Managing unemployment perceptions

Why did we accept one in twenty workers being unemployed as a good thing?

unemployed workers looking for work in depression era sydney

Stephen Koukoulas has a look at the changing composition of the Australian economy in Business Spectator today where he looks at how things have evolved over the last 50 years.

One of the notable things is unemployment and how our perception of what an acceptable level is;

Australia’s unemployment rate is 5.4 per cent at present, it was 0.9 per cent in August 1970 while in August 1951 it was a staggering 0.3 per cent.

In the 1961 Federal election the Menzies government hung on by one seat, having been punished for allowing the unemployment rate to reach the dizzying heights of 3.5 per cent.

Through the Twentieth Century, Australia’s unemployment rate averaged around 5% as shown in this Treasury graph.

Australia's unemployment through the twentieth century

What’s notable in that graph is how high unemployment became the norm in the last quarter of the century. When it became obvious politicians and economists couldn’t move the needle below 5%, the process of convincing us that five percent was ‘good’ began.

One wonders what the acceptable level of unemployment will be for the next generation. Will they consider us the failures that our grandparents would?

Image of unemployed carpenters in 1935 courtesy of the NSW State Library via Flickr

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Author: Paul Wallbank

Paul Wallbank is a speaker and writer charting how technology is changing society and business. Paul has four regular technology advice radio programs on ABC, a weekly column on the smartcompany.com.au website and has published seven books.

6 thoughts on “Managing unemployment perceptions”

  1. Hi Paul, it would be interesting to compare these really low unemployment periods to metrics like inflation rates, industrial relations settings and productivity. I’ve spent far too much time in the ACT (unemployment rate 3%) to conclude that 100% employment is a good thing…if you’re the 96 and 97th most employable person in a room of 100, you won’t get a job in NSW but you’ll be on the payroll in the ACT in no time.

    1. Hi Simon,

      I think the ACT is an outlier on this, if you can’t get a job there you move back to Sydney, Melbourne. I’m not sure what we’d discover tracking unemployment against those other measures, it might be an interesting exercise.

  2. Of course, there are lies and then there are statistics…..

    The 5% doesn’t mean that 95% are working full time. As I understand the calculation method, someone working only a couple of hours a week is classed as employed, regardless of whether they were working part time by choice.

    1. yep, I wasn’t going to go into the rabbit warren of unemployment, inflation and GDP stats. Personally I think the US site Shadowstats does a good job of illustrating how the numbers have been massaged. Which again is another way of managing our perceptions and expectations.

  3. Great article, I had no idea that 5% was so high historically. I only remember it being ridiculously high under Keating so 5% seemed very low in comparison.

    Don’t forget the GPs pushing long term unemployed onto the disability pension (not aged pension) in return for sweet private health insurance money.

    This seems to have slowed recently because it was becoming too obvious what was going on. I remember some news articles coming out around 2006/7 about how the number of DSP recipients outnumbered the unemployed – it was quickly swept under the carpet and nobody spoke of it again, but it has become a bit harder to make the transition from unemployed to DSP lately, and I think it may have been because of this.

    Clever Johnny certainly knew how to play the system to his advantage. He was the last of an era.

    But even with this, and all those other statistical tricks in place, they can only manage 5%? Remarkable!

    1. Yeah, I remember being on a Sydney bus when the ticket inspectors came through a few years back. Of the two dozen passengers working age passengers, I was the only one who didn’t have a health care card.

      I asked the inspectors if this was normal and they said it was about right.

      This is why I worry about the sustainability of the path we are on.

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