Putting unemployment in context

Despite encouraging confidence indicators, there wasn’t too much inspiration on the jobs front last month. It’s hard to imagine how the concept of unemployed candidates applying for 40 jobs per month could help anyone.

On the upside, the broader picture for employment bodes well, following a spike in construction.

  • NAB’s latest study showed business conditions soared to a 4 year high in July.  Chief economist Alan Oster said “Construction surged again, propped up by high levels of building approvals that will drive activity for many months”. This sector employs almost 10% of our labour market.  With current housing shortages, this upswing is expected to lead to job gains across real estate, professional and technical services.
  • ANZ Job Ad series  showed that job ads rose for 2 consecutive months (up 4.2% for the year). Chief economist Warren Hogan said demand for new staff was on the rise, which is “broadly consistent with ANZ’s view of a relatively gradual pick-up in economic activity”.

The current prognosis, however, is mixed. Australian Bureau of Statistics figures showed unemployment rose to 6.4% in July (6.8% for Queensland, and 20% for 15-19 year olds). Bear in mind that if you worked for just 1 hour (paid or unpaid) in the week prior, or were discouraged from applying due to knock-backs (or a lack of jobs), you’re not counted. Therefore, this measure excludes many people who are unemployed.

Roy Morgan’s survey was actually more optimistic. Both unemployment and under-employment trended down slightly (to 10.2% and 8.7% respectively), based on 5 straightforward questions:

Are you in paid employment? If No: Are you self-employed or a consultant?  If Yes: Do you work full-time or part-time?  If still No: Are you now looking for a paid job? AND A full-time job for 35 hours a week (or more), or a part-time job.  Part-time employees are asked: Are you looking for a full-time job or additional hours?

Personally, I go with the Roy Morgan research as the more accurate measure of real unemployment. The official ABS measure effectively ignores discouraged job-seekers and under-employment, whereas Roy Morgan still counts them. Youth unemployment is also a concern, as more entry level roles are automated, outsourced or off-shored.  In fact, Australia’s official unemployment rate now exceeds the USA.

Could there be a worse time to be unemployed? The government’s draft changes would force unemployed Australians (around 721,300) to apply for 40 jobs per month to qualify for welfare. This equates to almost 29 million applications per month from job seekers. The irony is there’s only 146,000 vacancies for the 29M applications. So, this works out to an average of 197 applications per vacancy just from unemployed job seekers!

Australia currently has nearly five unemployed people for every vacancy. To state the obvious, making people apply for more jobs does not create more employment, when the issue is a lack of jobs.

Are our fearless leaders really this far removed from the real world?  Has anyone considered the impact on businesses who advertise jobs, only to be flooded day-in day-out with irrelevant applications? Not to mention the open invitation for resume deception to take place, as people scramble to achieve the impossible.

Current research shows around 40% of resumes contain falsified information (such as length of service, gaps, qualifications, reasons for leaving, inflated salaries and referees – to name a few). It is hard to imagine how this scenario could lead to anything (but) an escalation in resume deception, which works in no one’s favour.

As any recruiter will tell you, the issue is not forcing people to apply for jobs. It’s about finding people with the right skills and geographic availability to apply for jobs.

Jan Gadsden