Official jobless rate for May branded ‘a complete crapshoot’

Uncertainty about the job market and doubts over the relevance of the official unemployment rate have prompted calls for a rethink of how ‘unemployed’ is defined.

Economist Saul Eslake: ’It’s a complete crapshoot.’ Picture: Richard Jupe

Record uncertainty about the job market and doubts over the relevance of the official unemployment rate have prompted calls for more information on the number of welfare recipients and a rethink of how “unemployed” is defined.

Forecasts for the May unemployment rate, to be released at 11:30am on Thursday, ranged from 6.3 per cent to 8.5 per cent according to Bloomberg, the widest gap in at least a generation as analysts struggle to understand how JobKeeper, JobSeeker and the pandemic are affecting worker and business decisions.

“It’s a complete crapshoot,” declared economist Saul Eslake who called on the government to publish weekly figures on the number of JobSeeker recipients.

“This data is available. Ministers see the figures weekly. It shouldn’t be a state secret and the US has been publishing this sort of data since 1967.”

Mr Eslake said the May jobless rate — likely to be 6.9 per cent — would be nearer to 13 per cent if the 1.64 million recipients of JobSeeker and the youth allowance (as of late May) were counted as unemployed.

Plenty going on underneath the hood

JobSeeker recipients did not have to look for a job until June 9, meaning they weren’t classified as unemployed by the Australian Bureau of Statistics.

“We have to realise that we don’t quite know what’s going on in the labour market,” said Bob Gregory, economics professor and a former Reserve Bank board member.

The previous labour force survey, conducted in the first two weeks of April, the first to include the effects of nationwide lockdowns, saw the jobless rate increase from 5.2 to 6.2 per cent, while hours worked dropped by more than 9 per cent.

The number of unemployed increased by 104,000 to 823,000 from March.

JP Morgan economist Tom Kennedy, who expects the jobless rate to increase to 6.5 per cent, said April was nevertheless the worst month for the labour market.

“I don’t know why the unemployment rate should increase in May but there’s a lot going on underneath the hood, visibility’s not great and therefore confidence in jobless rates is lower,” he said.

Labor Treasury spokesman Jim Chalmers said the official figures masked “severe underemployment, and the hundreds of thousands of people that have dropped out of the labour force or are working zero hours”.

Gary Morgan, chairman of Roy Morgan, which produces its own survey-based jobless rate, said the ABS headline figure was “phony” and called on government to revise the definitions.

“The current definitions were made up after the Second World War,” he said.

“Things have changed a lot. There’s far more women and part-timers in the workforce. People change jobs more.”