Australia’s jobless rate has stabilised at 5.8 per cent, but economists have identified some worrying trends in the latest round of employment figures.
Youth unemployment has hit a 12-year high, and a growing number of people in part-time jobs say they are not working enough hours.
Meanwhile, overall workforce participation is continuing to decline as more baby boomers retire.
While around 22,000 Australians found full-time jobs last month, 27,000 part-time workers lost theirs.
RBC Capital Markets senior economist Su-Lin Ong says the net loss of almost 5,000 was disappointing.
“We view it, I guess, partly as a bit of payback for what’s been a fairly strong few months in employment generation,” she said.
The unemployment rate has now been stuck at 5.8 per cent for three months, after hitting a decade-high of 6 per cent earlier this year.
It avoided another rise in May because the participation rate edged down.
“Which we never take as a particularly great sign. It looked like the participation rate was trying to bottom out, but it looks to have fallen a little bit more in the month of May,” Su-Lin Ong added.
In fact it has fallen to its equal lowest level since March 2006.
Westpac economist Justin Smirk expects the number of people working or actively looking for work to continue falling.
“We are scratching our heads a little bit, but it is quite interesting that this decline in participation is a little bit more structural and ongoing than we first thought,” he said.
He says having the baby boomers retiring now is contributing a fair portion of that decline, but far from all of it.
“If you just look purely at how the numbers are flowing through, you can quite quickly work out it’s sort of explaining about 0.2 percentage points of the fall per year,” he said.
“But we’ve seen a much greater fall than that, so there are other factors going on as well.
“Under the weak labour market, the rate of people leaving the labour force for retirement is greater than just what the ageing is. You know, more people are choosing to leave.”
He says those departures from the workforce mean less Australians are working as a proportion of the total population than has been the case for some time.
“What it’s also highlighting is the employment to population ratio is in quite a steep decline as well,” Mr Smirk added.
“That is, as a share of the workforce, the population that’s actually working and earning an income is declining and it’s declining faster than we anticipated.”
This month’s jobs data also provides a quarterly update on the portion of working Australians who say they are not getting enough hours.
Combined with the unemployment rate, that means 13.5 per cent of the potential work force either are not working, or are not working as many hours as they would like.
“So there does also appear to be a bit of a pause going on in the labour market. That is, employers are nervous to hire, they are underutilising people and rather than going through a large firing rate, are just working the labour markets a bit softer,” Mr Smirk explained.
“So it all goes to the vein of that, why we’re seeing households being a little bit conservative about their spending patterns, a little bit conservative about how they anticipate these things, and it’s really highlighting that, yes, we don’t have a rapidly rising unemployment rate, but underlying that the labour market is perhaps not as strong as what that not-rising unemployment rate suggests.”
There is one jobless figure that is rising – the youth unemployment rate. For people aged 15 to 24 it has hit a 12-year high of 13.1 per cent.
Lucas Walsh from Monash University researches the impact of higher unemployment on young people, and he is not surprised by the figures.
“Young people are particularly vulnerable to changes within economic cycles, and we saw this with the global financial crisis, which hit young people immediately and disproportionately,” he said.
“Similarly, we can in fact see young people carrying the burden of instability at the moment. We’ve seen young people hit hard by changes in the economy.
“The retail and services sectors are large employers of young people, and with downturns experienced of late, it’s not surprising to see more young people unemployed.”