Yet when JobKeeper ended at the end of March, it looked like a mere blip in employment. The unemployment rate actually fell, for the sixth consecutive month.
Changed rules pushed people off benefits
But it’s possible for people to come off benefits at the same time as people are losing jobs, especially if something else is driving them off, as it was at the end of March.
And job seekers were once again required to search for a minimum of 15 jobs a month, climbing to 20 from July.
While burdensome for employers (if all of Australia’s job seekers actually apply for those jobs, employers will be lumbered with 17 million applications per month, climbing to 23 million) it’s also unhelpful for job seekers.
These changes make the drop in the number of claimants understandable, much more so than the suggestion they got jobs, which in net terms they did not. Employment fell after the end of March, by 30,600 according to Bureau of Statistics figures which will be updated on Thursday.
As many as 97,000 fewer workers?
How is a drop in employment consistent with a drop in the unemployment rate?
The unemployment rate fell to 5.5% in April not because employment grew, but because 33,600 people who had previously identified themselves as unemployed dropped out of contention, changing their status to “not in the labour force”.
Had they continued to not work but continued to describe themselves as “unemployed”, the unemployment rate would have been 5.7%.
And it would have been higher still if those shifted to zero or reduced hours with the end of JobKeeper had been called unemployed. Employment fell 0.2%, but hours worked fell 0.7%.
My rough maths suggests this means the number of Australians actually working might have fallen by 94,100.
He gets 45,000 by comparing the number of people who left employment between March and April this year with the number who left between March and April in previous years.
He gets 97,000 by comparing the average (rapid) growth over the previous four months as we emerged from recession with the growth between March and April.
One in 11 JobKeeper jobs
A touch over one million Australians remained on JobKeeper to the end, suggesting that as many as ten in every 11 of them kept their jobs when JobKeeper ended. One in every 11 might have lost their jobs.Mangostar/Shutterstock
Men under the age of 40 have lost jobs while men over that age have gained them.
The unlucky young people who happen not to secure jobs during downturns can fail to secure them for years, being passed over by newer, fresher young people who are barely affected.
Even where these people get jobs, if they enter the market when the youth unemployment is five percentage points higher than normal, they can expect to earn roughly 8% less in their first year, and 3.5% less after five years. It takes about a decade for the effect to fully disappear, and it’s worse for women than men.
Vacancies, plus mismatch
It might be that the mix of jobs we will need is changing, or that employers can for the moment no longer rely on migration to give them the mix of skills they want. Or it might simply be that the general bounceback in jobs has been so fast that the right employers and the right workers are still working out how to find each other.
Many businesses will die as a result of the end of JobKeeper. Businesses are forever dying. Some have been kept alive for longer than they would have been, and some have exited JobKeeper into a changed environment.
We’ve managed to end JobKeeper without a catastrophe, but that doesn’t mean there hasn’t been damage, and it doesn’t mean young lives won’t be scarred.
After a textbook exit from a recession — the sharpest V-shaped recovery ever — it would be awful if we left a slice of young Australia behind.
- ^ 3.8 million (budget.gov.au)
- ^ Russia (www.imf.org)
- ^ discernible impact (www.abs.gov.au)
- ^ went further (ministers.treasury.gov.au)
- ^ 132,000 (ministers.treasury.gov.au)
- ^ 9% (data.gov.au)
- ^ stopped (ministers.dese.gov.au)
- ^ New finding: jobseekers subject to obligations take longer to find work (theconversation.com)
- ^ sooner (theconversation.com)
- ^ dob in a job seeker (www.news.com.au)
- ^ 30,600 (www.abs.gov.au)
- ^ Josh Frydenberg has the opportunity to transform Australia, permanently lowering unemployment (theconversation.com)
- ^ Jeff Borland (www.fwc.gov.au)
- ^ one million (budget.gov.au)
- ^ lost jobs (www.abs.gov.au)
- ^ scarring (budget.gov.au)
- ^ 2% (www.abs.gov.au)
- ^ The four GDP graphs that show us roaring out of recession pre-lockdown (theconversation.com)
Authors: Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University