Turnbull Government ignores Australia's underemployment crisis

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It is a crisis when almost a third of young Australians are either out of work, or without enough work, writes Leon Moulden.

THE LATEST Australian Bureau of Statistics (ABS) figures show a small decline in unemployment for the second consecutive month.

Predictably, the Turnbull Government is pleased, with Minister for Employment Senator Michaelia Cash quickly talking up the good news.

But a closer examination reveals a different story — a story of an employment trend that the Coalition Government refuses to acknowledge.

The current ABS figures have the seasonally adjusted unemployment rate at 5.6%, down from 5.7% in July and 5.8% in June. This is great news — three months of declining unemployment figures.

As you would expect, the Turnbull Government claimed credit and, on the release of the unemployment figures, Senator Cash said:

'The Australian Bureau of Statistics (ABS) labour force figures for August show the unemployment rate has fallen to the lowest level in three years, reinforcing the Turnbull Government’s focus on jobs and growth.'

But what the minister for employment didn’t say was that the part-time employment rate had increased, while full-time employment continued to decrease. Yet the ABS figures clearly show a consistent increase in part-time employment at the expense of full-time employment.

As the program manager of ABS' Labour and Income branch, Jacqui Jones, stated:

'The latest Labour Force release shows continued strength in part-time employment growth, with the majority coming from increasing male part-time employment. Since December 2015, there are now around 105,300 more persons working part-time, compared with a 21,500 decrease in those working full-time.'

This couldn’t be clearer — full-time work is decreasing and being replaced with part-time work. Yet this was not a fact that the minister for employment chose to mention.

From July to August this year, part-time employment increased by 10,200 persons, while full-time employment decreased by 400 persons. As a consequence, part-time workers now represent nearly 32% of the workforce, leaving full-time employment at a record low of 68%. This is significant when you consider that only 30 years ago, in August 1986, full-time employment accounted for 81.12% of the workforce.

But this is not the whole picture. The minister for employment also failed to mention a significant consequence of increased part-time employment – a word we rarely hear from politicians – “underemployment.”

The Turnbull Government – like Liberal and Labor governments before it – would prefer not to mention that, increasingly, more Australians do not have enough work to satisfy their basic needs. Indeed, there are well over a million underemployed Australians. This is the other side to today’s “agile” economy. Yet the Turnbull Government is missing in action on this issue. Underemployment is a word that government ministers dare not mention. But to many Australians, it is a daily reality.

The Australian Housing and Urban Research Institute (AHURI) report 'What is the Relationship Between Underemployment and Housing Insecurity' describes underemployment and some of its impacts:

Underemployment refers to employment that is insufficient in terms of the number of hours of paid work as assessed by the employee. It is a cause of low income and is highly correlated with insecure employment, particularly casual contracts.

This can make it difficult to meet fixed commitments such as rent and mortgage payments. Unlike unemployment, however, underemployed persons generally do not qualify for income support or rent assistance.

Supporting this statement, the ABS August figures provide a good picture of the scale of this labour force problem. They show that underemployment increased by 15,400 persons between May and August to a series high of 8.6% of the workforce. The majority of this increase came from male employees, who represented an increase of 12,500 workers during this period.

This underemployment, the ABS explains, is due to the

' ... increasing shift towards part-time employment.' 

Yet we hear nothing about this issue from Government ministers.

In addition, while ABS figures show an increase in underemployment amongst male employees, gender inequality in underemployment is still highly prevalent, with 10.4% of all female employees currently underemployed compared to 7.1% of males. 

And, if you combine the underemployment rate with the unemployment rate, this provides us with what the ABS refers to as the "underutilisation" rate. This is a very significant 14.3% of the workforce. Which equates to over 1.7 million underutilised and undervalued Australian workers, whose skills, talents and energy are currently being wasted.

It is even worse for young employees, with 19.9% of all 15-24 year old workers underemployed. Furthermore, if we then add the youth underemployment rate to the youth unemployment rate of 12.2%, then 15-24 years olds have an underutilisation rate of 32.1%. That’s nearly one-third of young Australians who are able to work but are either out of work, or without enough work.

Predictably, the impacts of underemployment are significant. They include: low job satisfaction, higher job turnover, lower income, low job security (often because of casual employment), low superannuation, limited access to credit and limited home ownership. Underemployment also impacts general wellbeing and mental health.

A recent Gallop Poll survey in the U.S. highlights the emotional toll of underemployment. It found that 54% of underemployed workers said they were struggling with day-to-day life instead of thriving. Another 50% said they were stressed and 46% said they were worried, while 21% had been diagnosed with depression compared to 12% of full-time workers. This poses the question: Would an Australian poll result in similar findings? If so, this is a major problem.

The ABS figures suggest that underemployment is a hidden crisis in Australia — a crisis that impacts individuals and the economy through the underutilisation and undervaluing of human capital. Yet the Turnbull Government ignores this crisis.

But ignoring underemployment will not make it disappear. Underemployment provides the conditions for an ever-increasing cohort of the working poor – a phenomenon that is usually identified with the United States – not Australia.

Therefore, if the Turnbull Government is really serious about jobs and growth, it should be exploring options to increase employment opportunities for both the unemployed and underemployed.

It should be considering increasing government employment through nation-building infrastructure projects. After all, borrowing money has rarely been cheaper. And it would be better to invest in national infrastructure with borrowed money than using it for recurrent expenditure, as the Coalition Government is currently doing. Many economists think that under the right circumstances, this is logical, including the new governor of the Reserve Bank, Philip Lowe, who stresses the importance of "good" government debt:

“Another option is for governments to use low interest rates to increase spending … Many of our cities could do with better transport infrastructure, Sydney among those.”

In addition, as the AHURI report suggests, governments could also improve minimum employment conditions so as to provide greater job security and guaranteed hours of work — thus reducing the likelihood of underemployment. Similarly, they can provide easier access to income support so as to reduce the burden of underemployment.

Unfortunately – and predictably – it is doubtful that this kind of worker-friendly mixed-economy approach will appeal to the Turnbull Government, as they are stuck in the past by the ideological constraints of neoliberalism. But they will need to respond to this issue quickly, because the fourth wave of the industrial revolution is just around the corner.

If the Coalition Government doesn’t act, underemployment will become the new “norm” as new technologies, such as artificial intelligence, robotics and 3D printing reduce the role of human labour in the economy.

It is surely time for truly innovative social and economic policies — not the same old free market thinking that created this illogical predicament.

Leon Moulden is a freelance social researcher.


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