With businesses complaining about labour shortages, and the official unemployment rate at a long-time low, this should be an optimistic time for unemployed people – a job offer should be just around the corner! As the ABS Labour Force data in the graph below shows, unemployment is trending down strongly after the spike caused by COVID lockdowns, and it is significantly below the pre-pandemic levels. Even long-term unemployment (more than 12 months duration) is decreasing the in face of economic growth and a tight labour market.

However, this is overly-simplistic and other data shows a pattern of higher unemployment and sustained, long-term unemployment. The ABS Labour Force data defines a person as employed if they have any employment at all (even 1 hour per week), which means that when people are minimally employed, or pick up the odd shift or week’s work they don’t show up as unemployed and the clock is reset on their duration of unemployment.

A very different story

What is actually happening for people on the margins of the labour market is much better captured by the Department of Social Security (DSS) data on those receiving unemployment payments: JobSeeker and Youth Allowance (Other). The 2022 September Quarter data shows that there were 839,000 people in receipt of JobSeeker and Youth Allowance, far more than the 504,000 unemployed in the ABS Labour Force data.

Approximately 183,000 (22%) of those receiving JobSeeker/YA had some form of earnings for the fortnight, and so would be excluded from the ABS definition of unemployed. However, the remaining 656,000 unemployed people in the DSS data is still a much higher number than the ABS estimate of unemployment, and in contrast to the ABS unemployment estimate, the total numbers of people receiving JobSeeker/YA has not yet returned to pre-pandemic levels. Further, as the graph below shows, the gap between the ABS employment data and the numbers of people receiving income support payments has widened substantially since COVID – probably reflecting a more fractured or precarious post-pandemic labour market.

The DSS data not only shows higher levels of effective unemployment, but also of much longer duration. The ABS labour force data suggests around 25% of unemployed people are out of work for 12 months or longer, while the DSS data shows that some 71% of those receiving JobSeeker have been in receipt of the payment for more than a year – and 80% have been in receipt of JobSeeker or other income support payments for more than a year.

According to the DSS data, in September 2022 there were a massive 665,000 people on JobSeeker/YA who had been receiving income supports payments for more than a year. That is higher than the total ABS unemployment figure, and still higher now than prior to the pandemic. As the graph below shows, the numbers have reduced since the height of the pandemic, but it is not the rosy story painted by the ABS data. There remains a problem of entrenched and long-term unemployment.

Why are people unemployed in the long-term if there is work available?

One reason for the ongoing long-term unemployment is that, while macro-economic models posit a smooth relationship between economic growth and jobs growth leading to reduced unemployment, for individuals looking for work the process is anything but smooth. There is not a queue where you get to the font of and get a job when it is your turn – it is a competition for each job. And if you have a disability and only a partial capacity to work (or need additional supports) or if you have caring responsibilities, employers may simply prefer someone else (that they see as less complicated).

That is important because the DSS data shows:

• Over 40% of unemployed people receiving JobSeeker are assessed as having only partial capacity to work only (i.e. they have some form of disability which prevents them working more than 30 hours a week)
• Around 13% are the principal carers for children, with 80% of those people not having a partner and so being the principal carer on their own.

These people are at a considerable disadvantage in each individual employment competition, and someone still ends up in long-term unemployment if they finish second in every employment process!

The extent to which people who are unemployed are constantly beaten to jobs is shown in ABS data on changes in labour force status. This tracks the flows of people who are employed, unemployed or not-in-the-labour-force (NILF) in one month to see if their status changed in the next month. From this, we can track where people who get jobs are coming from.

From November 2021 to November 2022, the vast majority of jobs that went to people who were not already employed did not go to people who were unemployed. 72% of such jobs went to those who were previously not in the labour force, with only 28% going to those who were unemployed. The result was that on average only a quarter of those that were unemployed one month were employed by the next month, just over a half were still unemployed and the rest had dropped out of the labour force.

So, while unemployment levels did drop last year (in both ABS and DSS data sets), the labour market expansion did not simply soak up the unemployed. Rather, we saw:

• extra hours going to workers who already had jobs (with the numbers of people employed but looking for more hours falling by about 20%),
• people entering (or re-entering) the workforce getting the majority of jobs that did not go to those already in work, and
• the long term unemployed remaining unemployed.

Or put more broadly, we can see that entrenched long-term unemployment is compatible with (and will not be fixed by) jobs growth when the unemployed are constantly or disproportionately beaten to jobs.

Implications of long-term unemployment

The existence of significant levels of entrenched long-term unemployment is important because the longer someone is unemployed the more likely savings will run out, housing and other basics become more difficult to secure, personal confidence declines, motivation and mental health challenges become more acute, skills and networks degrade, and the harder it becomes to get a job. In a society where identity and access to resources is fundamentally determined via the labour market, being unemployed sucks. And being long-term unemployed is damaging.

In a future post I will consider the implications of these significant levels of entrenched long-term unemployment for political-economic theory and policy, but finish here simply with a table summarising the September 2022 data which shows the extent of the problem.

	ABS Labour Force Data	DSS Payment Demographic Data
Unemployment (U)	504,200	839,421
Less than 12 months	377,930	174,724
More than 12 months	126,300	664,697
Unemployment Rate (% of LF)	3.6%	5.4%
Long Term U % of Total U	25%	79.2%
Median Duration of U/Payments	13 weeks	315 weeks*