Jobs Report

Issue 1, December 2011 In 2010, the Australian economy was a jobs machine 362 300 more Australians were in work at the end of the year than at the start of it. This was the biggest increase in employment in a calendar year on record. Even better, 300 500 of these additional employed people had full time jobs.

Unfortunately, the labour market spent much of 2011 treading water. It was always expected that jobs growth would be slower in 2011, but a range of factors (like natural disasters and the Euro-zone mess) led to the slowdown being more severe than expected.

Employment rose by 40 400 in the year to November 2011, but the working age population grew by 225 400. This meant that the proportion of the population in work fell, from 62.6% to 62.1%. Although this is still extremely good in historical terms (63% is the all-time high, reached in April 2008 before the GFC), the slight erosion of 2010s gains has been disappointing.

All of the net additional employment in 2011 was in part time work, with full time employment falling by 14 900 over the year to November. The ups and downs of the jobs market havent been spread evenly across industries, with some sectors like manufacturing doing it particularly tough in the current conditions. However, the Australian labour market is still in a far better state than virtually any other developed country, with unemployment at 5.3%, a rate that some economists insisted was impossible a few short years ago.

This Jobs Report forms part of a new suite of regular reports by the ACTU, along with a Wages Report and an Economic Report, each of which will be released quarterly.

Australian jobs at a glance

Level Employment Full time employment Part time employment 11 457 100 8 026 300 3 430 800 18 460 400 5.3% 7.3% 65.5% 62.1% Monthly change -6 300 -39 900 +33 600 +21 100 +0.1pps +0.3pps* -0.1pps -0.1pps Year-ended change +40 400 -14 900 +55 300 +225 400 +0.1pps +0.2pps* -0.5pps -0.5pps

Working-age population Unemployment rate Underemployment rate Participation rate Employment to population ratio

Source: ABS 6202.0. All figures are seasonally adjusted unless otherwise noted. Figures refer to the month of November unless otherwise noted. Estimates of the working age population are imputed from the data. *Underemployment data are quarterly. pps = percentage points.

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Australian employment and unemployment

The number of Australians in work fell in November, down by 6 300 from October. Full time employment shrank by nearly 40 000 in the month, with part time employment offsetting most of the fall. After reaching a post-GFC low in March of 4.9%, the unemployment rate rose to 5.3% in November. This is a Figure 1 - Monthly change in employment
Thousands 40 30 20 10 0 -10 -20 -30 -40 -50 -39.9 Full time Males
Source: ABS 6202.0.

particularly disappointing, with the number of men in work falling by 10 400 over the year.

very low rate compared to those that Australia has experienced for the past three decades or so and its lower than most other developed countries rates, but the increase is still a concern.

33.6 25.3

8.3 2.3 Per cent 6.5 6.0 5.5 5.0 Part time Females Persons Total 4.5 4.0 3.5 3.0 Nov 06

Figure 3 - Unemployment rate November 2006 to November 2011

-8.6 -6.3

-16.9 -22.9

Figure 2 - Change in employment Year to November 2011

Thousands 60 50 40.4 40 30 55.3 50.4 50.8

Nov 07

Nov 08

Nov 09

Nov 10 Trend

Nov 11

Seasonally adjusted

Source: ACTU calculations based on ABS 6202.0. All data seasonally adjusted other than the ACT/NT, which are trend estimates.

The underemployment rate also rose over the year,

20 10 0.4 0 -10 -10.4 -20 -15.3 -14.9 Full time Males Part time Females Persons Total 4.9

growing from 7.0% in November 2010 to 7.3% a year later. Underemployed workers are those who are in work, but want to work more hours and are available to do so. Adding together the unemployment and

underemployment rates gives the underutilisation rate, a broad measure of the proportion of the labour force who want more work than they currently have.

Source: ABS 6202.0.

Over the year, employment has grown, but all of the gains have been in part time work. Total employment rose by 40 400 in the year to November, but 14 900 fewer Australians were employed full time than was the case a year earlier. Male employment growth was
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Figure 4 - Labour force underutilisation rate (Unemployment + Underemployment)

Per cent 15 13 11 Underemployment 9 7 5 3 Nov 06 Unemployment

high of 63% in April 08, fell to 61.6% by June 09, recovered to 62.6% in November 2010, and has now fallen to 62.1%. The ratio is now about halfway between its pre-GFC peak and its post-GFC low.

Figure 6 - Employment to population ratio

Per cent 64 63 62 61 Nov 07 Nov 08 Nov 09 Nov 10 Nov 11 60

Source: ABS 6202.0

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Employment growth in the year to November (40 400) wasnt enough to keep up with working-age population growth (225 400). Figure 5, below, shows these two measures, converted to indices set to equal 100 in May 2008, before the GFC. It shows that jobs growth outpaced population growth from mid-2009 to late-2010, but that the sluggish employment growth in 2011 has seen the gap widen once again. Figure 5 Change in the working age population and total employment since 2008
Index 107 106.6 106 105 104 103 102 101 100 May 08Nov 08May 09Nov 09May 10Nov 10May 11Nov 11
Source: ACTU calculations based on ABS 6202.0.

58 2001 2003 2005 2007 Seasonally adjusted 2009 Trend 2011

Source: ABS 6202.0

The employment to population ratio is back to where it was in early 2007 historically an extremely high rate, but slightly below the highs that would be reached before the GFC took hold. The participation rate, too, has fallen slightly after reaching an all-time high in November 2010 (66%). Its now 65.5%. Treasury forecasts that 66% participation is as high as Australia will get before the effects of the ageing population start to be felt in the labour market.

105.3

Figure 7 - Participation rate

Working age population Total employment Per cent 67 66 65 64 63

A more conventional way to look at these figures is the employment to population ratio, as in Figure 6, below. This shows the proportion of working-age Australian residents who are in paid work. This ratio hit an all-time
Source: ACTU calculations based on ABS 6202.0

62 2001 2003 2005 2007 Seasonally adjusted 2009 Trend 2011

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Employment by State
The strongest employment growth in November was recorded in Western Australia, which added 11 600 net new jobs in one month. This left WA employment up 15 700 workers over the year, a 1.3% increase in WA employment. Victoria and Tasmania each grew by a small amount, between 0.1% and 0.4%, while Tasmania did not add any net new jobs and ACT employment shrank. Figure 8 and Figure 9 show the jobs growth by State in the year to November 2011, in both absolute terms (the number of jobs) and proportionate terms (the percentage New South Wales, South Australia and both Territories each added a small number of workers in November ranging from 2 800 in NSW to 100 in the ACT, a statistical blip. Although employment in the ACT shrank over the year, it was still left with the nations lowest unemployment rate at 3.9%. Tasmanias rate, 6.0%, was the nations Figure 8 - Change in employment (thousands) year to November 2011 WA SA Qld NSW Vic NT Tas ACT -5 0.0 -1.0 0 5 10 Yearly change (000s) 15 20 1.2 3.6 3.1 9.2 9.2 15.7 highest. Figure 10 - Unemployment rates by State November 2011
Tas Qld Vic SA NSW WA NT ACT 0 2 4.3 4.2 3.9 4 Per cent 6 8 6.0 5.8 5.5 5.3 5.2

increase in total employment in each State).

Source: ABS 6291.0.55.003. States data are seasonally adjusted; territories data are trend estimates.

Figure 9 - Change in employment (per cent) year to November 2011 WA SA Qld NSW Vic NT Tas ACT -1.0% -0.5% -0.5% 0.0% 0.5% Yearly change (%) 1.0% 1.5% 0.0% 0.1% 0.1% 0.4% 1.3% 1.1% 1.0%

Source: ABS 6202.0. States data are seasonally adjusted; territories data are trend estimates.

Although there continues to be a fairly wide variation in unemployment rates across the States and Territories, with 2.1 percentage points between the highest and lowest rates, this gap is actually smaller than at virtually any time from 1980 to 2011.

The record was reached in December 1997, with a 7.1 percentage point gap between Tasmanias 11.6% unemployment rate and the 4.6% rate in the Northern Territory. The average gap for the past 30 years has been 4.0%, suggesting that the gap between high- and low-unemployment States and Territories is about half

Source: ABS 6291.0.55.003. States data are seasonally adjusted; territories data are trend estimates.

Over the year, there were three speeds of jobs growth across the States. WA, Queensland and SA each increased their employment levels by at least 1%. NSW,

as big in 2011 as it has been for most of the past few decades. Although the economic growth during the past few years has been somewhat lopsided, the jobs growth
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has been more broadly spread across the country than is commonly assumed.

While the gap between unemployment rates is relatively small relative to its historical average, the States and Territories continue to have significant differences in

Figure 11, below, shows the highest and lowest State/Territory unemployment rates, compared with the national figure, for the past five years. Figure 12 shows the gap between the highest and lowest rates, going back to the start of the ABS Labour Force time series in 1978. Figure 11 - Unemployment rates November 2006 to November 2011 Per cent 7 6 5 4 3 2 1 0 Nov 06
Lowest State/Territory rate Australia Highest State/Territory rate 6.0 5.3

their labour force participation rates. In the Northern Territory, 74.4% of working-age residents are either in work or are actively looking for work; in Tasmania, the equivalent figure is 60.8%.

The five mainland States have participation rates that range from 63.4% (SA) to 68.2% (WA), with the national figure being 65.5%.

Figure 13 - Participation rates by State

NT ACT WA Qld 3.9 Vic NSW SA Tas 50 55 60 60.8 65 Per cent 70 75 80 68.2 67.5 65.6 63.6 63.4 72.0 74.4

Nov 07

Nov 08

Nov 09

Nov 10

Nov 11

Source: ABS 6202.0. States data are seasonally adjusted; territories data are trend estimates.

Source: ACTU calculations based on ABS 6202.0. All data seasonally adjusted other than the ACT/NT, which are trend estimates.

Figure 12 - Gap between highest and lowest unemployment rates in the Australian States and Territories - 1978 to 2011
Percentage points 8 7 6 5 4 3 2 1 0 78 81 84 87 90 93 96 Year 99 02 R = 0.4622 05 08 11

Figure 14 - Spread of participation rates across State and Territories Per cent Highest 76
State/Territory rate

74 72 70 68 66 64 62 60 58 Nov 06 Nov 07 Nov 08

Lowest State/Territory rate Australia

Nov 09

Nov 10

Nov 11

Source: ABS 6202.0. States data are seasonally adjusted; territories data are trend estimates.

Source: ACTU calculations based on ABS 6202.0. All data seasonally adjusted other than the ACT/NT, which are trend estimates. A fourth order polynomial has been added to highlight the long term trend.

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Employment by Industry
The largest employment gains in both the November quarter and over the year were recorded in the Health Care and Social Assistance industry. This industry has recorded the largest employment increase in each of the last three years. Since the ABS industry employment time series began in the mid-1980s, the biggest job gains each year have been in either Health Care and Social Assistance or Other Services, a smaller industry that includes repair and maintenance as well as personal services.
1

Figure 15 - Employment growth by industry (November quarter)

Health Care & Social Mining Wholesale Trade Public Administration & Safety Electricity, Gas, Water & Construction Financial & Insurance Services Agriculture, Forestry & Fishing Other Services Arts & Recreation Services Education & Training Administrative & Support Transport, Postal & Professional, Scientific & Rental, Hiring & Real Estate Information Media & Accommodation & Food-9.2 Manufacturing Retail Trade -9.7 -11.9 -15 -5 5 15 25 Quarterly change in employment (000s)
Source: ACTU calculations based on ABS 6291.0.55.003, trend.

20.9 11.3 9.3 8.4 3.2 3.0 2.5 2.1 0.3 -1.5 -1.5 -2.3 -2.6 -2.7 -3.5 -4.5

In

proportionate

terms,

the

biggest

employment

increases in both the quarter and the year were recorded in Mining up by 4.9% in the November quarter alone, a thumping 18.9% over the year. Despite these large proportionate gains, Mining is still a relatively small employer, with direct employment in the industry accounting for around 2% of all employment.
2

A number of industries saw employment contract over the year, with Manufacturing recording the biggest job losses. Manufacturing employed 997 100 Australians in November 2010, but this fell to 945 600 by November 2011, a fall of 51 400 workers or 5.2% of the industrys workforce. This issue contains a feature looking at structural change in the Australian labour market during the 2000s.

Figure 16 - Employment growth by industry (year to November quarter)

Health Care & Social Mining Public Administration & Safety Financial & Insurance Services Arts & Recreation Services Construction Wholesale Trade Professional, Scientific & Electricity, Gas, Water & Accommodation & Food Administrative & Support Education & Training Transport, Postal & Other Services Information Media & Rental, Hiring & Real Estate Retail Trade Agriculture, Forestry & Fishing Manufacturing -0.4 -0.6 -5.4 -6.3 -8.7 -13.4 -15.5 -16.1 -32.1 -51.4 17.9 12.6 10.8 6.3 2.0 51.1 38.0 36.8 36.3

Agriculture, Forestry and Fishing also shrank over the year, though it grew in the November quarter, perhaps signalling a resurgence in that strongly cyclical industry.

Measured as years ended in the November quarter. 2 Note: the industry data referred to in this section are trend estimates unless otherwise noted. Trend estimates are preferred due to the standard errors associated with some industry-level data.

-60 -40 -20 0 20 40 60 Yearly change in employment (000s)

Source: ACTU calculations based on ABS 6291.0.55.003, trend.

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Feature: Australian jobs in the 2000s

Recent decades have seen a steady rise of the proportion of workers who are employed in services, a broadly defined composite of industries, while added in mining since 2001 paled next to larger industries such as Health Care and Social Assistance, and Construction, which between them added around a quarter of a million jobs. Of course, some jobs in nonmining industries (such as Construction and Personal, Scientific and Technical Services) will be in firms providing services to the mining industry, and other jobs will have been created indirectly by the boost to national income that the global commodity price rise has delivered. Nevertheless, effects of even mining taking into the indirect the

manufacturing employment has declined as a share of total employment. Mining and construction, taken together, remained more or less steady as a share of total employment for much of the 1990s, before their combined employment share rapidly increased in the early 2000s as the housing price boom and commodity price boom took hold, in that order. Agricultures share of employment began to fall around the same time, and is now slightly more than half what it was a decade ago. Manufacturing employs 8.3% of the workforce in 2011, down from 13.5% two decades ago. Figure 17 - Change in employment by sector 2001 to 2011
Index 180 160 140 Services 120 100 80 60 2001 2003 2005 2007 2009 2011
Source: ABS 6291.0.55.003

employment

account,

employment boost experienced as a result of the mining boom is likely to be much smaller than is commonly supposed. Figure 18 - Change in employment by industry 2001 to 2011
Change in employment (thousands): 2001-2011 -200-100 0 100 200 300 400 500 Agriculture, Forestry & -129 Manufacturing Information Media & Other Services Rental, Hiring & Real Estate Wholesale Trade Electricity, Gas, Water & Administrative & Support Financial & Insurance Services Arts & Recreation Services Transport, Postal & Accommodation & Food Mining Education & Training Retail Trade Public Administration & Professional, Scientific & Construction Health Care & Social
Source: ABS 6291.0.55.003

Mining & Construction

-86 -8 26 49 56 60 67 76 80 117 140 149 193 205 217 282 377 436

Manufacturing

Ag., forestry & fishery

In the past decade, employment in mining grew rapidly off a small base: although mining employment has more than doubled in the past ten years, it still only employs around one in fifty Australian workers. Perhaps the most striking change in Australian jobs over the past decade has been the rise of Health Care and Social Assistance, which went from being the third largest employer ten years ago to the number one employer of Australians in 2011, surging past Retail Trade and Manufacturing.

Figure 19, below, shows each industrys share of total employment in 2001 and 2011. It shows, for example, that the Mining industry employed 0.9% of Australian

While mining employment increased rapidly in the 2000s, Figure 18 makes it clear that the 149 000 jobs

workers in 2001 and 2.0% in 2011.

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Figure 19 - Shares of total employment - 2001 to 2011

0% 2% 4% 6% 8% 10% 12% Agriculture, Forestry and Mining Manufacturing Electricity, Gas, Water and Construction Wholesale Trade Retail Trade Accommodation and Food Transport, Postal and Information Media and Financial and Insurance Rental, Hiring and Real Professional, Scientific and Administrative and Support Public Administration and Education and Training Health Care and Social Arts and Recreation Services Other Services 2001
Source: ABS 6291.0.55.003

changed: 86 000 manufacturing jobs were lost between mid-2001 and mid-2011.

The loss of manufacturing jobs is gathering pace. Total employment in the industry fell below one million in May 2010 for the first time in decades. Of the 86 000 net jobs lost in the industry in the past decade, 69 100 were lost between February and August 2011.

Figure 20: Employment in Australian manufacturing November 1991 to November 2011

Thousands 1100 1050 1000 950 900 850 2011 800 1991 1996 2001 2006 2011 GFC

Over the past decade, the proportion of Australian workers who are employed in Manufacturing has shrunk by 3.1 percentage points, while Agriculture, Forestry and Fishing has shrunk by 2.1%. The loss of employment share from these two industries was offset by gains in Professional, Scientific and Technical services (+1.1 pp); Health Care and Social Assistance (+1.9 pp) and Construction (+1.8 pp).

Source: ABS 6291.0.55.003.

The decline in manufacturings share of employment was more rapid in Australia than in most other developed countries. In 2008, the most recent year for which complete OECD data are available, only the United States had a smaller proportion of its workers employed in the manufacturing industry, at 0.1

percentage points below Australia. The largest change in employment share of any industry in the past decade, positive or negative, was in manufacturing. Although the relative decline of Its conceivable that Australia will soon have fewer workers employed in manufacturing, as a proportion of total employment, than any other developed country.

Australian manufacturing has been a multi-decade trend, its contraction has accelerated in recent years. The 1990s saw manufacturings share of total employment contract (from 13.5% to 11.4%), but the total number of employees in the industry was more or less unchanged, from 1.036 million at the beginning of the 1990s to 1.031 million in 2001. In the 1990s, manufacturing was not keeping up with broader labour force growth, but it wasnt shrinking in absolute terms. In the 2000s, this

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Figure 21 - Manufacturing industry's share of total employment in OECD countries (2008)

Czech Republic Slovak Republic Slovenia Hungary Estonia Poland Turkey Italy Germany Korea Finland Japan Mexico Sweden Austria Switzerland Spain New Zealand Denmark Belgium Israel Ireland France Canada Norway Netherlands Greece Luxembourg Iceland United Kingdom Australia United States 27.3 24.3 23.9 22.7 21.1 20.9 20.0 19.9 19.0 17.3 17.3 17.1 17.1 15.9 15.9 15.8 14.8 13.8 13.7 13.3 13.0 12.6 12.3 11.4 11.1 10.7 10.7 10.2 9.9 9.8 9.7 9.6

of

manufacturing

may

have

negative

consequences for other industries. The mining industrys share of total employment has increased rapidly in recent years, yet it still only employs around one in fifty Australian workers. Manufacturing has shrunk, yet it continues to employ nearly a million Australians. Policymakers should not be indifferent to these workers and those in other industries affected by the multi-speed economy. The Prime Minister has said that The

Gillard

Government envisages a flexible, highly skilled, high value-adding manufacturing sector which is able to capture niche markets, enter into global supply chains, and make more specialised and highly valued products.
3

This is a laudable vision that will require concerted policy effort. The ACTU has welcomed the creation of a tripartite roundtable to discuss challenged and

opportunities facing manufacturing. The Commonwealths projections of jobs growth by industry to 2015 make the scale of the challenge clear,

0 10 20 30 Manufacturing share of total employment (per cent)

Source: OECD Stat.

While the commodity price boom has been a net positive for the country, the negative consequences and potential consequences should not be ignored. The labour market effects of the commodity prices boom should be of concern to policymakers for a number of reasons, including the following:

as can be seen in Figure 22. Figure 22 - Projected jobs growth 2010 to 2015/16
Health Care & Social Construction Professional, Scientific & Education & Training Transport, Postal & Retail Trade Mining Administrative & Support Other Services Accommodation & Food Public Administration & Safety Electricity, Gas, Water & Agriculture, Forestry & Fishing Financial & Insurance Services Wholesale Trade Rental, Hiring & Real Estate Information Media & Arts & Recreation Services Manufacturing 323.3 195.8 149.8 95.7 77.0 76.4 69.2 48.4 47.5 46.6 40.9 32.4 27.4 24.0 23.8 21.0 13.0 6.0 -30.4

1. Structural change has real consequences for families and communities labour is not reallocated across the economy in anything like the frictionless process that is often assumed by economists policymakers. 2. If the current terms of trade are sustained, the Gregory effect or Dutch disease phenomenon may become entrenched, leaving Australia illequipped to sustain its living standards when the mining boom ends. 3. The manufacturing industry in particular has positive spill-overs and higher productivity and, at least implicitly, by

-100 0 100 200 300 400 Projected new jobs (thousands)

Source: DEEWR
3

growth than many other industries; the decline

http://www.pm.gov.au/press-office/manufacturings-crucial-roleour-economy ACTU Jobs Report | December 2011 | Page 9