Unemployment falls, underemployment grows

February 13, 2010

New figures from the Australian Bureau of Statistics said unemployment had fallen in January by 22,300 to 612,000 — a drop of 0.2% to 5.3%. The ABS, which released its unemployment figures on February 11, estimated that 52,700 jobs were created in January.

But, of these new positions only 15,900 were full-time jobs. More than two thirds — 36,900 — were part-time.

Underlying the ongoing loss of full-time jobs from the economy, hours worked across the economy fell by a further 14.8 million in January, to 1518.1 million. This is the fewest hours worked across the economy for any month since August, when 1,510.5 million hours were worked. At that time, the unemployment rate was 5.8%.

In January, the ABS estimated that 10,996,300 people were employed. This is an rise of 232,700 on the 10,763,600 employed in August — yet this much bigger workforce is working almost no more hours than it was in August. The reason is that many more workers are working fewer hours.

The ABS counts someone as employed when they work for as little as one hour a week.

Unless hourly rates of pay have increased dramatically across the board since August (which they haven't, according to the September Labour Price Index), more workers working fewer hours means that many workers are losing out. While they may officially be "employed" they are working too few hours to make ends meet.

Evidence that more people are working for fewer hours and hence lower wages, is also borne out by the fall in retail sales in December — traditionally a big month for retailers. Sales fell by 0.7% in December said the ABS Retail Trade Australia report, published on February 4.

Underemployment, and with it lower incomes, is putting pressure on working people's ability to spend.

The fall in official unemployment has increased speculation that the Reserve Bank of Australia (RBA) will raise official interest rates when it next meets on March 2.

The Commonwealth Bank's chief economist, Michael Blythe, told Reuters on February 11: "Market scepticism about imminent RBA rate rises has disappeared and it's now better than a 50-50 proposition that rates will go up in March and, at the very least, these numbers say that the pause we've seen on the rates front will be short."

A new rise in interest rates, combined with higher underemployment and stagnating wages, will only put further pressure on working people's living standards.

Meanwhile, profits of some of the biggest corporations are certainly recovering, even if working people's living standards are not. BHP Billiton announced a $6.5 billion after tax profit on February 10, said ABC Online.

T%he profit was a fall of 7% on the company's return for the same time a year ago, but it's considered unlikely that any of the senior executives will go hungry as a result.

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