Older, wiser but underemployed: no longer can it be treated with indifference

Extract from The Guardian

Grogonomics

Australian economy

Greg Jericho

Over the past year the rate has once again drifted up after falling during 2017 and 2018

@GrogsGamut

Tue 25 Feb 2020 03.30 AEDT Last modified on Tue 25 Feb 2020 03.32 AEDT

‘For older workers, the inability to get the hours of work has become a more heightened issue, and one that seems less able to be solved by merely reducing unemployment.’ Photograph: Yuya Shino/Reuters

In the past year underemployment has risen, destroying any hope of improved wages growth. But while the overall rate of underemployment remains a major concern, the experience for older workers highlights how the problem has changed and has gone from one mostly applied to younger workers to one that those nearing retirement are dealing with more than ever before.
One of the troubling things about writing an economics column is that you become very conscious of the passing of the years. As a rule I try to show data over at least a five-year period to give some context, and now that means going back to 2015 – a year that feels far closer than that.
One of the other troubling aspects is I spend a lot of time looking at data with age categories and the final age category gets ever closer to my own age.

The monthly unemployment data, for example, gives a breakdown for seasonally adjusted and trend data for every 10-year age bracket from 15 to 55, where there is just a 55-and-over category.
Yes, Generation X, you are about to enter the last category.
The passing of years and the examination of economics data also reminds me of how greatly things have changed in my lifetime. When I turned 15, there were nearly three times as many 15- to 24-year-olds working as there were 55- to 64-year-olds. By the time I turn 55 it’s likely there will be more of the latter than the former:

The change in the demographics is not just some interesting quirk; it means we need to approach the issues of the economy rather differently than in the past.

As the Labor leader Anthony Albanese said in his speech last week on respecting and valuing older Australians: “For too many Australians over the age of 45, if they become unemployed they will struggle to get another job and instead spiral down towards a pretty lean retirement.”
The generation who listened to the Smiths sing “There is a light that never goes out” are about to discover that the light of employment can go out very quickly.
When most of the labour force is under 35, your policies can assume most workers have time on their side, something that is less the case when – as is now – 40% of those in the labour force are over 45:

But while the talk is often of unemployment, underemployment is too often sidelined.
Over the past year underemployment has once again drifted up after falling during 2017 and 2018.
In January the underemployment rate was 8.5%, and the gap between it and the unemployment rate was the largest recorded:
We treat underemployment with too much indifference. It gets nary a mention in the budget papers. The treasury and Reserve Bank will predict unemployment, wages growth and various other economic indicators, but underemployment misses out, and with that absence comes an absence of focus.

Underemployment has always been a sharp aspect for the youngest workers because they are more likely to work part-time. But of late it has been a very strong rise in underemployment of older workers:

And reflecting the overall change, the underemployment of older workers is moving in an opposite direction to unemployment – over the past year, the unemployment rate for over-55 workers has remained relatively flat while underemployment rose 1%pt:

While all age groups now have a much larger gap between underemployment and unemployment rates than a decade ago, unlike other age groups the gap has broadened considerably for over-55s in the past year:

For older workers, the inability to get the hours of work has become a more heightened issue, and one that seems less able to be solved by merely reducing unemployment.
In the past, policymakers didn’t worry too much about underemployment because, first, it was not a major issue and, second, it rose and fell with unemployment. Now not only is underemployment a much bigger problem, no longer does it move in line with unemployment.
It means we need separate policy to tackle the two issues. All the momentum of the labour market is towards more “flexibility” with a greater emphasis on part-time work. It has seen the hours of part-time workers increase, but the overall percentage of people working full-time decrease.
And it means that workers entering the final stage of their employment life are not only having to deal with a higher retirement age than they assumed they would have when they began work, they are now much more likely to be struggling to get as much work as they desire.
The old days of unemployment only being an issue for young workers and not something we need to worry about is now long past, and with this change not only comes the need for different policies, but also a greater focus.

• Greg Jericho writes on economics for Guardian Australia