Unemployment vs Not in the Labour Force
Wednesday, May 11th, 2011
The Australian Government often refers to an ABS (Australian Bureau of Statistics) figure called the Unemployment Rate. Everybody goes on about it but nearly everybody I speak to has no concept of what it really means.
Essential reading for understanding the problem of Australian men outside the workforce is a Staff Working Paper published by the Australian Productivity Commission in January, 2007 – Men Not at Work: An Analysis of Men Outside the Labour Force by Ralph Lattimore. In particular, I would encourage journalists to read Men Not at Work so their commentary moves from the general perception of unemployment toward a role of educating the public about the true meaning (and obfuscation) of the unemployment statistic.
Lattimore used a simple pie chart to contextualise the unemployment number provided by government. There are two categories:
- Those who are participating in the labour force (employed + unemployed)
- Those not participating in the labour force (pensioners, stay at home mums, retirees… neither employed nor unemployed)
The figures aren’t that different today so we’ll stick with Lattimore’s pie chart for the male demographic: (1) 68 per cent of men employed + 4 per cent of men unemployed – all participating in the labour force; and (2) 28 per cent of working age Australian men classified as ‘not in the labour force’. Number 1 is refered to as the ‘Participation Rate’ (grey and white in Lattimore’s pie chart).
