More jobs lost despite 'recovery' claims

April 17, 1991

By Peter Boyle

Official unemployment rose by 82,400 in March, bringing the total to 777,100 or 9.3% of the workforce. The greatest loss in jobs was in Victoria (59% of March losses) and NSW (27%), where most of manufacturing industry is located.

However, unemployment rates are still highest in Western Australia (10.3%) and Queensland (10.2%). The NSW rate is 8.3%, Victoria 9.2%, South Australia 9.4% and Tasmania 9.6%.

As usual, the official figures do not show the full extent of the problem. According to the Australian Bureau of Statistics, the labour participation rate has fallen to 63.2%. This means that in March, about 54,000 people (not counted in the unemployment figure) have been discouraged from looking for jobs — joining the half a million adults of working age who are technically not in the job market.

More people have dropped out of the job market in the last six months than in the full course of the 1982-83 recession.

The job figures would also be worse if not for the thousands of people who have been forced to go onto part-time work (the ABS counts a person working one hour a week for pay as being employed!).

More and more workers are being forced to work shorter weeks for less pay with the unofficial cooperation of unions, according to the ABS. Malcolm Stewart, the director of the Federation of Automotive Products Manufacturers, told the April 12 Financial Review that the car component industry had shed 5000 jobs, and 45% of its remaining workforce is working a three- or four-day week.

The Hawke Labor government is trying to tough it out, claiming that the pain of unemployment will be good for the economy in the longer term. Social security minister Graeme Richardson said that the government's "Active Employment Strategy" would provide the unemployed with training which would come in useful when the economy picks up.

However, activists from the Unemployed Workers Union in Launceston, who have studied the AES program, say that the training provided is of little value and that the program is aimed at cutting more people off the dole.

Despite last month's claims by the Hawke government that the recession had bottomed out, there are many indications that unemployment is set to rise even further. The Department of Employment, Education and Training says that there is no sign of a recovery in the job market in the coming months, and the Reserve Bank admits that the recession is proving deeper than it expected.

The ANZ job advertisement survey shows that further retrenchments can be expected. The National Australia Bank's March quarterly business survey found that 50% of 750 businesses it polled expected weaker trading conditions in the next quarter and did not expect a recovery until six months to a year later. Treasurer Paul Keating pointed to a 1.5% rise in a Westpac-Melbourne leading indicator, reports from some banks that the slump in demand for housing finance had begun to turn around and the recent improvement in the balance of payment figures as evidence that better times were around the corner.

However, conflicting statistical projections aside, all economists concede that a recovery in the Australian economy (which relies on the export of raw materials) depends on the state of the international economy, particularly that of North America. The Hawke government's forecasts all assume an international recovery in the second half of this year.

Such hopes have been dampened by the latest figures from the US, which show an official unemployment figure of 8.6 million, and still rising. Geoffrey Moore, director of Columbia University's Centre for International Business Cycle Research, told the Financial Review: "The recession is still with us — and looks like it will be for several more months".

Consumer credit and credit for car purchases continued to contract in the US, providing no sign of a recovery boosted by domestic spending. Lower wages, cuts in welfare (only 37% of unemployed receive benefits) and the fact that many people haven't recovered from the last recession are combining to dampen domestic demand.

The Gulf War-led recovery has turned out to be an illusion. A New York Times/CBS poll showed consumer confidence deflated after rising during the war. And the possible $15 billion "profit" that the Pentagon may have made on the war won't make much of a dent in the US$300 billion deficit expected this year. n

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