Real unemployment in Australia is far higher than claimed by the ABS

The latest Roy Morgan employment estimates for March 2022 showed there were 1.13 million Australians (7.8 per cent of the workforce) unemployed in March and even more, 1.23 million, underemployed (8.4 per cent of the workforce). This compares to the ABS estimate of 563,000 unemployed Australians (4.0 per cent of the workforce) and 926,000 underemployed (6.6 per cent of the workforce).

The Roy Morgan unemployment and underemployment estimates showed Australia has had over 2 million Australians either out of work, or looking for more work, nearly continuously since December 2011 – more than a decade ago.

The widespread community transmission of COVID-19 is responsible for the largest impact on the Australian labour market and workplaces employment across the country.

The Health Department website showed there are more than 450,000 Australians currently infected with COVID-19 – a number far higher than at any time during 2020-21. This high case load is caused by the highly transmissible omicron “variant” of COVID-19 that has spread around Australia in two distinct waves.

The high case load means over 450,000 Australians are currently forced into week-long isolation because of being infected with the virus, and many hundreds of thousands more, such as family members living in the same house, are forced into periods of isolation due to being close contacts of those who are infected.

The forced isolation of many employees is in turn forcing businesses to hire more workers on part-time hours. In March part-time employment increased by 289,000 to a near-record high of over 4.7 million. This is where all the employment growth in the labour market has come from over the last few months.

Since October 2020 when the final COVID-19 lockdowns in NSW, Victoria and the ACT ended, part-time employment has increased from 4,281,000 to 4,712,000 – an increase of 431,000. In contrast, during the same time period full-time employment is down by 60,000 to 8,678,000.

This equates to a net increase of 371,000 employees – all caused by the increase in part-time work.

As companies and businesses are forced to hire employees on reduced hours to cover for those workers who are in forced isolation, but would like to work more hours, the level of employment increases but there are also more workers who would ideally like to work more hours – the underemployed.

As long as outbreaks and transmission of COVID-19 are forcing hundreds of thousands of Australians into isolation this trend of higher part-time employment, and a high underemployment rate, is set to continue – which means wage growth will remain below expectations.

Lower unemployment, will not facilitate wages growth unless there is a substantial reduction in the number of Australians who are underemployed – which is more closely correlated to wage growth due to being on the “margin” between full-time and part-time work.

The latest Australian wage growth figures showed annual wage growth of 2.3 per cent over the year to December 2021 compared to estimated CPI during that period of 3.5 per cent. These figures showed that wage growth is failing to keep pace with inflation – and this situation has clearly worsened in 2022.

Rising inflation is putting more pressure on workers to earn more money and this means that more workers in part-time employment need to work more hours to compensate for the higher level of inflation in the economy – the under-employed are “feeling the pinch” of inflation.