Jennie George (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Environment and Heritage) Share this | Link to this | Hansard source

Since 1960 the Australian Bureau of Statistics has relied on the labour force survey to provide our community with information on employment, unemployment and labour force participation. The survey is done on a monthly basis with a sample of around 29,000 households comprising approximately 65,000 individuals. The ABS definition of an employed person is ‘a person aged 15 and over who during the reference week worked for one hour or more for pay, profit, commission or payment in kind in a job or business or on a farm’. Employment for only one hour or more in that reference week is the test as to whether are you considered to be employed or unemployed.

Despite the huge changes in our labour market since the 1960s—with the growth of casual, part-time and contract labour, and the decline in full-time jobs—the one thing that has not changed is how the ABS measures unemployment. It is a statistical convention set by the ILO which has not changed in four decades. The steady rise in the proportion of people working non-standard hours means that the way we define who is employed actually underestimates the true picture, because it does not measure the extent of underemployment in our economy.

When part-time employment constituted less than 10 per cent of total employment back in the early sixties, adopting a rule that defined employment as working more than one hour a week did not cause any great distortion. Today part-time work accounts for 29 per cent of total employment, the second highest proportion in the developed world. Now that part time, casual and contract work is so much more common, the arbitrary one-hour rule is much more misleading. In the past employment was considered to be a proxy for self-sufficiency, but, as we know, today a casual or even a part-time job is no guarantee of self-sufficiency—let alone a situation where if you work for one hour you are considered to be employed. For example, people searching for full-time jobs are not counted as unemployed if they manage to pick up a few hours of causal work in a survey period.

So when we hear the Howard government loudly proclaim the historic low levels of unemployment in Australia, remember that in the calculation of the unemployment rate, currently at 4.6 per cent, it does not matter whether an individual worked for one hour or 40 hours in a week. Anyone working for more than one hour is defined as employed and by definition cannot be considered unemployed.

We now have in Australia more underemployed workers than officially unemployed. Underemployment has been defined by the ABS as a situation where a worker has a job but works for fewer hours than he or she is willing and able to work. Unfortunately, the ABS only calculates the underemployment figure once a year, in September, and many months pass before it is actually released. The latest broader measures available are for September 2005. They show that the official unemployment rate was 5.1 per cent then, blowing up to an underutilisation rate of 10.5 per cent and an extended underutilisation rate if you include discouraged job seekers of 11.4 per cent. In September 2006, that translated into 521,000 unemployed and 544,600 underemployed Australians. When you look at the figures for the state of New South Wales in September 2006, you see that the official unemployment rate was 5½ per cent and the underemployment rate was 5.1 per cent, leading to an aggregate labour force underutilisation rate of 10.6 per cent.

These figures, I think, are proof that the official unemployment rate that we refer to in fact hides the true labour market situation. The narrow measure of unemployment that we now use, and that the ABS uses, could be rectified by adding a standard question to monthly labour force surveys asking how many hours the person would like to have worked. This would provide both a broader definition of unemployment, along with the narrow official definition that is used to maintain international comparisons. If you take both the official unemployment rate, the underemployment rate and an estimate of discouraged jobless, you get a much broader measure of the true unemployment rate in Australia. This ends up being roughly double the narrow official rate. On this basis, a more realistic measure of unemployment in Australia today is not 4.6 per cent but nearer to nine or 10 per cent. In the region I represent—the Illawarra—it would be in the order of 14 to 15 per cent.