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What is the real unemployment rate – maybe it’s not as low as you think. - featured image
By Michael Yardney

What is the real unemployment rate – maybe it’s not as low as you think.

On the one hand, we keep hearing how unemployment is now around 4.6%, but on the other hand, we see all those vacant shops and hear of all those people who are out of work or not working as many hours as they want.

So what is the real unemployment rate? Job Opportunity

The Roy Morgan research house has always had a different view on the unemployment rate to the ABS - for example, the ABS  counts as employed Australians who were working zero hours for ‘economic reasons’.

On the other hand, the latest Roy Morgan employment series data shows 1.32 million Australians were unemployed in October.

This is up 55,000 in September, for an unemployment rate of 9.2%, while under-employment was up 0.6% points to 8.6% (1.23 million).

The workforce in October was 14,339,000 (down 234,000) – the lowest so far during 2021 and comprised of 13,019,000 employed Australians (a decrease of 289,000) and 1,320,000 unemployed Australians looking for work (up 55,000).

Australian employment in October dropped to 13.02 million, the lowest since March 2021, driven by the decrease in part-time employment, down 379,000 to 4,281,000, the lowest for over a year since August 2020. In contrast, full-time employment increased by 90,000 in October to 8,738,000.

Unemployment increased in October as long lockdowns ended in Sydney and Melbourne.

1,320,000 Australians were unemployed (9.2% of the workforce), up 55,000 from September.

Driving the increase was more people looking for part-time work (up 114,000 to 849,000) while there was a decrease in people looking for full-time work (down 59,000 to 471,000).

Roy Morgan unemployment

Roy Morgan’s unemployment figure of 9.2% for October is over 4% points higher than the current ABS estimate for September 2021 of 4.6%.

However, the ABS figure for September counts as employed an additional 184,800 Australians who were working zero hours for ‘economic reasons’ and 263,400 Australians who were working zero hours for ‘other reasons’ – such as being forced out of work by mandatory lockdowns.

If these 448,200 non-workers are added back the ABS unemployment estimate for September increases to 1.07 million (7.9%).

The ABS also claims there are nearly 1.25 million Australians (9.2%) under-employed for a total of over 2.32 million unemployed or under-employed (17.1% of the workforce) – a similar estimate to the latest Roy Morgan unemployment and under-employment estimate of 17.8%.

Under-employment increased in October even as part-time employment fell:

In addition to those who were unemployed, 1.23 million Australians (8.6% of the workforce) were under-employed – working part-time but looking for more work, an increase of 64,000 (up 0.6% points) in September.

In total, 2.55 million Australians (17.8% of the workforce) were either unemployed or under-employed in October, an increase of 119,000 in September.

Roy Morgan unemployment

Roy Morgan says that compared to early March 2020, before the nation-wide lockdown was implemented, in October 2021 there were almost 400,000 more Australians either unemployed or under-employed (+2.2% points) even though overall employment (13,019,000) is higher than it was pre-COVID-19 (12,872,000).

Michele Levine, CEO Roy Morgan, says Australia has finally emerged from a winter of long lockdowns of NSW, Victoria, and the ACT, and with the easing of restrictions hopes are high we are set to experience a period of strong growth in the months ahead:

“The latest Roy Morgan employment estimates for October show unemployment increasing 0.5% points to 9.2% and under-employment increasing 0.6% points to 8.6%.

This means total unemployment and under-employment of 17.8%, very similar to that of August (17.7%) and July (17.9%) during the initial stages of the recent lockdowns in Sydney, Melbourne and Canberra.

The increasing unemployment and under-employment nationally was driven by NSW and Victoria, both of which started the month in lockdown.

Other States, including Queensland and South Australia, had increasing full-time employment in October with both State Premiers outlining plans to re-open their respective State borders in the lead-up to Christmas.

Looking at an industry-specific level shows the industries to shed jobs during October were led by retail, recreation and personal services and community services – all industries that are disproportionately impacted by extended lockdowns and store closures.

October was the month Australia finally started to emerge from months of lockdowns with Greater Sydney emerging from a 107-day lockdown on Monday October 11, Canberra’s two-month lockdown ending on Friday October 15, Melbourne’s sixth lockdown ended a week later on Friday October 22 and earlier that week Hobart’s second lockdown ended on Monday October 18. Jobs

October was (hopefully) the last month we see widespread lockdowns around Australia although there is always the chance a COVID-19 variant arises in the future that could cause renewed lockdowns.

“The end of the lockdowns has allowed the re-opening of many businesses that have been forced to close because of heavy restrictions. Industries including hospitality, retail stores, arts and recreation and personal services such as hairdressers and personal training have been the hardest hit by COVID-19 restrictions and their re-opening is set to drive a surge in employment during the next few months.

This prediction is based upon the experience of Australia’s employment markets when Victoria exited its long second lockdown in October 2020.

From November 2020 to July 2021 full-time employment in Australia increased for a record eight months in a row by 866,000 to a record high of 8,826,000.

Although the increases in employment are unlikely to match the resurgence from a year ago there is likely to be a strong rebound in the industries most heavily impacted by the COVID-19 lockdowns as more than 12 million Australians who’ve been forced to remain at home for months are allowed to return to their normal lifestyles and spend some of the savings built up over the last few months. Unemployment

Roy Morgan’s data scientists working in conjunction with the Australian Retailers’ Association (ARA) have forecast pre-Christmas retail sales of $58.8 billion over the next two months – matching last year’s record and up over 11% on the pre-Christmas sales in 2019. The strong forecast signals a strong resurgence for the retail industry in the months ahead.

Another strong signal about the expected resurgence of the Australian economy over the next few months is the exceptionally strong Roy Morgan Business Confidence Rating for October of 115.3, up 10.7pts (+10.2%) from September.

Businesses became increasingly confident about the period ahead during October as State Governments provided more certainty about their re-opening roadmaps and Business Confidence was above the long-run average of 113.8 for the first time in three months since July 2021.

Looking forward we expect to see the strength in Business Confidence and spending expectations to translate into employment growth in the run-up to Christmas and into the early months of 2022.

There are risks to this forecast though and these include the threats of rising inflation next year and future lockdowns caused by potential COVID-19 variants evading vaccines.”

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.
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