Coronavirus continues to have a disastrous effect on employment figures around the world. Social isolation and government-led shutdowns have decimated entire industry sectors, with the Australian economy certainly not immune. 594,300 people lost their jobs in April as restrictions affected thousands of businesses across the country. The official jobless rate, published by the Australian Bureau of Statistics, rose 1% from 5.2% to 6.2%.
While heart-breaking, this number is somewhat conservative compared to the economic reality and likelihood of things to come.
The Australian government themselves are expecting a 10% peak in unemployment later this year, stabilising somewhat in 2021 before falling back to 6.5% in 2022. However, some commentators are forecasting even rougher conditions and more prolonged recovery times. In the Commonwealth Bank's March Quarter update, unemployment is expected to reach 9% this year, 8.5% in 2021, and 6.5% in 2022. ; ; ;
Unemployment numbers alone fail to tell the entire truth, as record numbers of people leave the job market and underemployment becomes the new normal. The participation rate dropped from 66% to 63.5% over the month, which is the lowest rate in 16 years. According to Bjorn Jarvis, the head of labour statistics at the ABS, "The large drop in employment did not translate into a similar-sized rise in the number of unemployed people because around 489,800 people left the labour force."
There is a very good reason why so many people left the job market, with many businesses shut or struggling to stay afloat. National job ads slumped by almost two-thirds in April, and many businesses that remained afloat only did so with the help of the JobKeeper package. According to Capital Economics analyst Marcel Theliant, "What's more, all employees who received the Government's JobKeeper wage subsidy were counted as employed, even if they didn't work any hours."
According to many experts, the real unemployment figures would be much higher if they accounted for temporary lay-offs or people who worked zero hours. According to RBC Capital Markets chief economist Su-Lin Ong, "It suggests that if Australia adopted a similar definition to North America for temporary lay-offs or worked zero hours, the Australian unemployment rate would be at 11.7 per cent rather than 6.2 per cent."
Underemployment is another huge concern, especially for young people and those in casual employment. Underemployment surged by more than 600,000 to 1.8 million people over the month, which takes the rate to a record high of 13.7%. This is a sharp rise of almost 5% in just a month. Underutilisation, which adds unemployment and underemployment numbers together, also jumped to a record high of 19.9%. The biggest problem with all of these numbers, however, including government and industry forecasts, is the uncertainty and risk that accompanies any return to employment.