By Peter Boyle
According to the Australian Bureau of Statistics, unemployment in May reached a postwar record of 10.6%. Yet Australia is "technically" well out of recession because, by the end of March, the economy had grown for three quarters in a row, according to official statistics.
Unemployment rose from 10.3% in January to 10.5% in February, stayed steady through March, fell only slightly to 10.4% in April and then rose again in May. Federal government advisers expect the rate to rise even higher this year.
The ABS found that unemployment is worse for young people and for people living in the southern states of Victoria (11.8%), South Australia (12.4%) and Tasmania (11.8%). Youth between the ages of 15 and 19 years suffer a national unemployment rate of 34% and a shocking 46% in Victoria.
It is no secret that the ABS estimate understates real unemployment by not counting someone who has worked even for a few hours (i.e. the underemployed) and those who have been demoralised into giving up the immediate search for work (discouraged job seekers). There are many estimates for this hidden unemployed, said by some to account for at least another five percentage points.
There are some official measures of this hidden unemployment. The ABS employment surveys tell us that the number of people who have "dropped out of the work force" is growing. Just in May another 60,000 gave up looking for work, and since January a total of 155,000 people have dropped out of their calculations.
The ABS says that 54,100 jobs have been lost since January, but if the forced shift to part-time work is taken into account, 100,000 full-time jobs were lost since then.
ABS statistics show that 680,000 children are now growing up with neither parent in a job and that 500 children join this list every day. In February, Melbourne's Herald-Sun newspaper estimated on the basis of statistics from the DSS which are not normally disclosed, that 1.3 million children and adults were dependent on the dole and that there were a total of 4.5 million (more than 26% of the total population) dependent on welfare payments of one form or another.
High unemployment is testing the economists' definition of recessions and recoveries. The traditional rule of thumb — two quarters in a row of falling GDP count as a recession and two quarters in a row of growing GDP are a recovery — says nothing of the scale of the rise and fall in GDP recorded. While GDP grew by 0.1% and 0.3% in the September and December quarters respectively — giving us our recovery — GDP in December was still w its peak in 1989. In the March quarter, it grew by only 0.6%.
The recovery is also weak because it is out of synch with the world economy. Australia's recession had to be brought on earlier because of the speculative boom — based on deregulated borrowing by "entrepreneurs" — that preceded it. Now Japan, a major buyer of Australian exports, is going into recession.
But while continuing high unemployment might be partially explained by slow recovery and the fact that job growth traditionally lags behind recovery in economic activity, the problem is far more serious.
Economics professor Bob Gregory of the Australian National University estimates that less than half the current unemployment figure is due to the recession; high unemployment, he says, will last far into the. As in most western countries, the underlying or permanent rate of unemployment has been growing since the 1970s.
Even by the estimates of the federal government in Keating's "One Nation" statement, official unemployment is expected to average 10% in the 1992-93 financial year, 9.25% the year after and 8.25% the next. Four full years into this "recovery", unemployment will still be 8.25%.
These are the projections of a government about to face the polls, so the real situation could be worse. Keating's grim projections for unemployment were based on estimates of economic growth that are already proving unrealistic. He projected a total growth of 2.75% for the financial year about to end, but to meet this, the economy will have to grow by 1.75% in the three months to the end of June.