Hewson's View: Employment challenges significant

Unwanted: The largest age group receiving the unemployment benefit, Newstart, are those aged over 55. Picture: Shutterstock
Unwanted: The largest age group receiving the unemployment benefit, Newstart, are those aged over 55. Picture: Shutterstock

The government proudly boasts that it has created some 1.3 million jobs since coming to government, and has achieved the lowest unemployment rate in seven years. It has committed to create a further 1.25 million jobs over the next five years, 1 in 5 of which will be for young people.

All good! Nothing to be seen here! Yet a headline unemployment rate in the low 5s (percentage), while traditionally taken by some as to be near full employment, masks some significant shifts in the labour market, and hides a very significant underutilisation of workers.

Wages have remained surprisingly "flat" now for several years, rather than increasing as you would expect if the labour market were tightening.

Our official employment data defines you to be "employed" if you work just one or more hours per week. While the number of people measured as "unemployed" is some 726,000, or 5.3 per cent of the workforce, there are over 2 million Australians, nearly 14 per cent of the workforce, who are underemployed, or can't get as much work as they want each week, and maybe another million who have "given up", or have been "discouraged", not bothering to join the labour market.

This "underutilisation rate" is an average - it is closer to 16 per cent for women, and as high as 20 per cent in some regions of our economy. This explains, to a large extent, not only sluggish wage growth, but also weak consumer confidence, a retail recession, and our weakening economic growth overall.

There are also some significant challenges when we look at the experience of different age groups. The Brotherhood of St Laurence has drawn attention to the particular challenge of youth unemployment, especially those who have been unemployed for more that one year.

Nearly one in five unemployed 15- to 24-year-olds, have been out of work for more than a year. Ten years ago the number was just under one in 10.

The overall youth unemployment rate, at around 12 per cent, is about where it was coming out of the GFC, and is some three times the unemployment rate for Australians aged over 25. That is, some 265,000 young people are measured as unemployed, with multiples not able to get as much work as they would like, or discouraged from looking for work.

Moreover, the Brotherhood has commented: "While the youth unemployment rate remains stubbornly high, another pitfall presents itself for the emerging generation: the nation's vocational education and training (VET) system is not on track to meet future demand in many fast growing occupations. This is at the same time as the number of unskilled and entry-level jobs has fallen".

There is also a particular challenge in relation to older Australians, aged say over 55, who are finding it difficult to keep a job, or to return to the workforce, and/or to get as much work as they would like.

It came as a significant surprise to many to realise that the largest age group receiving the unemployment benefit, Newstart, were those aged over 55, some 173,000.

There are only about 62,500 people aged between 21 and 24 on the unemployment benefit. Gone is the notion, often pushed by members of the government, that the unemployed are mostly "dole bludgers" or "job snobs".

It should be noted that the benefit is a mere $275 a week, or $39 a day, and Newstart hasn't been increased in real terms since 1994. Moreover, with their job search difficulties, the aged are spending longer on the benefit - close to four years for those over 50, compared to 45 weeks for those aged under 25.

Ian Henschke, of National Seniors Australia, has commented that: "The inadequacy of Newstart is undermining the retirement income system. It is pushing older workers into poverty as they head to retirement ... This is especially the case for those who rent, who have not been able to accumulate significant savings and those facing high out-of-pocket health costs".

As you dig down behind the headline employment numbers ... you soon start to realise the magnitude of the challenges in our labour market.

Clearly, as you dig down behind the headline employment numbers, and the lofty government promises and commitments, you soon start to realise the magnitude of the challenges in our labour market, and the related challenges for the education and training systems, and for aged care policies.

John Hewson is a professor at the Crawford School of Public Policy, ANU, and a former Liberal opposition leader.