Roy Morgan underemployment surges

By Leith van Onselen in Australian Economy

January 21, 2020 | 1 comment

The latest Roy Morgan Research (RMR) unemployment estimate for December softened, rising by 0.6% over the month to 8.7%:

However, over the year, unemployment fell by 1.0%.

Underemployment surged by 1.9% over the month and by 1.1% over the year, with labour underutilisation tracking at 18.6% (up from 0.1% from a year ago):

Below are the key points from the release:

• The workforce in December was 13,896,000 – comprised of 12,691,000 employed Australians and 1,205,000 unemployed Australians who are looking for work. The workforce increased year-on-year by 520,000 to 13,896,000. This increase was driven entirely by increases in both full-time and part-time employment compared to this time a year ago.
• The number of Australians in employment was up 617,000 from a year ago to 12,691,000 in December 2019 – a rise driven by a significant increase in full-time employment of 367,000 to 8,326,000 and an increase in part-time employment of 250,000 to 4,365,000.
• Unemployment, the number of Australians looking for work, was down 97,000 on a year ago, to 1,205,000, and the unemployment rate was down by 1% point to 8.7%. Under-employment, Australians working part-time and looking for more work, is up from a year ago at 1,383,000 (up 205,000) and is now 9.9% of the workforce, an increase of 1.1% points on a year ago.
• Roy Morgan’s unemployment figure of 8.7% for December is higher than the current ABS estimate for November 2019 of 5.2%. Roy Morgan’s under-employment estimate of 9.9% is also higher than the current ABS under-employment estimate of 8.3%.
  Although Roy Morgan’s total unemployment and under-employment of 2,588,000 Australians (18.6% of the workforce) in December, up 108,000 on a year ago, is larger than figures usually estimated, the biennial ABS survey the ‘Barriers and Incentives to Labour Force Participation’, last released in late 2017, claimed the much higher figure of 2.7 million Australians would like a job or to work more hours – including 1.1 million people who wanted a job but were excluded from the Labour Force.

As explained each month, RMR measures employment differently from the ABS:

According to the ABS definition, a person who has worked for one hour or more for payment or someone who has worked without pay in a family business, is considered employed regardless of whether they consider themselves employed or not.

The ABS definition also details that if a respondent is not actively looking for work (ie: applying for work, answering job advertisements, being registered with Centre-link or tendering for work), they are not considered to be unemployed.

The Roy Morgan survey, in contrast, defines any respondent who is not employed full or part-time and who is looking for paid employment as being unemployed…

Since Roy Morgan uses a broader definition of unemployment than the ABS, it necessarily reports a higher unemployment figure. In addition, Roy Morgan’s measure tends to be far more volatile, owing to the fact that it draws on a smaller sample than the ABS and is not seasonally adjusted.

The difference between the ABS unemployment rate (4.8% NSA in November) and the unofficial RMR measure has widened to 3.9%:

Given the dwelling construction bust is all but baked-in:

Alongside weakness across discretionary spending:

Unemployment should rise in 2020.

• About
• Latest Posts

Leith Van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

SOURCE: https://www.macrobusiness.com.au/2020/01/roy-morgan-underemployment-surges/