Jobkeeper has failed, and it’s hitting women and young people the hardest.

Extract from The Guardian

Grogonomics graph of the week

Australian economy

Greg Jericho

The policy was too narrowly defined, and it hasn’t done the very thing it aimed to do: keep people in the labour force

@GrogsGamut

Sun 21 Jun 2020 06.00 AEST Last modified on Sun 21 Jun 2020 15.46 AEST

Jobkeeper aimed to keep the unemployment rate down by keeping people technically employed even though they were not actually working. Photograph: Stefan Postles/EPA

The latest labour force figures released this week show the government’s jobkeeper policy has largely failed. While the unemployment rate has remained lower than expected this has actually been due to the failure of the very thing the jobkeeper aimed to do: keeping people in the labour force.
It says something about just how shocking the labour force figures are that the Bureau of Statistics felt the need to explain that the unemployment rate of 7.1% – some 2 percentage points higher than it was in February – did not really reflect reality.
Because reality is so much worse.

This recession is not primarily about unemployment, but the rise in both underemployment (because workers’ hours have been cut) and the masses of people giving up looking for work.
Jobkeeper aimed to keep the unemployment rate down by keeping people technically employed even though they were not actually working. And to an extent it worked. Since March, employment has fallen by a massive 6.4%, but that is less than the astonishing 10% fall in hours worked.
Had employment fallen by that amount there would be an extra half a million people without a job. And yet that does not mean there would be an extra half a million “unemployed”.
The problem is that to be unemployed you have to be looking for work, and many of those who have lost their jobs in the past two months are not doing that.
Since March, 835,100 people have lost work, but the number of unemployed has “only” risen 211,500.

The missing 623,600 are neither working nor unemployed and so are not counted in the labour force. This has meant the participation rate (which is the per cent of adults who are either working or unemployed) has fallen from 65.9% in March to 62.9% in May.
This is why the ABS rather unusually explained that the unemployment rate of 7.1% is not really telling the real story. It noted on Thursday that were those 623,600 people counted as unemployed the unemployment rate would be 11.3% – well above the 10% it predicted would be the peak.
It has led to a stunning increase in underutilisation – which measures unemployment and underemployment.
In March the underutilisation rate was 14%. Now it is 20.2%.
But again the reality is actually worse because that figure includes the 7.1% unemployment rate. If we include those who since March have left the labour force as part of the underutilised, then rather than 20.2% it would be around 24.9% – a quarter of the workforce lacking work or the number of hours they would like to work.
The destruction of the labour force is most prominent among those under 25: 13% of women under 25 have left the labour force since March.
This highlights the problem of jobkeeper requiring casuals to have been employed in the same job for more than a year. That was predicted to hit younger workers harder. And so it has.
So massive has been the hit that since March, 157,000 teenagers have lost work, but the number of teenagers unemployed has also fallen 5,000 – they just gave up looking for work.
If we counted that 162,000 as unemployed, the teenage unemployment rate would not be 19.9% as it stands, but 35.6%. Including those teenagers alone would see the overall unemployment rate rise from 7.1% to 8.2%.
Across all ages and genders more people in the past two months have given up looking for work than have gone from working to being unemployed, but overall women have been more affected.
Yes, the jobkeeper policy has helped keep more people employed than otherwise would have been the case, but it is abundantly clear it was too narrowly defined – missing out on far too many casual workers, those who work contracts, and those who cannot afford reduced hours because the cost of childcare become too great.
And it is also clear the result has been a greater loss of women and young people to the workforce, a loss which will take years to recover.

• Greg Jericho writes on economics for Guardian Australia