State-wise lockdowns and reduced work hours aggravates unemployment state, ABS data reveals

The Australian Bureau of Statistics (ABS) data depicts a painful state of joblessness in Australia, with drops in employment by 1,46,000 in August. This is a much depressing figure compared to the median forecast fall of 90,000. The unemployment rate was recorded at 4.5% in August. The jobless rate saw a dip of 0.1% as it was 4.6% in July.

Strict lockdowns in Sydney and Melbourne are a big contributor to this problem. Owing to the financial losses incurred due to lockdowns, businesses put workers out of jobs and cut back the working hours. 

The ABS statistics also revealed that the labour force has a huge role to play in the slips in the unemployment rate. The Labour workforce is completely demotivated as it is very difficult to find jobs in lockdowns. Adding to that, only the workers actively looking for work are tagged as unemployed. 

Bjorn Jarvis, Head of Labour Statistics at the ABS, said that impact on labour markets and the state of its recovery from lockdowns can only be ascertained by studying the data that encapsulated the numbers of hours worked by the labour force. On the country level, the number of hours worked plummeted to 3.7%. It dipped by 6.5% in New South Wales while Sydney was under complete lockdown.

Similarly, the participation rate was documented at 65.2% registering a drop of  0.8 percentage points. Due to workers’ hour limitations, underemployment surged to 9.3%. 

Sarah Hunter, chief Australia Economist for BIS Oxford Economics said, "The September print for labour force will see a further significant step-down, as this will include the full impact of Victoria’s lockdown." She also expected GDP to slump by around 4% in the September quarter due to the disturbances caused in economic pursuits.

The RBA warned that the unemployment rate could rise above 5% once the impact of lockdown is truly realised. It also was optimistic that the economic recovery will be swift once the lockdowns are partially or fully lifted.