1% points).

“This increasing rate of part-time employment directly impacts on under-employment which has increased by nearly 200,000 since September 2015 while the fast growing workforce has added another 200,000 Australians unable to find jobs who are now unemployed.”

This Roy Morgan survey on Australia’s unemployment and ‘under-employed’* is based on weekly face-to-face interviews of 600,483 Australians aged 14 and over between January 2007 – September 2018 and includes 4,172 face-to-face interviews in September 2018.

*The ‘under-employed’ are those people who are in part-time work or consultants who are looking for more work. (Unfortunately the ABS does not release this figure in their monthly unemployment survey results).

Roy Morgan Unemployed and ‘Under-employed’* Estimates

*Workforce includes those employed and those looking for work – the unemployed.

ROY MORGAN MEASURES REAL UNEMPLOYMENT IN AUSTRALIA

NOT THE ‘PERCEPTION’ OF UNEMPLOYMENT – JUNE 8, 2012

The Roy Morgan Unemployment estimate is obtained by surveying an Australia-wide cross section by face-to-face interviews.

A person is classified as unemployed if they are looking for work, no matter when. 

The results are not seasonally adjusted and provide an accurate measure of monthly unemployment estimates in Australia.

The Australian Bureau of Statistics Unemployment estimates are obtained by mostly telephone interviews.

Households selected for the ABS Survey are interviewed each month for eight months, with one-eighth of the sample being replaced each month.

The first interview is conducted face-to-face. Subsequent interviews are then conducted by telephone.

The ABS classifies a person as unemployed if, when surveyed, they have been actively looking for work in the four weeks up to the end of the reference week and if they were available for work in the reference week.

The ABS classifies a person as employed if, when surveyed, a person worked for one hour or more during the reference week for pay, profit, commission or payment in kind, or even if a person worked for one hour or more without pay in a family business or on a farm.

The Australian Bureau of Statistics Unemployment estimates are also seasonally adjusted.

For these reasons the Australian Bureau of Statistics Unemployment estimates are different from the Roy Morgan Unemployment estimate.

Gary Morgan’s concerns regarding the ABS Unemployment estimate is clearly outlined in his letter to the Australian Financial Review, which was not published.

Roy Morgan Research vs. ABS Unemployment Estimates