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Queensland Economic Advocacy Solutions

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Critical Appraisal of Queensland’s Labour Market

Queensland’s labour market finds itself in a peculiar situation: it has experienced very good employment growth yet our unemployment rate remains stubbornly above six per cent.

Queenslanders should in theory be highly concerned that our State’s unemployment rate remains 0.7 per cent above the national average of 5.4 per cent.  The gap between our unemployment rate and the national average is widening despite the gains made in job creation.

QEAS takes a look at some of the underlying influencers contributing to our stubbornly high and cemented unemployment rate of 6.1 per cent.

Queensland’s labour market has experienced steady growth in 2017-18 with total employment growing in the12 months to June 2018 by 2.6 per cent, the same level of growth that has occurred nationally.  Whilst employment growth has hit its peak for this cycle an additional 62,700 jobs over the past 12 months is something to be very happy about.

The composition of this growth has also been very good with a good split between 39,900 jobs being full-time positions and 22,900 being part-time.   Despite all the hullabaloo only 10 per cent or 6,204 of these 62,700 jobs were courtesy of the State Government increasing the size of the public service (a story for another blog).  It is the Queensland private sector that has done the heavy lifting in this improvement which is again a good thing.

One of best indicators for overall economic growth is the number of hours worked and this has also grown over the 12 months to June 2018 by 5.3 million hours indicating additional demand for labour as domestic economic activity has lifted.  So arguably the State’s labour market performance has been very good. 

Yet there has been a considerable disconnect between this jobs improvement and it benefiting our State’s unemployed persons. Some quicks stats here for context:

  • The number of registered unemployed persons between June 2017 and June 2018 actually increased by 1,800 persons to 161,200 persons.
  • Our unemployment rate between June 2017 and June 2018 only decreased from 6.2 per cent to 6.1 per cent whilst our underemployment rate (the number of persons looking for additional hours of work increased from 9.0 per cent to 9.2 per cent.   

So what is going on? Well the answer to this almost certainly relates to our State’s participation rate and also interstate migration. The participation rate is in itself a great measure of confidence in the labour market and over the 12 months to June 2018 it rose from 65.3 per cent in June 2017 to 65.8 per cent and is now higher than the national rate of 65.6 per cent.

As employment creation has occurred more persons have returned to our State’s labour market looking for work.  These person’s would have previously been out of the labour market either on home duties or in education. For every job being created, we have had a new person re-entering the labour market either taking one of these newly created jobs and in turn denying a job to unemployed person or registering as being unemployed in the expectation that they will find work soon.  In effect there has been no net change.

In addition there is also no question that our State’s unemployed persons are in competition with persons located interstate and overseas.  Population always flows towards employment opportunity and both overseas and interstate migration have surged across the period of Queensland’s labour market improvement.  Chances are some of the 62,700 jobs created have gone to interstate and overseas workers rather than drawing down on our State’s unemployed.

So should we be alarmed that the gap between our unemployment rate and the national average is widening?  The answer is no - in reality we have had solid jobs growth, a participation rate rising and strong population growth courtesy of our labour market improvement.  We can always be doing better and no stone should remain unturned whilst 160,000 plus Queenslanders find themselves out of work. In addition our youth unemployment rate is at 13.2 per cent more than double the State unemployment rate.

However and in summary, the 2017-18 financial year was a good one for Queensland's labour market.

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Hi John, Yes good point. The median duration for a job search in Queensland has increased from 18.5 weeks in June 2017 to 19.8 weeks in June 2018 which is consistent with the benefit not flowing through to unemployed Queenslanders as discussed above.
Cheers
Nick

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Would it be the case that the timeframe people are unemployed is a factor?
For instance, if they find another job quickly then the political heat of high unemployment would not be so great.

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