Lead Story
Issue No. 9 - February/March 2003
Labour Labyrinth
by Professor Richard Blandy
In December 2002 South Australia’s unemployment rate fell to 5.6 per cent (seasonally adjusted) — the lowest rate of any State and the lowest rate ever recorded for South Australia since the Australian Bureau of Statistics’ labour market survey began in the late 1970s.
There was a good deal of local triumphalism about this apparently magic event, which is not unsurprising in view of the terrible state of the South Australian labour market over the preceding decade, including an unemployment rate persistently higher than Australia’s as a whole.
Unfortunately, the unemployment rate is not necessarily a clear indicator of the state of the labour market. A more rounded evaluation of the latest labour market figures indicates that South Australia does not have the best labour market in Australia, but that it is improving very greatly compared with the previous decade’s pathetic outcomes.
First, if one refers to the more reliable trend data (which eliminates more of the erratic movement in the original data collected by survey from households every month) the unemployment rate fell only to 5.9 per cent, compared with 6.1 per cent nationally, 3.7 per cent in the ACT, 5.5 per cent in the Northern Territory, 5.7 per cent in Victoria, and 5.9 per cent in New South Wales.
Second, a more reliable idea of the strength of the labour market is gained by looking at jobs growth rather than at the unemployment rate. The reason is that the unemployment rate is affected by labour availability as well as by work availability. An unemployment rate that is low not because there are a lot of jobs, but because there are few people looking for work, is not a strong labour market.
Queensland has the highest (trend) unemployment rate in Australia — 6.9 per cent — and over the past decade its unemployment rate has fallen by only 3.5 percentage points (from 10.4 per cent). By comparison, South Australia’s unemploy...
