This post is a follow up to another article by Dr De Silva. Read the previous post here.
Recently the ABS released the latest unemployment statistics. These figures were remarkably good given the mediocre global economic environment. Notably, the release received little media attention and the attention it did receive was fairly critical.
The main criticism relates to the definition of being employed. Readers of this blog would be familiar with this issue already. Further, readers would also be familiar with an alternative measure, Effective Full time Unemployment Rate (EFUR), that is relatively more robust than the standard measure.
Below is an update of the national EFUR together with some detailed analysis at the state level. An important thing to keep in mind when looking at the following graphs is that the EFUR is a relative measure – it is not an absolute measure. In other words it should be interpreted relative to its past.
According to Chart 1 the EFUR indicates that national labour market conditions are worse than the pre-GFC conditions of the mid-2000s. In particular the EFUR seems to be hovering at rates consistent with the experience of the early-mid 1990s and 2001. The standard unemployment rate at these times was around 10 per cent and 7 per cent respectively. No doubt some of the difference between the alternative measures is attributable to changes to working conditions.
A (selected) state level comparison is presented below. Interestingly, the labour market conditions for Western Australia appear to be improving, approaching pre-GFC levels. This is in contrast to the labour market conditions in other states (considered) which seem to be showing very little, if any, sign of approaching pre-GFC levels.
In summary, the EFUR indicates that the labour market conditions across Australia are notably worse than the conditions leading up to the GFC – with WA perhaps being the exception.
Dr Ashton de Silva is a senior lecturer at the School of Economics, Finance and Marketing, RMIT University. He has a PhD in econometrics from Monash University, the results of which have been published in leading academic research journals. Ashton’s research interests include economic policy analysis, forecasting and property market analysis.