Economy Begins A Swan Dive

3 Feb

Unemployment data for January 2012 from Roy Morgan Research is out.

For those brave enough to peek between their fingers clasped over the eyes, here’s a chart to give you nightmares:

Click to enlarge

In Roy Morgan Research’s own words (emphasis added):

  • Unemployment was 10.3% (up 1.7% since December 2011) — an estimated 1,278,000 Australians were unemployed and looking for work. This is Australia’s highest ever number of unemployed as reported by Roy Morgan and is also Australia’s highest unemployment rate for a decade — since January 2002 (10.9% — 1,075,000).
  • A further 7.5% of the workforce* were working part-time looking for more work (underemployed) — 934,000 Australians.
  • In total a record 17.8% of the workforce, or 2.21 million Australians, were unemployed or underemployed.
  • The Australian workforce* in January was at a record high 12,429,000, up 383,000 since January 2011 — comprising 7,681,000 full-time workers (up 106,000); 3,470,000 part-time workers (down 53,000) and 1,278,000 looking for work (up 330,000).
  • The latest Roy Morgan unemployment estimate of 10.3% is now almost double the 5.2% currently quoted by the ABS for December 2011.

Now, you may be wondering why Roy Morgan stats are so much higher than the Australian Bureau of Statistics (ABS) data.

You know. The “official” statistics agency that is quoted exclusively by government politicians, and parroted by their PR agencies … ummmm, the media.

A few hints:

1. The ABS is a government agency.

2. See 1.

3. You have to run up and down the street naked, waving your hands wildly and shrieking “I don’t have a job!!” for weeks to be counted as unemployed by the ABS.

More seriously, academic economist Bill Mitchell has written a very lengthy, detailed article about the differences between ABS and Roy Morgan methodology here.

In a nutshell:

“...the real difference is that [Roy Morgan] do not apply an activity test as strictly as the ABS and thus include a number of workers which we might consider to be “hidden unemployed” as per the previous discussion.

The Roy Morgan method asks whether the person who is “not employed if they are actually looking for a paid job (regardless of whether they’ve looked in the last four weeks)” and so they include the ABS official unemployed plus some estimate of the hidden unemployed…

In other words, Roy Morgan Research data is a broader measure of employment (or lack thereof).

So which one to believe?

Here’s Bill Mitchell again (emphasis added):

“The broad rule of thumb that economists such as me use to provide an estimate of the state of the labour market is to double the official unemployment rate and then add some for hidden unemployment.”

Now you know why “word on the street” amongst we average folk has been that unemployment is on the rise, while the government continues to downplay ever increasing job losses.

About that budget surplus Wayne … Wayne?

*crickets*

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7 Responses to “Economy Begins A Swan Dive”

  1. Betty Whiffin February 3, 2012 at 6:59 pm #

    Wayne Swan is out for a duck. All blab and no score.

  2. Jazza February 4, 2012 at 8:52 am #

    Well said Betty! But I always thought he was a Goose?

  3. JMD February 4, 2012 at 11:12 am #

    New record for government bond issuance in 2011! $62.56 billion! That doesn’t include debt less than 1 year, which is constantly rolled over into bank credit, propping up the insolvent commercial banks (nudge, wink!).

    No wonder the Broad Money aggregate is rising exponentially, even though commercial banks are slashing costs & jobs.

    • The Blissful Ignoramus February 4, 2012 at 11:48 am #

      >“That doesn’t include debt less than 1 year”

      Indeed … of which there’s been a lot, as I recall. Might make for an interesting analysis.

  4. Richo February 4, 2012 at 2:05 pm #

    Crispin Hill wrote about this very issue in the Canberra Times a few weeks ago. Essentially, the official unemployment rate is really only used for international comparison. As stated though, it is based on a too narrow snapshot of the workforce (working 1 hour a week means you are not counted).

    However the ABS do also look at underemployment at their rate is was 10.6 in November 2011. It is just the goose forgets to mention it.

    http://www.ausstats.abs.gov.au/ausstats/meisubs.nsf/0/066A05FB703E40DBCA257989000BFFCE/$File/62020_dec%202011.pdf

    • The Blissful Ignoramus February 4, 2012 at 2:08 pm #

      >“It is just the goose forgets to mention it.”

      How convenient /sarc

  5. Ivan February 28, 2012 at 7:50 am #

    High unemployment and lies told by governments are the two most damaging things for humans
    High unemployment, because it affects personal confidence, self esteem and ability to look after ones self and family. It also brings on a dependence of welfare and handouts.
    Government lies are a coverup of corruption within the Government and its burocracy
    We have them both now

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