Every month, the ABS releases stats on the labour force. But what does it all actually mean?
Every month, we get an update on the latest jobs numbers. And as always, it’s all eyes on one big number: the unemployment rate. So what actually is it?
The unemployment rate is the percentage of people in the labour force who are unemployed. But it’s not just a measure of people who are on the dole or receiving other Centrelink benefits.
The unemployment rate is the percentage of Aussies who aren’t undertaking paid work, but are actively looking for work. So:
The employed people + the unemployed people are the total labour force.
And then of course, there are those people who sit completely outside of the labour force.
Think: people who aren’t in a paid job, but are not actively looking for work. This might be people who are studying, caring for children, retirees, or people who are permanently unable to work. This group is not included in the Australian Bureau of Statistics (ABS) monthly calculation.
Unemployment rate = Number of unemployed people ÷ labour force x 100
For example, if there are 600,000 Australians who are unemployed out of a total labour force of 13,000,000 - then the unemployment rate would be 4.61%
The unemployment rate gives economists and the government an insight into the the labour market. Think about it. A high unemployment rate is generally a bad sign for the economy. It means the economy can’t generate enough jobs for people seeking jobs.
A low unemployment rate means there are enough jobs for everyone to go around.
Obviously 0% unemployment rate is ideal for society - but this is pretty unrealistic. Between 1978 - 2021, the unemployment rate in Australia averaged 6.78%.
In December 1992, we saw the Australian unemployment rate hit a peak of 11.20%. And the lowest unemployment rate was 4.0% in February 2008.
This should give you a sense of what to look out for when hearing the latest numbers from the ABS.
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