The “real” unemployment rate: 2.59 million Australians unemployed or under-employed in January

As a property investor it's important to keep a careful eye on employment statistics .

When people are confident about their employment prospects and their financial futures, they're more likely to make significant purchases such as property.  

And if they're not...property markets tend to stall.

Just look at those states where jobs growth is poor and unemployment is high.

The good news is we're creating more jobs, but the bad news is most of these are part time jobs and according to Roy Morgan  the real unemployment figures of 9.1% for January are substantially higher than the current ABS estimate for December 2017 of 5.5%.

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

• The workforce is 13,455,000 comprised of employed and unemployed, up only 41,000 on a year ago;   
• 1.219 million Australians were unemployed (9.1% of the workforce); a decrease of 76,000 (down 0.6%) on a year ago.
• In addition 1.371 million Australians (10.2% of the workforce) are now under-employed, working part-time and looking for more work, a rise of 264,000 in a year;
• 12,236,000 Australians were employed in January – an increase of 116,000 over the past year (an average of just under 10,000 jobs added per month);
• The increase in employment over the past year was driven entirely by an increase in part-time employment which rose 156,000 to 4,191,000 while full-time employment fell 40,000 to 8,045,000;

Source: Roy Morgan Single Source October 2005 – January 2018.

Michele Levine, Chief Executive Officer, Roy Morgan, said jobs growth in calendar year 2017 was driven entirely by growth in part-time employment which may partly explain why Australians don’t believe the monthly ABS unemployment estimates are accurate:

“Today’s Roy Morgan employment estimates show overall employment growth of 116,000 jobs since January 2017 however this growth was entirely driven by the increase in part-time employment up 156,000 to 4,191,000 while full-time employment was down 40,000 to 8,045,000.

“The increasing casualisation of the workforce has been a consistent trend in recent years and in January 34.3% of employed Australians were working part-time, up 1% from a year ago while 65.7% of employed Australians were working full-time. However, although rising employment is definitely a good thing, one of the consequences of a greater proportion of part-time employees is a rising level of under-employment.

“In January a high 1.37 million Australians (10.2% of the workforce) were under-employed, up a sizeable 264,000 from a year ago, and along with 1.22 million (9.1%) unemployed Australians this meant 2.59 million Australians (19.3%) were either looking for work or looking for more work – 28 straight months more than 2 million Australians were either unemployed or under-employed. 

“The enduring level of under-employment in Australia may partly explain why Australians just don’t believe the official ABS unemployment  estimates. A recent Roy Morgan survey published in The Australian – ‘Voters sceptical of official unemployment figures, Roy Morgan research finds by Adam Creighton’ shows nearly 60% of Australians surveyed, and 70% aged 18-24, think the unemployment rate is closer to 10, 15 or 20 per cent far above the official level of 5.5 per cent and more in line with Roy Morgan’s unemployment (9.1%) and under-employment (10.2%) estimates.

“However, despite the persistence of worryingly high labour force slack the early weeks of 2018 have provided some positivity about the Australian economy with Consumer Confidence of 121.4 in January the highest for seven years.

“Other positive indicators include an increasing Roy Morgan Business Confidence, at 117.4 entering the new year at its highest since 2013 while some 2.38 million Australians intend to purchase a car in the next four years, up a solid 142,000 from a year ago.”

About Michael Yardney Michael is a director 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.