Why June was a mixed month for employment

Employment increased by 210,800 people between May and June the latest labour force data from the Australian Bureau of Statistics (ABS) indicates.

The unemployment also rate rose from 7.1% to 7.4% in June - the highest it's been since 1998. 

This simultaneous increase in employment and the unemployment rate is due to the participation rate which fluctuates as more people actively look for work and enter the unemployment market. 

This is in part due to the reintroduction of JobSeeker mutual obligations, which have been reinstated on a limited basis - meaning job seekers are required to look for work. 

"The increase in unemployment reflects a large movement from 'not in the labour force' to 'unemployment' between May and June, meaning the increase in unemployment is largely the result of people moving back into the labour force, rather than people losing their job," the ABS said.

"By contrast, the increase in unemployment in April largely reflected movements from employment into unemployment."

Hence, the participation rate increased by 1.3 percentage points to 64% in June. 

Reflecting on the ABS figures, Treasurer Josh Frydenberg told reporters that the government believes the real unemployment rate to be 13.3%, which includes both those who have stopped looking for work during the crisis and those that have lost their job due to it. 

According to the ABS, the 210,800 increase in employment was underpinned by a large increase in part-time employment (249,000 people) and a further decrease in full-time employment (38,100 people).

Overall, the percentage of people employed in Australia increased one percentage point to 59.2%, up from a low of 58.2% in May.

In June, hours worked also increased, jumping up 4%, but remains 6.8% lower than March. 

Females were the beneficiaries of increased hours in June, with hours worked increasing 5% for women and 3.3% for males. 

However, hours of females worked was still around 7.3% lower than March, compared to 6.5% for males. 

Despite the fact that Australians gained employment during the month, compared to a year ago, there were 306,800 fewer people employed full-time and 215,500 fewer people employed part-time in June.

Further, in comparison to earlier months in 2020, the rise in employment between May and June is measly - employment fell by 874,700 people between March and May.

Unemployment increased by 69,300 people to 992,300, with 70% of newly unemployed people in June not in the labour force in May. 

The underemployment rate improved in June, with the rate decreasing 1.4 percentage points to 11.7%. 

However, this rate remains 2.9 percentage points above March. 

The underutilisation rate, which combines the unemployment and underemployment rates, fell 1.0 percentage point, to 19.1%.

 

Source: Labour Force, Australia, Jun 2020 - Australian Bureau of Statistics