POST 48: THE MCGOWAN GOVERNMENT ARE STRUGGLING TO DEAL WITH WEST AUSTRALIA’S CHRONIC YOUTH UNEMPLOYMENT.

Summary

The latest Australian Bureau of Statistics data shows alarming unemployment figures for West Australian youth (15-24 age). It is the McGowan Government’s  “elephant in the room”. It is shown worrying trends of persistence.

Discussion.

Population Research WA welcomes the fall in the overall unemployment in WA from 8.3% in July to 7% in August 2020[1] But it’s youth unemployment which is proving a real headache and shows no signs of improvement, see Table 1 below.

The welcome downturn in overall unemployment should not come as a surprise. The State and Federal Government have poured a huge amount of taxpayer’s monies to stimulate Housing and Land development in Greater Perth. Those Housing Industry job gains and profits have bypassed many West Australian’s. A significant 33% of WA youth dropped out of Labour Force between July 2020 and August 2020

The effective unemployment rate provides an accurate measure of labour market problems.

In total, nearly 23,000 (15-24 age) have dropped out of the Labour Force since the height of the Wuhan coronavirus in March through to August 2020.[2] They are are not counted by the ABS as unemployed. These are temporary stood down (rather than being unemployed).[3] This means there are a total 51,250 WA youth not in the Labour Force at August 2020, see Table 1 below..

Table 1: Western Australian youth unemployment (15-24 age), official rate (August 2020) and dropped out of Labour Force (March – August 2020).

MonthLabour force total (000’S)Official total unemployed (000’s)Official unemployment rate
Aug-2020209.46728.57013.6%
    
 MonthLabour Force loss (000’s)Offical unemployed plus Labor Force loss (000’s)Effective unemployment rate
March – Aug 2020 22.680 51.25024.5%

(Source: Australian Bureau of Statistics, 2020.[4])

The official estimate shown in the Table 1 reveals 28,570 youth unemployed but this is not an accurate figure. The real figure is higher and closer to 51,250 displayed in Table 1. The effective unemployment rate includes the official unemployed and those that have dropped out of the WA Labour Force from March through to August 2020 (cumulative).

Population Research applied this measure to get a better picture of real unemployment. The effective unemployment rate for WA youth is 24.5% for August 2020.

Instead of using the ABS official headline rate to guide economic responses to the pandemic, the Federal Treasury use the effective unemployment rate. This takes into account not just those who are unemployed officially, but also those who have left the labour force or seen their hours reduced to zero. AMP Capital senior economist Diana Mousina agrees that is a “truer” measure of the real unemployment rate.[5]

References.


[1] Australian Bureau of Statistics, ‘6202.0 – Labour Force, Australia, Aug 2020’ (c=AU; o=Commonwealth of Australia; ou=Australian Bureau of Statistics, 2020) <https://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0> [accessed 19 September 2020].

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

[3] Australian Bureau of Statistics, ‘People Who Lost a Job or Were Stood down: Flows Analysis, April 2020’, 2020 <https://www.abs.gov.au/articles/people-who-lost-job-or-were-stood-down-flows-analysis-april-2020> [accessed 19 September 2020].

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

[5] Michael Janda and Rachel Pupazzoni, ‘“What’s Going to Happen on the Other Side?”: Falling Unemployment Rate Masks Real Jobs Challenge’, 2020 <https://www.abc.net.au/news/2020-09-17/jobs-employment-data-abs-august-2020/12668374> [accessed 19 September 2020].

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