- The unemployment rate rose to 7.5% in July, as the number of unemployed Australians surpassed one million.
- That figure doesn’t include the 3.5 million workers being supported by JobKeeper.
- Recorded before Victoria’s most recent lockdown, the numbers are expected to rise through August.
- Visit Business Insider Australia’s homepage for more stories.
If you or someone you know is out of work, you’re part of a quickly-growing group.
In fact, there were more than one million unemployed Australians in July, for the first time during the coronavirus pandemic, according to the latest ABS labour force figures out on Thursday.
It comes after 15,700 more people were ejected from the workforce over the course of the month, the latest casualties of the country’s first recession in three decades, lifting the unemployment rate to 7.5%.
Despite the landmark figure, it will be considered a surprisingly good result, with the expectation generally being that the labour force was in even worse shape.
Certainly, it was helped by an extra 114,700 people lifted into jobs, with unemployment only lifting on the back of a strengthening participation rate – that is, the growing number of people looking for work.
However, as avid followers of the jobs figures would know, the headline unemployment rate only tells part of the story.
“It’s been clear for a few months that the unemployment rate isn’t fully capturing all people that are effectively unemployed, as the JobKeeper and JobSeeker programs are distorting the data,” Sarah Hunter, chief economist for BIS Oxford Economics said.
“Without JobKeeper, the ABS estimates that the unemployment rate would be 0.8% higher, and adding in those people that have lost their job and exited the workforce since March, the rate rises to around 10%.”
In total, some 235,000 Australians have simply dropped off from the official count. Far from a conspiracy, these people aren’t included as unemployed because they’ve ceased actively looking for work. Cue the chart.
Australia's labour market dynamics during the crisis have been difficult to interpret. This graph shows why.
Employment has fallen around 530k since March. However, unemployment has increased just 293k. There is a sizable gap between 'officially' and 'actual' unemployment. pic.twitter.com/g7Cr8FPefr
— Callam Pickering (@CallamPickering) August 13, 2020
No doubt the group is unexcited about their prospects given the current economic climate. However, they’ll be forced back into the fold as mutual obligations are reintroduced and JobSeeker recipients are required to actively apply for whatever roles they can find.
The number of hours Australians are working meanwhile improved in July but remain down 5.5% on pre-pandemic levels, while employment is 4.1% down from its peak.
More significant a caveat, however, is the fact that Victoria didn’t unleash stage four restrictions on Melbourne and stage three restrictions on the remainder of the state until August.
In other words, Thursday’s figures reflect a national economy that was lifting in July with the government still hopeful of triumphant recovery.
With Victoria, representing nearly one-quarter of the entire economy, effectively sitting the month of August out, next month’s figures are set to be the most bitter since COVID-19 really got into full swing.
Official estimates suggest there’ will be 250,000 layoffs as a result, with real unemployment to hit 13% by Christmas.
Talk about a gift no one wanted.