Key points
large. In the period since 2003, the gap has averaged
The ‘multi-speed economy’ didn’t translate into a
2.8 points, and it’s even lower if we exclude the past
widening gap in unemployment rates across the
year.1 The labour market has been less ‘multi-speed’
country.
in the past decade than in the two decades before
The gap between unemployment rates across
that. Figure 1: The range of unemployment rates in the states/territories Per cent 14
regions falls when the national unemployment rate falls.
The pain of rising unemployment is concentrated disproportionately
in
12
already-disadvantaged
10
regions.
Low unemployment regions tend not to see
8
much change in their unemployment rates, even
6
Range of state/territory unemployment rates Australia
when the national rate rises or falls by a large
4
amount. 2 0 1984
The fact that Australia has been a “multi-speed economy” over the past decade has become so well known that it has attained the status of cliché. The strange thing is that this multi-speed economy didn’t quite play out the way you’d expect in the labour market. You’d expect there would be a widening gap between the unemployment rate in WA and the rate in, say, Tasmania, during the mining boom period, but that’s not what happened.
1989
1994
1999
2004
2009
2014
Source: ABS 6202 and ACTU calculations.
Figure 2: Gap between highest & lowest state/territory rates Percentage points 8 7 6 Average gap 2003present, 2.8
5 4 3 2
The unemployment rates of the various states and territories converged during the past decade. Between 1980 and 2002, the gap between the
1 0 1984
Average gap 1980-2002, 4.4
1989
1994
1999
2004
2009
2014
Source: ABS 6202 and ACTU calculations.
highest and lowest state/territory unemployment rates averaged 4.4 percentage points. That’s quite
1
The unweighted standard deviation of unemployment rates tells the same story.
ACTU Economic Bulletin – March 2014 – Page 1
state/territory
There was even a brief period just before the GFC in
the dispersion of rates among the regions, so the
which Tasmania’s unemployment rate was lower
curve becomes flatter and fatter-tailed.2 Figure 4: Distribution of unemployment rates across 87 small labour force regions
than those of NSW or Victoria, with the Tasmanian rate dipping below the national rate for the only time in at least the past 35 years (see Figure 3).
Density 4
Figure 3: Gap between Tasmanian unemployment rate and the national unemployment rate
Jan 2008
3
Percentage points 3
Jan 2014
2 2 1
1
0
0 0
-1 2000
2002
2004
2006
2008
2010
2012
2014
Source: ABS 6202 and ACTU calculations.
2
4
6 8 10 12 Unemployment rate (%)
14
Source: ACTU calculations based on ABS 6291.0.55.001, not seasonally adjusted. Chart shows the number of labour force regions (out of a total of 87) that fit into unemployment rate bins of 0.2 percentage points, smoothed using a Gaussian filter.
It turns out to be a pretty strong correlation – when It turns out that all regions in a happy labour market are somewhat alike, but each region in an unhappy labour market is unhappy in its own way. When the national unemployment rate falls, it’s not the case that the ‘good’ areas get better and leave the rest languishing. Nor is it the case that all local labour markets improve by the same amount. The spread between the ‘good’ and ‘bad’ areas actually narrows
the national unemployment rate is low, the gap between the strong-performing local labour markets and the weak labour markets narrows, just as the gap across the states and territories narrows.3 When the national unemployment rate rises, so does the dispersion between the unemployment rates of local areas. This is shown two different ways in Figure 5 and Figure 6.
when overall unemployment falls. Not only does a rising labour market tide lift all boats, but it lifts the worst performers the most.
This is true not only across states and territories, but among smaller labour force regions as well. Figure 4 shows the distribution of unemployment rates across all 87 labour force regions that make up the country. When the national unemployment rate is higher, so is
2
Of course, even when the national unemployment rate is low, there are still pockets of disadvantage with unacceptably high rates, but these pockets are less numerous and their disadvantage less severe than during recessions. 3 The same result was obtained using different data by Gruen, Li and Wong 2012, ‘Unemployment disparity across regions’, Economic Roundup Issue 2, The Treasury, Canberra.
ACTU Economic Bulletin – March 2014 – Page 2
Figure 5: Unemployment rate and standard deviation of unemployment rates across 87 labour force regions Per cent 8.0
Figure 7: Unemployment rates in the 10 highest & 10 lowest unemployment regions, compared to the national rate
Percentage points 3.2
7.0
2.8
10
Average of 10 highest unemployment regions
8
National unemployment rate (LHS)
6.0
Per cent 12
2.4 6
5.0
Australia
2.0 4
Standard deviation of regional unemployment rates (RHS)
4.0
3.0 Oct 98
1.6
1.2 Oct 03
Oct 08
Oct 13
Source: ACTU calculations based on ABS 6291.0.55.001.
Figure 6: Unemployment rate and standard deviation of unemployment rates across 87 labour force regions
2 0 Jan 1999
Average of 10 lowest unemployment regions Jan 2004
Jan 2009
Jan 2014
Source: ACTU calculations based on ABS 6291.0.55.001. This chart is based on rolling 12-month averages of non-seasonally adjusted data.
The areas with the highest average unemployment
Unweighted standard deviation 3.5
rates over the past 16 years are shown in Figure 8, and the areas with the lowest average rates are in Figure 9. Regional and outer suburban areas
3.0
dominate the list of high unemployment areas, while wealthier parts of Sydney feature prominently in the
2.5
list of low unemployment regions. 2.0
Figure 8: Highest average unemployment rates: 1998 to 2014
1.5
Wide Bay y = 0.35x + 0.28 R² = 0.73
1.0 4
5 6 7 National unemployment rate
8.8
Mid North Coast 8
Source: ACTU calculations based on ABS 6291.0.55.001.
8.7
Tasmania - West and North West
8.3
Ballarat
8.1
Richmond - Tweed
8.0
The trend has held up in the past year or so – as
Sydney - South West
unemployment has risen, so has the dispersion
Coffs Harbour - Grafton
among unemployment rates in local labour markets.
Mandurah
7.7
Adelaide - North
7.7
The rise in unemployment has been felt most acutely in those regions that already had higher-than-average unemployment rates.
Logan - Beaudesert
7.9 7.8
7.6
7.0 7.5 8.0 8.5 9.0 Average unemployment rate: Oct 98 to present (%) Source: ACTU calculations based on ABS 6291.0.55.001.
ACTU Economic Bulletin – March 2014 – Page 3
Figure 9: Lowest average unemployment rates: 1998 to 2014 Sydney - Northern Beaches Sydney - Sutherland
Figure 10: Correlation between average unemployment rate of each region (1998-2014) and the standard deviation
2.9
Standard deviation of region's unemployment rate (ppts) 4
3.0
Sydney - Baulkham Hills and…
3.2
Darling Downs - Maranoa
3.3
Sydney - North Sydney and…
3.3
Sydney - Eastern Suburbs
3.3
3
Australian Capital Territory
3.9
Sydney - Inner West
3.9
Brisbane - West
2
4.0
Sydney - Ryde
4.1
2.0 2.5 3.0 3.5 4.0 4.5 Average unemployment rate: Oct 98 to present (%) Source: ACTU calculations based on ABS 6291.0.55.001.
1 y = 0.27x + 0.33 R² = 0.36
0 2
The low unemployment regions not only have a low
4 6 8 Region's average unemployment rate: October 1998 to present (per cent)
10
average unemployment rate, but their rates have
Source: ACTU calculations based on ABS 6291.0.55.001.
been quite stable over the past fifteen years. For
The ill effects of a sluggish labour market are
example, the Northern Beaches region in Sydney has
concentrated disproportionately in particular areas,
had an average unemployment rate of 2.9%, with a
and become more concentrated as unemployment
standard deviation of just 1 percentage point. This
rises. This is food for thought when pondering the
means that the unemployment rate for this region
politics of macroeconomic stabilisation. Politicians
has been within 1.9% and 3.9% for around two-thirds
from low-unemployment areas might not see much
of the time since 1999. Low unemployment areas like
of a change in conditions in their areas when the
the Northern Beaches barely experience much of a
national unemployment rate rises, so they could
business cycle at all. By contrast, Wide Bay in
either be unaware of the depth of the problem, or
Queensland has had an average of 8.8%, with a
indifferent to it, depending on which explanation you
standard deviation of 2.9
percentage
prefer.
indicating
variability
much
greater
points, in
its If the national unemployment rate rises further over
unemployment rate over time.
the coming year, the pain won’t be spread evenly: it Figure 10 shows that the Northern Beaches and Wide
will be concentrated in those areas that are already
Bay are not isolated examples. Each dot represents
experiencing relatively high unemployment.
one of the 87 labour force regions – you can see that those with higher average unemployment rates over the past 15 years, like Wide Bay, have tended to have
Please send any comments, corrections, criticisms or
higher standard deviations in their unemployment
compliments
rate over that period.
mcowgill@actu.org.au.
ACTU Economic Bulletin – March 2014 – Page 4
to
Matt
Cowgill
at
The tables and charts below summarise the latest available data about the Australian labour market.
60
Table 1: Summary of labour force figures Yearended change
Monthly change
Level
Figure 12: Change in employment in the year to February Thousands 80 69.8 70
Employed persons
11,530,800
47,300
69,800
- Full time employment
8,049,900
80,500
42,700
53.0
50
42.7
38.9
40 28.6
30 20
27.1 16.8
14.1
10 0
- Part time employment
3,480,900
-33,300
27,100
Working age population
18,925,700
27,800
337,300
-10 -11.8
-20 Full time Males
Employment-topopulation ratio
60.9%
0.2
-0.7
Unemployment rate
6.0%
0.1
0.6
Unemployed persons
742,200
9,800
86,500
Part time Females
Total Total
Source: ACTU calculations based on ABS 6202, seasonally adjusted.
Figure 13: Unemployment rate Per cent 6.5 6.0
Participation rate Underemployment rate (quarterly)
64.8%
0.2
-0.3
7.4
-0.2
0.3
Source: ABS 6202, seasonally adjusted.
40
5.0 4.5
Figure 11: Change in employment between Jan and Feb 2014 Thousands 100 80.5 80 60
5.5
51.0
46.8
47.3
4.0 3.5 3.0 Feb 04
Seasonally adjusted Feb 06
Feb 08
Feb 10
Trend Feb 12
Feb 14
Source: ABS 6202.
33.7 17.2
20
Figure 14: Employment to population ratio (15+) Per cent 64
0 -3.7
-20 -40
-33.3
-60 Full time Males
-50.5 Part time Females
63 62
Total Total
61
Source: ACTU calculations based on ABS 6202, seasonally adjusted.
60 59 58 Feb 04
Feb 06
Source: ABS 6202.
ACTU Economic Bulletin – March 2014 – Page 5
Feb 08
Feb 10
Feb 12
Feb 14
Figure 15: Unemployment rates by state/territory
Figure 18: Employment growth in the year to November 2013
7.2 7.4
Tas
Public Administration & Safety
5.8
SA
6.7 5.7
Vic
6.4 5.8 6.1
Qld
5.8 4.6
WA
5.3 3.7 4.5
ACT
3.4 0
2
4 Per cent
34.5
Retail Trade
28.3
Health Care & Social Assistance
25.6
Other Services
22.9 12.4
Mining
6.1
Financial & Insurance Services
1.8
Transport, Postal &…
4.8
NT
Construction
Electricity, Gas, Water &…
5.3
NSW
77.2
Feb 2013
Arts & Recreation Services
Feb 2014
Rental, Hiring & Real Estate…
6
0.3
Agriculture, Forestry & Fishing
8
1.7
-3.5 -4.4
Administrative & Support…
-6.9
Accommodation & Food…
-13.0
Source: ABS 6202, trend.
Figure 16: Participation rate 15+ (%) 66.0
15-64 (%) 77.0 76.5
65.5
76.0
65.0
75.5
64.5
Education & Training
-13.7
Professional, Scientific &…
-19.4
Manufacturing
-27.3
Wholesale Trade
-32.9
Information Media &…
-50
-33.5
0 50 Thousands
Source: ACTU calculations based on ABS 6202, trend.
75.0
64.0
74.5
63.5
74.0 Feb 04
15-64 (LHS) Feb 06
Feb 08
15+ (RHS) Feb 10
Feb 12
63.0 Feb 14
Source: ABS 6202.
Figure 17: Underemployment and unemployment rates Per cent 14 12 10 Underemployment 8 6 4 Unemployment
2 0 Feb 09
Feb 10
Feb 11
Feb 12
Feb 13
Feb 14
Source: ABS 6202, trend.
ACTU Economic Bulletin – March 2014 – Page 6
100
Figure 21: Annual growth in labour productivity (GDP per hour) Table 2: Summary of September quarter National Accounts
Level
Quarterly change
Yearended change
Quarterly real GDP
387031
0.6%
2.3%
Real GDP per capita
16683
0.2%
0.6%
Labour productivity (total economy)
-
0.0%
1.0%
Labour productivity in the market sector
-
0.0%
1.5%
Terms of trade
-
-3.3%
-3.5%
Wages share of income
53.8%
0.0
-0.2
Profits share of income
26.7%
0.0
0.0
Year-ended growth 5% Fair Work Act
Work Choices
4% 3% 2% 1% 0% -1%
Seasonally adjusted
Source: ABS 5206.
-2% Dec 03
Dec 05
Dec 07
Dec 09
Agriculture, forestry and fishing
6% 5% 20-year average, 3.3%
3% 2% 1% 0% Dec 03
Dec 05
Dec 07
Trend
Dec 09
Dec 11
Dec 13
Figure 20: Annual growth in nominal unit labour costs 8%
6.6%
Financial and insurance…
5.4%
Public administration and…
5.4%
Health care and social…
4.7%
Other services
2.6%
Arts and recreation services
2.5%
Administrative and support…
2.4%
Retail trade
2.2%
Education and training
2.2%
Construction
1.3%
Transport, postal and…
1.0%
Information media and…
0.0%
Manufacturing
-1.2% -2.4%
Electricity, gas, water and…
-2.7%
6%
-2.7%
-15%-10% -5% 0% 5% 10% 15% Annual GVA growth
20-year average, 2.6%
Source: ABS 5206.
2%
0% Seasonally adjusted Trend Dec 97
-0.9%
Accommodation and food…
Wholesale trade
-2% Dec 93
6.9%
Rental, hiring and real estate…
Professional, scientific and…
Source: ABS 5206 and ACTU calculations.
4%
Dec 13
10.2%
Mining
Seasonally adjusted
Dec 11
Source: ABS 5206.
Figure 22: Growth in output (gross value added) – year to December 2013
Figure 19: Growth in real GDP per year
4%
Trend
Dec 01
Dec 05
Dec 09
Dec 13
Source: ABS 5206 and ACTU calculations. Non-farm.
ACTU Economic Bulletin – March 2014 – Page 7
Figure 24: Headline and underlying CPI inflation Per cent 5%
Table 3: Summary of prices and wages data
Wage Price Index (WPI)
Latest quarter
Level
September
-
Year-ended change 2.7%
3%
Full-time average weekly ordinary time earnings (AWOTE)
May
$1,421
5.3%
Real full-time AWOTE
May
$1,421
2.9%
Total average weekly earnings (AWE)
May
$1,105
4.9%
July
$622.20
2.6%
September
3.5%
-0.1ppts
Headline CPI
December
-
2.7%
Trimmed mean (underlying CPI)
December
-
2.6%
Employees’ cost of living (LCI)
December
-
1.3%
May
17.5%
-0.1%
National Minimum Wage per 38 hour week Average wage rise in fed enterprise agreements
4%
2%
RBA's target band
1%
Headline CPI 0% Dec 03
Underlying CPI Dec 05
Dec 07
Dec 09
Dec 11
Dec 13
Source: ABS 6401.
Figure 25: Wage Price Index growth
4.0%
Gender pay gap
Source: ABS 6345, ABS 6302, FWC, DEEWR Trends in Federal Enterprise Bargaining, ABS 6401, ABS 6467, ACTU calculations.
Figure 23: Annual growth in the CPI and workers’ cost of living (Employee LCI)
6%
3.0%
2.5% Trend
Seasonally adjusted
Sep 03
Sep 08
Sep 13
Figure 26: WPI growth in the public and private sectors
3%
5.0%
2%
-1% Dec 03
Long-run average
Source: ABS 6345.
4%
0%
3.5%
2.0% Sep 98
5%
1%
4.5%
4.5% Underlying CPI 4.0%
Employee LCI
3.5% Dec 05
Source: ABS 6467, ABS 6401.
Dec 07
Dec 09
Dec 11
Dec 13 3.0% 2.5%
Private Public
2.0% Dec 03
Dec 05
Source: ABS 6345.
ACTU Economic Bulletin – March 2014 – Page 8
Dec 07
Dec 09
Dec 11
Dec 13
Figure 27: WPI growth in the year to December by industry 0% 1% 2% 3% 4% Electricity, gas, water and…
3.3%
Mining
Figure 30: Average weekly ordinary time earnings for full-time adults $0 $1,000 $2,000 Mining
3.1%
Education and training
2.9%
Public administration and…
2.9%
Manufacturing
2.8%
Construction
2.8%
Rental, hiring and real…
2.8%
Health care and social…
2.7%
Retail trade
Professional, Scientific… Information Media and…
$1,672.00
Financial and Insurance…
$1,649.40
Electricity, Gas, Water… Public Administration… Education and Training
2.7%
Financial and insurance…
2.6%
Australia Information media and…
2.4%
Administrative and…
2.4%
Arts and recreation services Accommodation and food… Other services Wholesale trade
$1,450.50 $1,437.00
$1,368.10
Arts and Recreation…
$1,321.00
Manufacturing
2.3%
Rental, Hiring and Real…
2.2%
Administrative and… Other Services
2.1%
Accommodation and…
1.6%
Retail Trade
Source: ABS 6345.
$1,390.50 $1,387.10
Health Care and Social…
2.2%
Professional, scientific and…
$1,519.70
Construction
Wholesale Trade
2.5%
$1,619.90 $1,534.90
All Industries Transport, Postal and…
2.5%
Transport, postal and…
$2,469.60 $1,730.70
$1,290.60 $1,286.90 $1,281.60 $1,103.20 $1,048.40 $1,031.80
Source: ABS 6302.
Figure 28: Range of WPI growth rates across industries 7% Figure 31: Average annualised wage increase in federal enterprise agreements Per cent 5.5
6% 5% 4%
5.0
3% 4.5
2% Range of growth rates in all industries
1%
4.0
Australia 0% Dec 03
Dec 05
Dec 07
Dec 09
Dec 11
Dec 13
3.5
Source: ABS 6345 and ACTU calculations.
Figure 29: WPI growth in the year to December by state 0% 1% 2% 3% 4% SA
3.5%
WA
All current agreements 2.5 Sep 93
Sep 98
Sep 03
Sep 08
Sep 13
3.0%
Australia
2.5%
Qld
2.5%
Victoria
2.5%
NSW
2.5%
ACT
2.4%
NT
2.3%
Tas
Agreements lodged in quarter
3.0
Source: Department of Employment, Trends in Federal Enterprise Bargaining. )
2.2%
Source: ABS 6345.
ACTU Economic Bulletin – March 2014 – Page 9