Working paper

Labour underutilisation and regional labour force data estimates

Labour force Labour market Employment Australia
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In the recent Federal election campaign the issue of labour underutilisation was implicitly assumed away by the emphasis by both major parties on the (alleged) ongoing strength of the national economy. The declining official unemployment rate is cited as evidence that the economy is robust. It is also increasingly apparent that many regional organisations and press sources are using the Australian Bureau of Statistics (ABS) regional Labour Force Survey (LFS) data, particularly the unemployment rates, to make political statements about how the local economies are profiting from the national growth.

This paper addresses the problems that pervade both aspects of LFS use. The reality is that underutilisation of labour remains the largest problem facing policy makers despite the lack of political will to address it. Figure 1 shows that the low point unemployment rate in Australia has ratcheted upwards over successive cycles in Australia since 1975. The Australian economy is now precariously balanced given rising world oil prices and the fragile household balance sheets (due to record personal debt levels).

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