By Sean Malloy
While the ALP government insists the recession is "technically" finished, hundreds of thousands of people face long-term unemployment, and there is an increasing amount of underemployment, according to two articles in the latest Australian Bulletin of Labour.
The articles also try to assess whether training is a partial answer to unemployment.
Paul Keating asserted in parliament on October 6 that the recession is "technically" over, because there had been "1.6% growth over the year to June 30". Said Keating, "We were out of the recession long ago".
In the September issue of ABL, Judith Sloan and Mark Wooden argue that "on the basis of the long-run trend in the figures ... the unemployment rate may not even have peaked yet!"
Sloan and Wooden note that "job vacancy levels remain at historically low levels and there are few signs ... to indicate that the labour market is strengthening.
"... full-time employment continues to decline, with part-time employment providing the impetus for the growth recorded in the July data."
The Australian Bureau of Statistics puts September's unemployment rate at 10.8% noting that the reduction from 10.9% in August was due to 64,000 people giving up looking for work without finding jobs.
Sloan and Wooden forecast that the unemployment rate will be around 10.5% in June 1993. They argue that the 1990s will be "the long trough", "an era of persistently high unemployment".
Comparing unemployment figures in the '83 recession, Sloan and Wooden note that in '83 the unemployment rate levelled out at 10% for six months before a recovery. In this recession unemployment levelled out at 10.5% for six months before rising again.
They argue that any recovery will have little impact on unemployment.
"If a 3.5 percent growth rate in GDP for the year June 1993 is assumed" — this is what the government predicts — "and given labour force growth of about two percent, for unemployment not to grow, labour productivity must rise by less than 1.5 percent. Productivity growth, however, has averaged about one percent over the last decade. Furthermore, productivity growth tends to rise above trend coming out of a recession as a result of labour shedding. Consequently, we expect a productivity growth figure of close to 1.5 percent meaning minimal reductions in the stock of unemployed and a digit unemployment."
They point out that the 27,000 "jobs" created by Keating's One Nation statement and the August budget will "not make much of a dent in the unemployment pool which currently numbers well in excess of 900,000 persons".
Sloan and Wooden also discuss underemployment, which includes both unemployed and part-time workers seeking full-time work. Access Economics has estimated underemployment at between 14 and 18%, noting that 500,000 people currently working part time want to work full time.
"Of the 148,000 new part-time jobs (in net terms) that appeared in the year to July 1992, more than half (57 percent) involved persons working fewer hours than desired", write Sloan and Wooden.
They add that "the level of underemployment during the 1991/92 recession is much higher than it was during the 1983 recession ... the long-run trend in underemployment ... is distinctly upwards and is not simply a cyclical phenomenon".
As for training, they say that "even given the training imparts valuable skills, it does not guarantee that any jobs will be available upon cessation of the program".
They see the main function of programs such as Jobstart or Jobtrain as "to help share unemployment around and to prevent long-term unemployment from rising further".
An expansion in training will not result in more jobs: "Instead the proportion of the unemployed with post-school qualifications will increase".
The ABS records 350,000 people with post-school qualifications who are currently unemployed.
Another article in the same issue by Bruce Chapman, P.N. Junankar and Cezary Kapuscinski examines long-term unemployment specifically.
The authors project that "by early 1994 there will be about 400,000 people in the category [of long-term unemployed], compared to about 190,000 in 1983".