Shock jobs rebound drives unemployment down, despite Melbourne lockdown

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Australia’s unemployment rate has posted a surprise fall as 111,000 jobs were created last month, despite a lockdown in the nation’s second most populous state.

Unemployment hit 7.5 per cent in July, but has since fallen to 6.8 per cent in August, even though Melbourne was totally locked down and regional Victoria under stage 3 restrictions.

The Bureau of Statistics figures appear to show the bounce-back in jobs is real, rather than a statistical illusion, with internationally comparable measures also showing a big drop in unemployment.

If Australia measured unemployment the same way as the US — including stood down workers as unemployed — then the jobless rate would be 7.9 per cent, down from a high of 11.8 per cent in April.

Despite more than 100,000 extra jobs, hours worked only rose 0.1 per cent last month, and are down 5.1 per cent on August last year.

That left the underemployment rate – people looking for more hours of work than they received – stuck at 11.2 per cent. It was 8.8 per cent prior to the pandemic hitting Australia’s shores.

Likewise, the percentage of adults in work or looking for it – the participation rate – only rose 0.1 percentage points. At 64.8 per cent, it remains well down on the 65.9 per cent level recorded in March, before the first lockdowns.

Nonetheless, Marcel Theliant from Capital Economics said the numbers appeared to show that recent Reserve Bank and Treasury forecasts of a 10 per cent unemployment peak by the end of the year were wildly pessimistic.

« While mutual obligations that required jobless people to start looking for a job were introduced in August, the unemployment rate dropped from 7.5 per cent to 6.8 per cent, » he noted.

« The upshot is that the labour market is now unlikely to climb to 8.5 per cent [unemployment] over the coming months as we had anticipated, let alone the 10 per cent predicted by the RBA and the Treasury.

« Indeed, with restrictions in Victoria set to be loosened towards year end, employment should continue to rise. »

Melbourne couple Kirby and Kyle Neil have been adjusting to a significantly reduced income since Kyle lost his job in March and Kirby was forced to shut down her hair salon.

« Our household income has been taken down to a third of what we’d usually earn, » said Ms Neil, who is on JobKeeper.

While they have managed to reduce their rent and car repayments, and the stage 4 lockdown means they are not spending as much as they used to, there are still a lot of expenses to meet.

« We’ve still got phone bills, water, electricity, gas bills — you can only go so far before it keeps on banking up on you, » added her husband.

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Mr Neil, who worked as a contractor in a customer-facing role prior to the pandemic, started receiving JobSeeker payments in March.

His former employer does not expect he will be able to rehire him until at least March next year.

That is long after JobSeeker payments are slashed by $300 to $815.70 a fortnight from the end of next week, and revert to the old $282.85 a week payment from January 1, unless the Government extends a higher rate.

« That’s the bit that we’re struggling on, is what’s going to happen on the other side of it, » he said.

« Coming out of it, we’ll have to repay all the money that we inevitably still owe. »

The couple married in March, just days before the Commonwealth and State Governments began shutting parts of the economy down.

With their income now reliant on Government support, they have put other life decisions on hold.

As Melbourne entered a strict lockdown of nightly curfews, mandatory masks, and bans on social gatherings, the ABC began documenting life during this once-in-a-century event in the words of those living through it.

« I feel like now is the time that we were wanting to start a family, buy a house, all of that sort of stuff and now, whether it’s been pushed back or whether we aren’t able to do it, that’s a big part of what’s playing on our minds as well, » said Mr Neil.

The Neils hope the Victorian Government allows hair salons to reopen sooner than the anticipated October 26 deadline, so Ms Neil can start earning money again.

« We just need to have our restrictions eased up a little bit, let’s get everybody back out, stimulate the economy and get our communities back together, » Ms Neil urged.

The latest ABS data confirm that Melbourne has now become the epicentre of the nation’s unemployment crisis, following the second wave of coronavirus and a hard lockdown during August that is dragging through September as well.

« Hours [worked] fell by 4.8 per cent in Victoria, compared to a 1.8 per cent increase across the rest of Australia, » noted the ABS head of Labour Statistics Bjorn Jarvis.

« In addition to the large fall in hours worked, employment in Victoria also decreased by 42,400 people and the unemployment rate increased to 7.1 per cent. »

Howver, while Victoria was the only state to report a fall in employment last month, its jobless rate was not the nation’s highest.

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AEST = Australian Eastern Standard Time which is 10 hours ahead of GMT (Greenwich Mean Time)

Source: https://www.abc.net.au/news/2020-09-17/jobs-employment-data-abs-august-2020/12668374

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