Australia’s unemployment rate falls to 4.9% but underemployment up as lockdowns take toll

The economy added nearly 30,000 jobs in June but fewer hours were worked overall as a result of Victoria’s lockdown

@Paul_KarpUnemployment in Australia has fallen by 0.2% to 4.9% but underemployment is on the rise as the economy convulses in response to Covid-19 lockdowns in Victoria and New South Wales.

On Thursday the Australian Bureau of Statistics published the latest labour force statistics, revealing the economy added 29,100 jobs in June despite a 0.5% rise in underemployment to 7.9%.

The month of June started with a two-week lockdown in Victoria and concluded with an ongoing lockdown of 5 million people in greater Sydney, developments that threaten to push the national economy into a negative quarter of growth, according to estimates of market economists.

The treasurer, Josh Frydenberg, told reporters in Melbourne the federal government had agreed on Thursday to extend economic support to Victoria in the event of a likely lockdown. This is expected to replicate the $500m per week support package for New South Wales unveiled on Tuesday.

The package was discussed by the national security committee and expenditure review committee, with the prime minister Scott Morrison due to reveal details later on Thursday.

“What we agreed with New South Wales is a template that can be rolled out across other states should they experience lockdowns,” Frydenberg said.

Despite the eighth consecutive month in which unemployment fell, and with employment now 1.2% higher in June than at the start of the pandemic, Australia now faces a slowing economy because of reduced hours and rolling lockdowns.

The ABS found that 33m fewer hours were worked in June, a 1.8% fall driven by a loss of 40m hours in Victoria.

Bjorn Jarvis, the head of labour statistics at the ABS, said the data on hours worked continued to provide the best indication of how lockdowns impacted the labour market.

“Hours worked in Victoria fell by 8.4% in June, compared with a 0.3% fall in employment,” he said.

“This highlights the extent to which people in Victoria had reduced hours or no work through the lockdown, without necessarily losing their jobs.”

Australia’s economic performance is split, with employment growth recorded in states with short or no lockdowns including Tasmania (1%), Western Australia (0.9%) and Queensland (0.6%).

Jobs were lost in the Northern Territory (-3.9%), the ACT (-2.5%), South Australia (-0.5%), Victoria (-0.3%) and NSW (-0.2%).

Jarvis said youth unemployment had decreased by 0.5% to 10.2% which was 1.4% below the rate at the start of the pandemic.

“The last time we saw a youth unemployment rate of 10.2% was in January 2009,” he said.

The minister for employment, Stuart Robert, said a record 63% of Australians aged over 15 were now employed.

“While Australia’s labour market rebound from the pandemic has beaten even the most optimistic of expectations, the government remains acutely aware that 679,100 Australians remain out of work, and that the risk of ongoing outbreaks of Covid-19 in the months ahead present a degree of uncertainty,” Robert said in a statement.

“Recent lockdowns are expected to have an impact on employment over coming months.”

In a joint statement, Labor’s deputy leader Richard Marles and shadow treasurer Jim Chalmers accused the government of patting itself on the back while 1.8m Australians were looking for work or more hours.

“The labour force figures released by the ABS today are for June and do not reflect the hurt and devastation many communities are feeling right now,” they said.

“Right now, Scott Morrison’s botched vaccine rollout is the biggest risk to our economic recovery.”

“We can’t have a first-rate jobs and economic recovery with a third-rate vaccine rollout.”

On Tuesday the federal and NSW governments announced a $5bn economic support package for businesses and workers affected by the greater Sydney lockdown.

To receive payments of up to $10,000 per week, businesses must maintain their full time, part-time and long-term casual staffing levels as of 13 July 2021.

On Thursday the Australian Council of Trade Unions wrote to the Fair Work Commission asking it to convene a hearing to consider varying award minimum conditions to reflect the rules of the new Covid-19 business support payments.

The ACTU secretary, Sally McManus, wrote that awards should “support” the requirement for jobs to be maintained, through “transparency and oversight … and for the FWC to play a role in determining appropriate outcomes where necessary”.

The ACTU wants employers to be required to advise employees they are receiving the payments and commit not to reduce staff or hours.

Employer groups are wary of the move, with Australian Industry Group chief executive Innes Willox warning it would oppose “awards containing any provisions which would prevent employers terminating employees”.

“This is not the role of awards,” he said. “Termination of employment is dealt with extensively in the Fair Work Act, including through the unfair dismissal laws.”

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