1/7/1999
BACKGROUND PAPER ON UNEMPLOYMENT: MEASURING UNEMPLOYMENT
In order to understand unemployment figures, it is important to know some of the key terms used and how the government measures unemployment.
The Australian Bureau of Statistics classifies people as being employed, unemployed or not in the labour force.
THE LABOUR FORCE
The labour force is made up of all people over the age of 15 who are either employed or unemployed.
EMPLOYED
? People are considered to be employed if they are doing any paid work at all.
UNEMPLOYED
? People are considered to be unemployed if, in a particular ABS reference week (that is, the week referred to in an ABS survey measuring unemployment), they are:
? Not employed
? They are available for work
? They are taking active steps to find work
THE UNEMPLOYMENT RATE
The unemployment rate is the percentage of the labour force that is unemployed. People who are not part of the labour force are not counted as being unemployed.
DISCOURAGED JOB SEEKERS
Discouraged job seekers who are no longer actively looking for work are considered to be marginally attached to the labour force but do not count as being unemployed.
UNDEREMPLOYMENT
Those who are not working full time hours and would prefer to work more hours but were unable to
do so for economic reasons are considered to be underemployed but they do not count as being unemployed.
LONG TERM UNEMPLOYED
People who have been unemployed for 52 weeks or longer are considered to be ‘long term unemployed?.
THE PARTICIPATION RATE
The participation rate is the proportion of the population aged 15 and over who are in the labour force, that is either working or unemployed. Movements in the participation rate are crucially important for understanding unemployment figures.
The definitions used above can be found on the Australian Bureau of Statistics website www.abs.gov.au.
For a short glossary of terms used in the discussion of unemployment, see also Battin, T., “Full Employment: towards a just society?, Catholic Social Justice Series, No 31, Australian Catholic Social Justice Council, pp 39 - 41.
FURTHER READING
CHURCH DOCUMENTS
Pope Leo XIII, Rerum Novarum, 1891
Pope John Paul II, Laborem Exercens, 1981
Australian Catholic Bishops? Conference, Common Wealth for the Common Good, 1992
Bishop Kevin Manning, Pastoral Statement for the Feast of St Joseph the Worker, 1998
Bishop Kevin Manning, Pastoral Statement for the Feast of St Joseph the Worker, 1999
Australian Catholic Social Justice Council (ACSJC), Putting People First: a word in support of the unemployed (Social Justice Sunday Statement), 1994
Australian Catholic Social Welfare Commission, A Just Wage or Just a wage: the importance of a living wage for the eradication of poverty in Australia, Common Wealth, Vol. 5:2, December 1996
Tim Battin, Full Employment: towards a just society, Catholic Social Justice Series, No. 31., ACSJC, 1997
LABOUR MARKET TRENDS
According to the Australian Bureau of Statistics, the trend unemployment rate fell rapidly from 11% in mid 1993 to 8.4% in July 1995, rose slowly to 8.7% in early 1997, and has since declined to 7.4% in March 1999. While this drop in the official unemployment rate is welcome, it is no reason for complacency.
Long term unemployment is particularly destructive and remains at high levels. In 1992-93 35.8% of unemployed people had been unemployed for 52 weeks or more. This percentage fell by 1996-97 to 29.3% but had risen to 31.7% in 1997-98.
The impact on young people of unemployment is also worse than the general rate of unemployment might indicate. In 1997-98 27.6% of people aged 15 - 19 years were unemployed and looking for a full time job. 14.1% of people aged 20 - 24 were in the same situation. 15.1% of people aged 15 - 19 and 8.8% of those aged 20 - 24 were looking for part time work in 1997-98.
At the same time as enduring high levels of unemployment, many Australians were working overtime. In August of 1997 41% of full time employees worked overtime on a regular basis. Average weekly overtime hours per employee working overtime was 6.97 hours in February 1999, an increase of 0.8% from November 1998. The percentage of employees working overtime increased to 15.29% in February 1999, 1.3% more than in November 1998.
Underemployment is also obscured by focussing only on the unemployment rate. In September 1997 some 62% of part-time workers who wanted to work more hours reported that they would like to work full-time hours. 54% of all persons working part time and wishing to work more hours were aged less than 35 years.
Hidden unemployment is also present beneath the official unemployment figures. In September 1997 there were 118,400 people who were discouraged job seekers.
In Catholic Social Justice Series No 31, Full Employment: towards a just society, Dr Tim Battin notes:
“Some explanations blame unions for demanding wages that were too high or government spending which caused an unsustainable inflation. One explanation favoured in the 1970s, and no longer fashionable, apportioned blame to women for entering a work-force where there is presumed a fixed amount of work to be carried out. On a similar logic, although seemingly unaware of it, some people in recent times especially have ascribed blame to Australia’s new immigrants for taking the jobs that would normally belong to longer established Australians. Others indict the unfunded Vietnam War of the 1960s or the oil price rises of the 1970s. And right across the political spectrum, many seem to blame technology and, more generally, the ‘post-industrial? society we now live in for the present rates of unemployment? (pp 10m- 11)
ARE WOMEN IN THE WORKFORCE CROWDING OTHERS OUT?
If the entry of women into the paid work force had anything to do with unemployment there ought to be a pattern of correlation between high female participation rates and unemployment among comparable countries. There is no empirical evidence of this.1
ARE MIGRANTS ‘TAKING OUR JOBS??
In a similar way, immigration has not been shown to have negatively impacted on unemployment. It may even be that new migrants with their potential for consumer demand and their skills and willingness to work actually aid the process of employment enhancement.2
ARE WAGES & SALARIES TOO HIGH?
While artificially high wages and salaries may contribute to inflation, inequity and unemployment, the current wage levels of the most poorly paid workers does not cause unemployment. It may be argued that lowering minimum wages lowers effective demand for goods and services resulting in less production and thus more unemployment.3
IS TECHNOLOGY ELIMINATING JOBS?
Even the technology argument doesn’t stand up to scrutiny. The 1950s and 1960s were periods of great technological progress and also times of high employment. Some of the countries with the highest rates of mechanization and automation in the world have had the lowest unemployment and vice versa. While there may be dislocation problems and a need for retraining, there is no clear evidence that technology generally causes increases in unemployment.4
Economists of different schools disagree on the causes of unemployment.
IS THERE A ‘NATURAL? LEVEL OF UNEMPLOYMENT?
Neo-classical economists believe that there is an inverse relationship between unemployment and inflation. They hold that there is a certain ‘natural? level of unemployment needed to contain inflation. It is called the NAIRU, that is, the non-accelerating inflation rate of unemployment. Lower wages and high economic growth rates are seen as the answer.
STRUCTURE AND PACE OF INVESTMENT
Post Keynesian economists, on the other hand, believe that the problems of unemployment and inflation are separate and that the role of institutions is critically important in ensuring sufficiently paced and structured investment to cope with increasing numbers of people looking for work5.
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1 Battin, T., Full Employment: towards a just society, Catholic Social Justice Series No 31, Australian Catholic Social Justice Council, p 11.
2 Ibid.
3 Op cit., p 12.
4 Ibid.
5 op. Cit., pp 13 - 19.
What Causes
Unemployment?
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THE AUSTRALIAN CATHOLIC SOCIAL JUSTICE COUNCIL
The Australian Catholic Social Justice Council (ACSJC) is the national social justice and human rights agency of the Catholic Church in Australia. It advises the Bishops on social justice issues in Australia and overseas; undertakes research and advocacy on such issues; educates the Catholic community about the Church’s social justice teachings and their application; and facilitates the development of social justice networks within the Catholic Church in Australia.
The work of the ACSJC falls into three areas: building social justice networks; education and formation, and; research, advocacy and public policy.
The ACSJC is made up primarily of lay people and its membership is drawn from each of the ecclesiastical provinces of Australia. The ACSJC is responsible to the Australian Catholic Bishops? Conference (ACBC) through the ACSJC Chairman, who is also a member of the Bishops? Committee for Justice, Development and Peace (BCJDP). Two other members of the BCJDP also sit on the ACSJC along with the BCJDP’s Executive Secretary who is an ex officio member of the ACSJC.
The ACSJC’s sister organization, Caritas Australia, works in the area of aid and development. It is also responsible to the ACBC through the BCJDP. The BCJDP oversights and coordinates the work of the Australian Catholic Social Justice Council and Caritas Australia.
©Australian Catholic Bishops? Conference.
This ACSJC Background Paper may be reproduced in its entirety
with appropriate permission and acknowledgement.
ACSJC Unemployment Position Paper
July 1999
