Job vacancies continue to rise as under-employment becomes a big issue
Australia’s job vacancies have continued to rise, providing three full years (12 consecutive quarters) of vacancy growth, but remaining just below the peaks achieved in 2011. The total number of vacancies should be providing plenty of opportunity for those seeking work, but that is not happening, suggesting that under-employment is worsening in Australia.
Examining employment rates and vacancy rates – the percentages, not the raw numbers – provides us with the opportunity to see where the pressures may lie in the economy. In theory, the lower the vacancy rate, which measures the proportion of vacancies relative to the labour force, the lower the unemployment rate.
So, when we see a chart like the one below, published in The Guardian on 4th October, we can anticipate that as the vacancy rate grows (1.38% in the quarter-ended August 2016), the unemployment rate will fall.
However, despite the orthodox view, the unemployment rate has grown and was 5.7% over the same period. Greg Jericho, writing about this in The Guardian, suggested that the unemployment rate should, with this level of vacancies, be down around the 5.2% level.
There are plenty of jobs – the vacancy data shows this – but the vacancies are mainly in the sectors that offer part time employment, as the chart below shows.
So, as a result of this data, we might consider that Australia has an issue with underemployment and perhaps even, an issue that is going to get worse.
Underemployment arises at the individual level (‘I would like more hours’), but also at the macro or economy wide level (‘This group of people are actively seeking work or more work’). At the economy level, under-employment means a key resource is not being fully utilized, which is both a social and an economic challenge.
Put at its simplest, part time work does not suit everyone, but it is much of what is on offer. While ever that is the case – and for whatever reason – the unemployment rate will remain higher and the under-deployment of the key national asset, will remain an issue.