Labour market tracking: slow gains and the gender-split recession

We released our last labour market tracking piece in May, at which point the data showed a pretty bleak picture of how the Australian economy and particularly the labour market were faring. Two months on and the lagged indicators show some improvement with some jobs coming back but now momentum appears to be faltering. This is likely to be compounded by Victoria’s Stage 4 restrictions, which have resulted in approximately 250,000 workers being stood down as department stores and other retail outfits were ordered to close.

Key Indicators

Employment to population ratio

The employment to population ratio is an estimate of the utilisation of the human resources in the economy. It is expressed as the number of people employed divided by the total population of the country. This fell from 62.2 in March to 59.8 in July, but has improved 0.6 percentage points from June.

Unemployment rate - Australia

The unemployment rate was steady at between five and 5.2 per cent in the months leading up to the economic downturn. The latest numbers show that this has increased to 7.5 per cent in July, an increase of a tenth of a percentage point from June.

Across all states the unemployment rates have risen with Queensland and WA experiencing some of the highest unemployment rates.

Weekly jobs and wage indicators

Payroll jobs

The ABS Jobs index (with jobs indexed to 14 March 2020) shows a slowdown in jobs from late March. The month of June saw the recovery in jobs build pace but this has since lost momentum as infections in Victoria rose, and further restrictions were introduced on July 8. The next series of this data will shed more light on how the 2 August introduction of Stage 4 restrictions impacted jobs.

The wage index, with wages also indexed to 14 March 2020 levels, shows a drop in wages from the end of March onwards although this has started to rebound more recently. However they should be interpreted with some caution. The most recent ABS Average Weekly Earnings data shows that there has been a 5.4 per cent increase in average weekly total earnings. A number of factors are at play here according to the ABS:

• large decreases in the number of jobs, people employed and hours worked;
• decreases in lower paid jobs and industries were heavily impacted;
• impact of jobkeeper payments which for some people, was an increase on what they were normally earning.

Industry by industry slowdown

There is no doubt that the virus has affected some parts of the economy more than others. For example, Accommodation and Food services experienced some of the largest falls in workforce (since 14 March 2020), as did Arts and Recreational Services, and Agriculture, Forestry and Fishing. Job losses now appear to be building more broadly across the economy.

Impacts on the female labour force

There has been much discussion regarding the pink collar recession based on the gender composition of sectors hardest hit in COVID and the disproportionate burden on women. Here we look at the story so far for hours worked, unemployment, underemployment and wages. Overall the analysis presented here shows that the gender impacts of this crisis vary across the different metrics. While we find that the crisis has had a muted effect on the hours worked for women when compared to men’s hours, unemployment rates appear to have affected women and men equally. Men report lower underemployment rates than women and men’s wages have recovered more slowly than women’s.

Total hours worked

The number of hours worked across all jobs dropped quite significantly in response to the economic shutdown. However these number rebounded in June 2020 after registering a 7.3 and 6.5 per cent drop for males and females respectively from the previous month. The chart presented here shows the hours worked divided by people in the labour force ¹. The effect on women’s hours worked appears quite subdued particularly when compared to men’s hours worked.

Looking at these charts, it is interesting to note that the dip in the number of normalised hours worked seems quite extreme for both genders relative to previous recessions. However it does appear to have more of an effect on full-time working hours for men relative to women when compared to previous recessions.

The hours worked in full-time jobs, normalised by the labour force, shows a slightly steeper decline for males than for females. This in part because males are more likely to be employed in full-time roles than females.

Part-time hours worked for females dipped very sharply just after the restrictions were announced, however more recently, the normalised part-time hours numbers have increased.

Unemployment rate by gender

The unemployment rate by gender shows very similar trends for males and females in the labour force with men experiencing slightly higher levels than women.

Underemployment by gender

In response to the crisis and the mass standing down of workers, the underemployment rate spiked quite sharply, but in the month of July this moderated to 10 per cent for males, and 12 per cent for females.

Jobs and wages index by gender

Jobs index

The jobs and wages index show a similar pattern for men and women through the crisis, but with women experiencing sharper initial falls in the month of April than men.

Wages index

The wages index for females and males shows that while both experienced sharp falls at the end of March to the beginning of April, female wages have recovered more strongly. Some of this could be the effect of jobkeeper and selection - i.e., that lower paid jobs have disappeared which has driven up the average wage.