UNDERUTILISED LABOUR



KEY SERIES

UNEMPLOYMENT RATE (a), 20-74 years
	2002-03	2003-04	2004-05	2005-06	2006-07	2007-08	2008-09	2009-10	2010-11	2011-12
	%	%	%	%	%	%	%	%	%	%
Males	5.3	4.7	4.2	4.0	3.5	3.2	4.1	4.7	4.0	4.2
Females	5.2	4.9	4.5	4.2	4.0	3.8	4.2	4.6	4.4	4.6
(a) Data averaged using 12 months in the financial year. Source: ABS data available on request, Labour Force Survey.

RELATED SERIES

UNDEREMPLOYMENT RATE (a), 20-74 years
		2003-04	2004-05	2005-06	2006-07	2007-08	2008-09	2009-10	2010-11	2011-12
		%	%	%	%	%	%	%	%	%
Males		4.4	4.4	4.2	4.2	3.8	4.5	5.0	4.9	4.8
Females		8.8	8.2	8.1	7.5	7.3	7.9	8.7	8.2	8.5
(a) Data were calculated as an average of four quarters (August, November, February, May) in the financial year. Source: ABS data available on request, Labour Force Survey.

LABOUR FORCE UNDERUTILISATION RATE (a), 20-74 years
		2003-04	2004-05	2005-06	2006-07	2007-08	2008-09	2009-10	2010-11	2011-12
		%	%	%	%	%	%	%	%	%
Males		9.0	8.6	8.3	7.7	7.1	8.7	9.7	8.9	9.1
Females		13.8	12.8	12.3	11.6	11.1	12.3	13.3	12.8	13.1
(a) Data averaged using four quarters in the financial year. Source: ABS data available on request, Labour Force Survey.

COMMENTARY


The labour of women was more likely to be underutilised than men. The underutilisation rate in 2011-12 for 20-74 year old women was 13.1% compared to 9.1% for their male counterparts.

The extent to which the available supply of labour is utilised is an important social and economic issue. Socially, concern centres around the number of people whose aspirations for work are not being fully met. Economically, there is interest in measuring the extent to which available labour resources are not being fully utilised within the economy. (Endnote 1)

The unemployment rate (i.e. the number of unemployed persons expressed as a percentage of the labour force) has historically played a central role in our understanding of unused labour supply. The emphasis on the unemployment rate as a key measure of underutilised labour is understandable given the profound social and economic costs associated with unemployment. The severe recessions of the early 1980s and 1990s resulted in unemployment rates in Australia almost doubling. (Endnote 2)

However, the unemployment rate does not reflect the full extent of labour underutilisation. Other measures include the underemployment rate and the labour force underutilisation rate. (Endnote 1)

Underemployed workers are defined as:

1. persons employed part-time who want to work more hours and are available to do so, either in the reference week or in the four weeks subsequent to being surveyed; and
2. persons employed full-time who worked part-time hours in the reference week for economic reasons (such as being stood down or insufficient work being available). It is assumed that these people wanted to work full-time in the reference week and would have been available to do so.

The labour force underutilisation rate is the sum of the unemployed and underemployed, expressed as a proportion of the labour force (total employed and unemployed). (Endnote 3)

The 20-74 year age group has been chosen as the key broad population of interest for a number of reasons. Those in the 15-19 year age group are more likely to be working part-time and/or studying, and not yet moved into the labour force on a regular basis. The increased life expectancy of Australians and the subsequent increase in the pension age progressively to 67 years, is likely to see rising rates of employment for people aged over 64 years in the future. Between 2002-03 and 2011-12, the labour force participation rate for men aged 65-74 years increased from 15% to 26%, while for women it doubled from 6% to 13%.

Over the last ten years, the unemployment rate for women was significantly higher than for men during 2004-05, 2006-07, 2007-08, 2010-11 and 2011-12. During 2011-12, the average unemployment rate for people aged 20-74 years old was 4.2% for males and 4.6% for females.
Underemployment for women was consistently much higher than for men over the period 2003-04 to 2011-12. In 2011-12 the underemployment rate for women was 8.5% compared to 4.8% for men.

Given the higher rates of both unemployment and underemployment, the labour force underutilisation rate has therefore been consistently higher for women aged 20-74 years than their male counterparts. In 2011-12 the rate was 13.1% for women compared to 9.1% for men.




By age

The labour force underutilisation rate was highest amongst 20-24 year olds (at 18.6% for males and 21.3% for females in 2011-12). In 2011-12, the underutilisation rate for males for the 55-64 year age group was 8.4%, compared to 7.3% for 45-54 year old males. A number of influences may impact upon the underemployment rate for males approaching retirement age. Being considered as 'too old' by employers has been reported as a major barrier for employment of those people 55 years and over seeking work. (Endnote 4)

The underutilisation rate for women was much higher than men for all age groups up to 54 years of age. However, the gap narrows for those aged 55 years and over.



Labour underutilisation of parents

In 2011-12, the labour force underutilisation rate for men who had a child in the household under six years of age was 6.2%, and 6.3% when the youngest child was aged 6 to 14 years. These rates are much lower than the average of 9.1% for the total 20-74 year old male population. This is consistent with the higher rates of those who want (more) work in the younger age groups, where fewer men are parents. Male parents with children under 15 years of age had both low underemployment and low unemployment rates.




The underutilisation rates for female parents (whose youngest child was under 15 years) were nearly three times those of their male counterparts (14.9% for female parents with children under 6 years of age, and 16.1% for those with children aged 6-14 years). Female parents also had higher rates of underutilisation than the total 20-74 year old female population. Underemployment was the main contributor to the underutilisation of female parents.


Impact of the Global Financial Crisis

Between 2007-08 and 2009-10 (a period of significant economic decline fuelled by the Global Financial Crisis (GFC)) the average annual unemployment rate in Australia rose 1.5 percentage points for men aged 20-74 years, and 0.8 percentage points for females in this age group. During this period there was also a rise in underemployment rates for males and females (1.2% and 1.4% respectively), as employers reduced employee work hours rather than reducing staff. (Endnote 5)

Young people tend to be particularly affected by economic slowdowns, and this also occurred during the recent GFC. (Endnotes 2 and 6) Between 2007-08 and 2009-10, both males and females in the 20-24 year old age group experienced the largest rises in underutilisation rates of any age group (up 4.4 percentage points and 5.5 percentage points respectively). In the 20-24 year old age group, for males, this was principally due to an increase in the unemployment rate, while for females they were most affected by a growing underemployment rate.


ENDNOTES

1. Australian Bureau of Statistics, 'Underutilised Labour', Year Book Australia, 2009-10, (cat. no. 1301.0), ABS, <www.abs.gov.au>.
2. Australian Bureau of Statistics, 'The Labour Market During Recent Economic Downturns', Australian Social Trends, Mar 2010, (cat. no. 4102.0), ABS, <www.abs.gov.au>.
3. For more information on unemployment, underemployment and underutilisation, see Economic Security Glossary.
4. Australian Bureau of Statistics, 'Barriers and Incentives to Labour Force Participation', July 2010 to June 2011, (cat. no. 6239.0)
5. The Australian, 29 March 2010, 'GFC's part-timers given short shift', <www.theaustralian.com.au>. As cited in Australian Bureau of Statistics, 'Underemployment', Australian Social Trends, Jun 2010, (cat. no. 4102.0), ABS, <www.abs.gov.au>.
6. Australian Bureau of Statistics, 'Underemployment', Australian Social Trends, Jun 2010, (cat. no. 4102.0), ABS, <www.abs.gov.au>.


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