False Optimism on Jobs

On the face of it, last week's Labour Force statistics from the ABS showed good news. March saw a two percent rise (seasonally adjusted) in employed persons and a 4.7 percent drop in the unemployed. But beneath the surface lurks a different picture.

The total employed figure includes a higher proportion of part-time workers than ever before. Ten years ago 21 percent of all employed people worked part time, many as a lifestyle choice. In March it was 30 percent and the sharp rise last year indicates it was more out of necessity. In other words, more people were settling for part-time work because they couldn't get a full-time gig.

The trend is more pronounced for women in the workforce, with the proportion of part-time workers going from 23 percent to 46 percent over the last decade. Again the last year has seen the sharpest rise.

This graph shows how the number of people unemployed is returning back quickly to where it was in January 2007, while the number of full time employed hasn't really moved from where it was three years ago, despite population growth. The significant trend is the number employed part time, which has increased by about 10 percent.

More people are working, but many are working less There's another disturbing trend. Over the last couple of years those part-timers have worked less and less as each month goes by. During the GFC full-time workers were also putting in less time, but now that the economy is starting to grow again they're heading back in the right direction (although their hours are still a lot less than before). But the slide in hours worked by those in part-time employment continues unabated. So we're seeing more people moving to part-time work, getting paid for less hours, and it's getting worse by the month.

Doesn't this strike a cautionary note? As always, it pays to be wary of top-level statistics. They can hide the true state of the economy. We're already seeing media reports of people scraping to meet the increased cost of power bills. To me these figures point to a growth in the working poor, which raises the question as to whether further interest rate rises will hit spending patterns harder than the Reserve Bank envisaged.