Friday, August 11, 2006

Unemployment Rate

As the Federal Government praises itself over Australia's "lowest" unemployment rate for a generation, it is timely for voters to remember that the measure of unemployment numbers is different.

It is like the measuremnt of the length of a ruler. Today, we would say its length is 30 (cm), but, but since we are not measuring the same things any more, we have only an 8 (inch) ruler in the 197o's. The numbers are different, because we are using different methods of measuring, and the quantities are different, because we defined them differently.

But there is more: who we define as "unemployed" is different. If a person works for 1 hour, they are not unemployed! Many people are "underemployed" - they have part-time work, but want to work more hours. Some people might have 2 part-time jobs, but still work fewer hours than 1 full-time employee! This is particularly true of of people aged 25 or less.

Furthermore, long-term unemployed people who are over 55 are no longer counted (they were "removed" from the unemployment lists in 1991) and were shifted from unemployment benefits to "disability" benefits.

To more accurately compare the employment rates from 1974 and todaywe should be using:
  • unemployment = unemployed people + underemployed + those over 55 who would work if it were offered and are available.
The ABS does not do this and it is unreasonable to compare unemployment rates calculated using different methods. Often, sports commentators say it is unfair to compare great sportspeople form different eras for the same reason.

We all, including media representatives, must ask politicians the "difficult" questions which will help to make them more accountable to us voters.

The Analyst