There is no doubt that the rate of unemployment is going to rise over the coming months. You can't shut down sections of the economy without the workers in them losing their jobs.
There's going to be a lot more use of phrases like "jobless rate", "unemployment rate" and "workforce". It will be useful to know what they mean.
What does the "rate of unemployment" mean?
The rate of unemployment (also known as the unemployment rate or the jobless rate) is the proportion - the percentage - of the workforce which wants to get work but can't.
The workforce is all those people of working age who want jobs or have jobs. It's both people with paid employment and also those without it but who would like it and are available and seeking it.
The Australian Bureau of Statistics defines an unemployed person as "one who, during a specified reference period, is not employed for one hour or more, is actively seeking work, and is currently available for work. Unemployment is a count of all these people."
In plain English: an unemployed person for the purpose of the statistics is someone without a paying job, even one which lasts only an hour a week, and who is seeking work.
The rate of unemployment (jobless rate or unemployment rate) is the proportion of the workforce which wants a job but can't get one.
So that's easy enough to understand?
Not quite.
The question is: how do you measure unemployment?
The obvious way would be just to count the number of people who sign on as unemployed at Centrelink.
But that would exclude a whole bunch of people who want work but who can't get it - and that's important for the economy because we need to know about unused resources - like labour. If people want to work and can't that's a waste for the economy.
Who are the unemployed who might not be in the JobSeeker category?
People may not sign on because they have savings and wouldn't get money by signing on but they are looking for work through other methods - advertising for it, answering jobs adverts or contacting contacts for example.
People might be too proud.
Some might be older workers who feel they have no hope of getting a new job even though they are keen for one- and they have skills and experience of value to the economy.
So just counting people who register isn't a good way of measuring how much unused potential there is in the economy - and that's what is the useful measure. How much slack is there?
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What is a better way of measuring unemployment?
The Australian Bureau of Statistics conducts a monthly survey (known as the Labour Force Survey) in which it asks around 50,000 people about their situation.
As part of this survey, the ABS groups people aged 15 years and over (the working-age population) into three broad categories:
- Employed - includes people who are in a paid job for one hour or more in a week.
- Unemployed - includes people who are not in a paid job, but who are actively looking for work.
- Not in the labour force - includes people not in a paid job, and who are not looking for work. (For example, students not looking for work or full-time carers, retired people or those permanently unable to work).
Once it knows the number of employed and unemployed, it works out the rate of unemployment.
How many unemployed are there in Australia?
On the latest ABS figures, there are just over 13 million people in employment (13,010,200) and just under 700,000 unemployed people (698,000) meaning roughly one in every 20 people in the workforce (or five per cent) are unemployed.
But no one believes that this won't rise substantially in the coming months.
How does that compare with the Great Depression?
In the late 20s and early 30s, around a quarter of the workforce couldn't find work, sometimes more. From 1930 to 1934, the rate of unemployment was 23.4 per cent. It peaked at 30 per cent in 1932.
Can we compare unemployment rates in different countries and at different times in Australia?
We can - but with care.
Under the rules of the International Labour Organisation (which is attached to the United Nations) countries have to measure unemployment in comparable ways.
Adjustments are made to a country's figures to measure like for like.
Government statistics offices like the ABS are very protective of their methods and data. They resist attempts to manipulate the figures politically so unemployment looks lower than it is.
Figures are also adjusted according to the time of year. There are seasonal workers in fruit-picking regions, for example. If unemployment rises after the harvest, we need to know how the rise compares with previous years - is it worse or better?
Figures for unemployment in Australia go back to 1931. The statisticians of the ABS make adjustments so they are as comparable as they can be. In 1931, for example, it might have been difficult to assess unemployment in deep rural areas but the idea is to be able to make a broad comparison over time. It's not exact but it's the best that clever people can do.
How low can unemployment go?
That's debated by economists but nobody thinks it can be zero - people are unemployed when they change jobs. There may be changes in the economy which will work through - say the closure of a factory in a town but new work is on the way and people hold out for it.
But everyone agrees that unemployment is undesirable. It is a waste of resources and it has a huge cost for the individuals who want work - and who value work - but who can't get it through no fault of their own.
According to a study for the Business Council of Australia: "The personal and social costs of unemployment include severe financial hardship and poverty, debt, homelessness and housing stress, family tensions and breakdown, boredom, alienation, shame and stigma, increased social isolation, crime, erosion of confidence and self-esteem, the atrophying of work skills and ill-health."
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