There is no doubt that the rate of unemployment is going to rise over the coming months. You can't shut down sections of the economy without the workers in them losing their jobs.
There's going to be a lot more use of phrases like "jobless rate", "unemployment rate" and "workforce". It will be useful to know what they mean.
What does the 'rate of unemployment' mean?
The rate of unemployment (also known as the unemployment rate or the jobless rate) is the proportion - the percentage - of the workforce which wants to get work but can't.
The workforce is all those unemployed people of working age who want jobs plus those who have jobs. It's people with paid employment and also those without it but who would like it and are seeking it.
The rate of unemployment (jobless rate or unemployment rate) is the proportion of the workforce which wants a job but can't get one.
So that's easy enough to understand?
The question is: how do you measure unemployment?
The obvious way would be just to count the number of people who sign on at Centrelink.
But that would exclude a whole bunch of people who want work but who don't want to register. They may be looking for work through other methods - answering jobs adverts or contacting contacts, for example.
People might be too proud. Some might be older workers who feel they have no hope of getting a new job even though they are keen for one, and who would benefit the economy if they did work.
Economists want to know what the potential of the economy is if all available workers were working - how much slack there is.
What is a better way of measuring unemployment?
The Australian Bureau of Statistics conducts a monthly survey (known as the Labour Force Survey) in which it asks around 50,000 people about their situation.
As part of this survey, the ABS groups people of working age (deemed as 15 years and over) into three broad categories:
- Employed - includes people who are in a paid job for one hour or more in a week.
- Unemployed - includes people who are not in a paid job but who are actively looking for work.
- Not in the labour force - includes people not in a paid job and who are not looking for work. (For example, some students, full-time carers, retired people or those permanently unable to work).
Once it knows the numbers of employed and unemployed, it can calculate the rate of unemployment.
How many unemployed are there in Australia?
On the latest ABS figures, there are just over 13 million people in employment (13,010,200) and just under 700,000 unemployed people (698,000) meaning roughly one in every 20 people in the workforce (or five per cent) are unemployed.
In the Great Depression a century ago, around a quarter of the workforce couldn't find work, sometimes more. From 1930 to 1934, the rate of unemployment was 23.4 per cent. It peaked at 30 per cent in 1932.
How low can unemployment go?
That's debated by economists but nobody thinks it can be zero - people are unemployed when they change jobs, for example.
But everyone agrees that unemployment is undesirable. It's a waste for the economy. And it is terrible for people.
According to a study for the Business Council of Australia: "The personal and social costs of unemployment include severe financial hardship and poverty, debt, homelessness and housing stress, family tensions and breakdown, boredom, alienation, shame and stigma, increased social isolation, crime, erosion of confidence and self-esteem, the atrophying of work skills and ill-health."
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