Atlas of New South Wales NSW Government Land & Property Information

Economy

Labour Underutilisation

There has been substantial growth in underemployment over the past two decades due to structural changes and the growth of involuntary part-time and casual employment.

The trajectory of unemployment in NSW has been close to that of other States and Territories and Australia as a whole. Unemployment in NSW was lower than the national unemployment rate from the late 1970s until the recession in the early 1980s when the NSW unemployment rate surpassed the national rate and remained higher for the remainder of the 1980s. The NSW unemployment rate was lower than the national rate from 1990 to 2002 and then increased to be higher than the national rate from 2005.

Between 1978 and 2008 the NSW unemployment rate has exhibited a counter-cyclical pattern, increasing rapidly after recessions and then declining slowly during periods of economic expansion. The unemployment rate increased from 5.2% in 1981 to 9.4% in 1984 and then fell gradually to 6.3% by 1990. Following the recession in the early 1990s, unemployment peaked at 10.5% in 1993 and subsequently declined to 4.8% in 2008. In 2008, the unemployment rate in NSW was higher than the national rate of 4.23%. It was also higher than all the other States and Territories except South Australia, where the rate was slightly higher, at 4.92%.

There were marked spatial variations in the unemployment rate within NSW between 1988 and 2008. Following the recession in the early 1990s, the NSW unemployment rate peaked at 10.5% in 1993. In the same year unemployment reached 17.4% in Fairfield-Liverpool, 15.9% in Central Western Sydney and 14.7% in Canterbury-Bankstown. Outside Sydney the unemployment rate reached 17% in Richmond-Tweed and Mid North Coast, 14.8% in Newcastle, 14.7% in Wollongong and 13.5% in Gosford-Wyong.

For some Labour Force Regions (hereafter regions), recovery from recession is very slow. In 1998, almost five years after the recovery began the Richmond-Tweed and Mid North Coast region still averaged 14% which was twice the State average.

In contrast, other regions consistently exhibit unemployment rates lower than the State average. In 1993, when the state unemployment rate was 10.5%, the unemployment rate in the Northern Beaches region was only 4.2% and the rate in Lower Northern Sydney was 5.8%.

By 2008, unemployment had declined significantly in all regions in NSW. Richmond-Tweed and Mid North Coast
and Fairfield-Liverpool continued to have the highest rates of unemployment, 7%
and 6.9% respectively. The Northern Beaches and Eastern Suburbs recorded
the lowest unemployment rates, 2.4%
and 2.6%.

There has been substantial growth in underemployment over the past two decades due to structural changes and the growth of involuntary part-time and casual employment. A person is considered to be underemployed if they are currently employed but are willing and able to work additional hours. Underemployment includes part-time or casual workers who would like to work additional hours as well as full-time workers who, for economic reasons (e.g. insufficient work being available), are not currently working on a full-time basis. In 2007, the underemployment rate varied throughout Australia, from 1.3% in the Northern Territory to 5.6% in South Australia. Between 1994 and 2007 the underemployment rate in NSW increased slightly, from 4.8% to 5%.

Unemployment and underemployment combine to provide the total Labour Force Underutilisation Rate which is a measure
of the proportion of the labour force currently working less than the desired number of hours.

Broad labour underutilisation has been persistently high over the last 30 years in NSW. It represents a major waste of available productive resources.

In 2007, the Labour Force Underutilisation Rate for NSW was 9.7% of the total labour force, which was higher than all States and Territories except South Australia and Tasmania. This consisted of 4.7% of the labour force who were unemployed and 5% who were underemployed. Elsewhere, the Labour Force Underutilisation Rate ranged from 4.9% in the Northern Territory to 10.1% in South Australia and Tasmania.

The Extended Labour Force Underutilisation Rate provides a further measure of the total amount of people who want to work additional hours. This consists of the Labour Force Underutilisation Rate (i.e. the sum of the unemployment and underemployment rates) as well as the proportion of people classified as “marginally attached to the labour force”. This latter group, who are often referred to as the hidden unemployed can be divide into two groups: people who are actively seeking employment but not available to commence work immediately; and, people who are not actively seeking employment but are willing to work and available to commence work within four weeks. The Extended Labour Force Utilisation Rate for NSW fell from 15.1% in 1994 to 10.9% in 2007 reflecting the decline in unemployment. Over this period, the proportion of people classified as marginally attached to the labour force averaged 1.2%.

The various measures of labour underutilisation in NSW for the period 1994 to 2007 shown here demonstrate that total underutilisation is significantly higher than the official unemployment rate.

Professor Bill Mitchell, University of Newcastle and Mr Michael Flanagan, University of Newcastle






Average Annual Unemployment Rate 1988 - 2008

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Average Annual Unemployment Rate 1988 - 2008

Average Annual Unermployment Rate 1978 - 2008

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Average Annual Unermployment Rate 1978 - 2008

Labour Underutlisation 1994 - 2006

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Labour Underutlisation 1994 - 2006

Unemployment and Underemployment September 2007

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Unemployment and Underemployment September 2007