- Australia’s unemployment rate has climbed to 7.1%, according to the May labour force figures.
- Another 227,700 jobs were axed in May, following 600,000 losses in the previous month.
- However, had masses of unemployed Australians not simply given up looking for a job, the unemployment rate would actually be above 11%.
- Visit Business Insider Australia’s homepage for more stories.
Australia’s soaring unemployment rate is showing no signs of slowing down.
Official data on Thursday showed another 227,700 jobs were lost in May, rocketing unemployment another full percentage point higher to 7.1%.
The result was worse than expected, with forecasts pointing to less than half of those losses for the month. Nearly 90,000 of those job losses were full-time, with a further 138,000 part-time jobs getting the chop.
It’s seen the unemployment rate jump nearly 2% in the space of as many months, a troubling sign for the Australian economy as the full impact of government restrictions are beginning to emerge.
It’s not over, either. Despite significant reopening taking place in June and July, Treasury expects unemployment will eventually end up at 8%.
That would see hundreds of thousands more people out of work, with diminished prospects of returning to the labour force.
Many have already left it, after all. The participation rate – the percentage of Australians actively looking for work – continues to fall, reflecting the fact some Australians have given up on the idea of work altogether in the current economic climate.
Such a departure has seen the headline unemployment rate be tempered. IFM Investors chief economist Alex Joiner points out that if those axed workers were all looking for a job, reported unemployment would actually be far higher.
“If the [participation rate] had stayed at January’s high of 66.1% the unemployment rate would sit at 11.6% – arguably a truer reflection of the labour market dislocation currently occurring,” he said in a tweet.
The participation rate is down 3.2pp since January & sits at 62.85% a low last seen in late 2000. If the PR had stayed at January's high of 66.1% the unemployment rate would sit at 11.6% – arguably a truer reflection of the labour market dislocation currently occurring #ausbiz https://t.co/m926w71yxR
— Alex Joiner (@IFM_Economist) June 18, 2020
If that all sounds a bit complex, consider this handy colour-coded chart, with the sharply falling black line showing how much kinder official figures are compared to the reality.
Australian employment has fallen 835k since March. But unemployment has increased by 211k. The remainder are considered to have left the labour force since – for a variety of reasons – they aren't searching for work #ausbiz #auspol @IndeedAU pic.twitter.com/1P1qbEsPTd
— Callam Pickering (@CallamPickering) June 18, 2020
The rising headline unemployment figure has been weighed down by the federal government’s $70 billion JobKeeper program, which has helped keep people technically in employment if they aren’t working.
However, given it is currently under review and could begin to be rolled back from September, there could be more heartache coming for Australian workers.