POST 33: Does the Australian Bureau of Statistics unemployment estimates make sense during an economic implosion?

Introduction.

Before the Australian Bureau of Statistics (ABS) Labor Force April issue was released. Many commentators had forecast a big spike in the unemployment rate due to Wuhan coronavirus impacts on the workforce. In fact the ABS produced a much lower than expected unemployment increase of 104,500 people, up 1% to 6.2%.

Population Research WA would like to add a caveat to this. And it is that we use the ABS on a regular basis it provides an excellent source of data. It is Australia’s national statistical agency, providing official statistics on a wide range of economic, social and population matters of importance to Australia.[1]  However, like any large organisation there is always room for improvement. 

ABS April release was confusing and data did not reflect Labor force reality.

The fact that many in the field of economic analysis lined up to question the results of the coronavirus affects on employment published in the ABS Labor Force April edition, does suggest something is amiss.

The ABS lists people that are actively looking for work as unemployed. It does not consider those that have given up looking for work altogether as unemployed.[2]  They revealed, 490,000 Australians left the workforce between March and April 2020 and were not actively looking for work. Therefore were not counted as unemployed? But they were included in the ABS figure for the total drop in employment (594,300 people) between March and April 2020.

If this fall in employment were applied to the official estimates, unemployment would be at 9.6%.[3]

This method prompted one Australian Business reporter to suggest, “National unemployment figures released this week are some of the most confusing in Australia’s history”.[4] This was typical of the response to the ABS data, because if those 490,000 persons who dropped out of the labour force last month were still actively looking for work – the official number of unemployed would be half a million higher (around 1.3 million).[5]

The non-government Roy Morgan Poll also provide a monthly measure of the Australian Labor Force. Their concern is, “the ABS claims the 490,000 people that lost their jobs and were not looking for work and available to start work during the reference week. These workers are unemployed – but NOT out of the workforce.[6] How can the ABS justify this claim?

Furthermore the ABS itself said the April jobs numbers would have been a lot worse if calculated differently. 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.[7]

Canada and the USA, list temporary layoffs as unemployed. From March to April 2020 the USA rate increased by 10.3% to 14.7% and Canada 5.2% to 13%. [8]

Closing comments.

It can’t be understated the importance of making sure Australia’s unemployment figures are a realistic measure of the current situation. Accurate measures of domestic unemployment help inform Government on immigration policy and the need for significant reductions in immigration when unemployment is high.

That said the Federal Government have continued to support the use of Temporary work visa and foreign student/worker visas  – at a time of huge job losses for Australian citizens.

The latest figures reveal there are 2.17 million Temporary visas in Australia, most with working rights.[9] But even harder to fathom, the Federal Government lifted the restrictions on the maximum hours that foreign students can be employed, during the Covid-19 outbreak.[10]  

References


[1] Australian Bureau of Statistics, ‘About the Australian Bureau of Statistics’ (c=AU; o=Commonwealth of Australia; ou=Australian Bureau of Statistics, 2020) <https://www.abs.gov.au/about> [accessed 19 May 2020].

[2] Australian Bureau of Statistics, ‘6202.0 – Labour Force, Australia, Apr 2020’ (c=AU; o=Commonwealth of Australia; ou=Australian Bureau of Statistics, 2020), p. 0 <https://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0> [accessed 15 May 2020].

[3] Australian Bureau of Statistics, ‘6202.0 – Labour Force, Australia, Apr 2020’.

[4] Gareth Hutchens, ‘Coronavirus Has Hit Australia’s Job Market Harder than Unemployment Figures Suggest – ABC News’, 2020 <https://www.abc.net.au/news/2020-05-14/coronavirus-australia-job-market-unemployment-figures-april/12247990> [accessed 15 May 2020].

[5] Australian Bureau of Statistics, ‘6202.0 – Labour Force, Australia, Apr 2020’.

[6] Gary Morgan, Michele Levine and Julian McCrann, ‘ABS April Unemployment Estimate Doesn’t Reflect Reality. ABS Claims 594,000 Lose Their Jobs but Only 104,000 Become Unemployed (?!?)’, Roy Morgan, 2020 <http://www.roymorgan.com/findings/8411-abs-april-unemployment-estimates-dont-reflect-reality-202005141058> [accessed 15 May 2020].

[7] Australian Bureau of Statistics, ‘6202.0 – Labour Force, Australia, Apr 2020’.

[8] Australian Bureau of Statistics, ‘6202.0 – Labour Force, Australia, Apr 2020’.

[9] Australian Government, Department of Home Affairs, ‘Temporary Visa Holders in Australia | Datasets | Data.Gov.Au – Beta’, 2020 <https://data.gov.au/dataset/ds-dga-ab245863-4dea-4661-a334-71ee15937130/details?q=temporary%20entrants> [accessed 15 May 2020].

[10] MOSIQI ACHARYA, ‘COVID-19 Response: International Students to Be Allowed to Work Additional Hours’, SBS Your Language, 2020 <https://www.sbs.com.au/language/english/covid-19-response-international-students-to-be-allowed-to-work-additional-hours> [accessed 15 May 2020].

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