The Australian Bureau of Statistics today (December 16, 2021) released the latest labor force data- Australian workforce – November 2021. With the advent of new variants, most states have now abandoned most Covid restrictions, which evaded vaccine coverage and the number of infections soaring to record levels (see chart), and the labor market will certainly rebound significantly. Employment growth is very strong, leading to a sharp drop in unemployment and underemployment rates. Participation rates have also increased, which prevented the unemployment rate from falling further. Overall, the situation is improving, although as the number of infections starts to rise rapidly, whether this situation will continue is another question. Of course, it is time for the federal government to take advantage of the growing situation of the non-governmental sector and formulate some very good job creation opportunities in areas and population groups that are still underdeveloped.
The ABS labor force (seasonally adjusted) summary estimate for November 2021 is:
- Employment increased by 366,100 (2.9%)-full-time employment increased by 128,300 thousand, part-time employment increased by 237,800 thousand.
- The number of unemployed fell by 69,400 to 636,700.
- The official unemployment rate fell by 0.6 percentage points to 4.6%.
- The participation rate increased by 1.4 percentage points to 66.1%.
- The employment-to-population ratio rose by 1.8 percentage points to 63%.
- The total number of working hours per month increased by 77 million hours (4.5%).
- The underemployment rate dropped by 2 percentage points to 7.5% (a decrease of 252,100 people). In total, there are 1.0329 million underemployed workers. The underutilization rate of the total labor force (unemployment plus underemployment) fell by 2.6 percentage points to 12.1%. The total number of unemployed or underemployed workers is 1,669,600.
In its– Media release – ABS stated:
The relaxation of restrictions in New South Wales and Victoria has had a significant impact on national data. Between October and November, employment in these two states increased by 180,000 and 141,000, respectively. Employment in these jurisdictions was only 52,000 in November, down from 4,000 in May, a decrease of 250,000 and 145,000 during the lockdown.
Therefore, openness and employment opportunities are the same as the infection rate.
Employment increase by 366,100 in November 2021
1. The employment growth rate was 2.9%, with 366,100 new jobs (net).
2. The number of full-time employees increased by 128.3 million, and the number of part-time employees increased by 237.8 million.
3. The number of employed persons in Australia in February 2020 was 181,900 (net) jobs (1.4%) higher than the pre-pandemic level.
The chart below uses seasonally adjusted data to show the monthly growth of full-time (blue column), part-time (grey column), and total employment (green line) for the 24 months ending in November 2021.
The table below provides an accounting summary Labor market performance in the past six months Provide a longer-term perspective, eliminate monthly changes, and better assess trends.
In view of changes in labor estimates, sometimes check Proportion of employed population (%) Because compared with the labor force estimate, the basic population estimate (denominator) is less cyclical and susceptible to changes. This is another measure of activity intensity versus unemployment rate, which is very sensitive to labor fluctuations.
The chart below shows the employment-to-population ratio since February 2008 (the low unemployment rate of the previous cycle).
It fell with the outbreak of the global financial crisis and recovered under the impetus provided by the fiscal stimulus package, but it went backwards again following the federal government’s bold attempt to implement fiscal austerity in 2012 to achieve fiscal surpluses.
There are two forces at work here-the denominator (population) is clearly providing favorable pressure, which is due to the lack of immigration due to the closure of external borders and the slowdown in population growth.
This forces employers to work harder to find workers already in Australia instead of discriminating against the unemployed.
With the relaxation of restrictions, the numerator (employment) is significantly stronger.
From the current monthly performance, the chart below shows the average monthly employment change from 1980 to 2021 (to date).
1. The labor market weakened significantly in 2018, and this situation further deteriorated in 2019.
2. The average employment change in 2020 is -8400.
3. From 2021 to present, the average monthly change is 28,300.
The chart below shows the average monthly change (in thousands) of full-time and part-time employment (below) since 1980.
The interesting result is that during a recession or economic slowdown, full-time jobs have undertaken most of the adjustment. Even if full-time employment growth is negative, part-time employment usually continues to grow.
However, this crisis is different, because most of the job losses are caused by blockades and forced closures of businesses in industries where part-time employment dominates.
Actual and trend employment
The Australian labor market is now bigger than it was in February 2020. But if it continues to expand in the previous trend, it will still be a long way from the level it will reach.
The chart below shows the total number of employed people (blue line) and what the number of employed people will be if they continue to grow based on the average growth rate from 2015 to February 2020.
As of November 2021, the gap has narrowed by 341,100 to 335,300 jobs.
Work hours increased by 77 million hours (4.5%) in November 2021
The chart below shows the monthly growth (percentage) over the past 24 months.
The dark line is a simple regression trend of monthly changes.
Population slowdown
The chart below shows the working-age population (over 15 years of age) in Australia from January 2015 to November 2021.
As the external borders are still basically closed, immigration has been reduced to almost zero, and the impact is very obvious.
In this case, this flattening forces employers to work harder to attract workers, which is one of the reasons for the rapid decline in the unemployment rate.
Employment trends by state
The blockades in Sydney, Canberra and Melbourne are now over, and the results are obvious.
The chart below shows the evolution of employment in various states and territories since March 2020.
New South Wales and Victoria have returned to the level of employment in March 2020.
ACT is 3.5 percentage points lower than the March 2020 level.
Western Australia is doing its best and will not open its borders until February 2022. They chose stronger employment and zero infection.
The number of unemployed fell by 69,400 to 636,700 in November
Driven by strong employment growth, the official unemployment rate fell by 0.6 percentage point to 4.6%.
The chart below shows the national unemployment rate from February 1980 to November 2021. A longer time series helps to form some insights into what is currently happening.
In November 2021, widespread labor underutilization dropped by 2.6 percentage points to 12.1%
Results for November 2021 (seasonally adjusted):
1. The underemployment rate dropped by 2 percentage points to 7.5% (a decrease of 252,100 people).
2. The total employment is less than 1.0329 million people.
3. The underutilization rate of the total labor force (unemployment plus underemployment) decreased by 2.6 percentage points to 12.1%.
4. The total number of unemployed and underemployed persons is 1,669,600.
The chart below depicts Australia’s seasonally adjusted underemployment rate from February 1980 to November 2021 (blue line) and the generalized underutilization rate over the same period (green line).
The difference between the two lines is the unemployment rate.
The three cyclical peaks correspond to the recessions in 1982 and 1991 and the most recent recession.
Another difference between now and the previous two cycles is that the recovery triggered by fiscal stimulus in 2008-09 did not last. Once the “fiscal surplus” superstition began in 2012, things quickly went backwards.
The previous two peaks were steep, but steadily declined. The last peak disappeared after the stimulus, but it reversed again when the stimulus was withdrawn.
Unemployment rate and broad labor underutilization index-past four downturns
The chart below reflects the evolution of unemployment in 1982, 1991, the global financial crisis and the COVID-19 downturn.
For each episode, the graph starts at 100—this is the unemployment index value for each cycle low (June 1981; December 1989; February 2008 and February 2020, respectively).
Then we mapped each episode into 90 months.
In 1991, the highest unemployment rate was reached approximately 38 months after the start of the economic downturn, and the resulting recovery was extremely slow. Although the economic recession in 1982 was severe, by the 26th month, the economy and labor market were recovering. The recovery since the beginning of 1982 has been faster than the recovery in the current period.
During the global financial crisis, the unemployment rate peaked after 16 months (thanks to large-scale fiscal stimulus), but once the stimulus measures were withdrawn prematurely, the unemployment rate began to rise again and reached a new peak in the 80th month .
The COVID-19 recession is obviously more serious than any previous recession, but due to its uniqueness-unemployment is mainly caused by lockdowns and so on.
The graph provides a graphical description of the rate at which each recession unfolds (it tells you some information about each event) and the length of time the labor market has deteriorated (expressed as the unemployment rate).
After 21 months, the unemployment rate rose from 100 to:
1. 185.2 Index points in 1982, and continue to rise.
2. In 1991, the index was 171.6 points and showed an upward trend.
3. The 139.6 index fell during the global financial crisis.
4. 89.8 The index is currently falling.
Please note that these are indices and only tell us the speed of the recession and not the unemployment rate.
The graph below does the same for the broad labor underutilization rate (the sum of official unemployment and underemployment).
The youth labor market continues to improve in November 2021
The following table shows the distribution of net job creation by full-time/part-time status and age/gender category (15-19 years old and others) in the past month and the past 12 months.
Putting the employment situation of young people within a scale (relative to their size in the population), the figure below shows Employed population ratio Since June 2008, the total number of men, women and 15-19 year olds has been targeted.
You can interpret this chart as depicting the loss of employment relative to the basic population of each cohort. We expect (at least) that this ratio should be constant, if not rising (depending on the school participation rate).
1. The proportion of men has fallen by 8.5 percentage points since February 2008, and rose by 2.4 percentage points in November. It is now 0.4 points higher than the March 2020 level.
2. The proportion of women has fallen by 0.6 percentage points since February 2008, and rose by 4.1 percentage points in November. It is now 3.5 points above the March 2020 level.
3. The overall ratio of youth employed population has fallen by 4.6 percentage points since February 2008, increased by 1.9 percentage points from March 2020, and increased by 3.2 percentage points month-on-month.
in conclusion
My standard monthly warning: Given the way labor surveys are structured and implemented, we must always interpret monthly changes carefully.
My overall evaluation is:
1. The cessation of most Covid restrictions allowed the labor market to rebound quite strongly.
2. There are still 1.6 million Australian workers out of work in some way (officially unemployed or underemployed), and hundreds of thousands have left the active workforce due to lack of employment opportunities.
3. In general, the labor market is in better condition than during the lockdown period, and more measures can be taken to reduce the rate of underutilization of labor.
Enough for today!
(c) Copyright 2021 William Mitchell. all rights reserved.
