Underemployment & Unemployment

Ahh statistics, underemployment and unemployment...what does it mean?

As a relatively new migrant it is not often that I get queries from people outside Australia seeking to know about employment opportunities in Australia. I was fortunate enough to move to Australia with a job in hand, but I know of several people who are still struggling to find permanent employment or a stable career.

The fact that Australia regularly reports its unemployment at around 6% does not seem to be reflected to those on the ground especially those seeking employment or those seeking to move jobs. I recalled my personal experience in changing job where I sent close to 200 applications over a period of 1 year without much success several years ago which some, would attribute to the economic condition prevailing then.

Lets us first understand what the official statistics of unemployment of 5.8% means, as the job market remains extremely difficult for job seekers and new migrants to Australia. To put in perspective, 5.8% unemployment rate is considered "fairly low", somewhere in the lower mid range by developed economies standard.

As comparison the unemployment rate (www.tradingeconomics.com/country-list/unemployment-rate) in the US 6.3%, UK 6.9%, Japan 3.4%, Singapore 2.1%, France 10.2%, Italy 12.7%, Germany 5.1%, Netherlands 8.7%. It appears that Asia is still the growth area, with the US and UK improving in recent times followed by Continental Western Europe, South Europe and lastly East Europe generally speaking.

To fall under the existing definition of "EMPLOYMENT", it is relatively easy, as defined by the OECD:

Persons in employment comprise all persons above a specified age who during a specified brief period, either one week or one day, were in the following categories: 

- paid employment; 
- self employment.
Source: http://stats.oecd.org/glossary/detail.asp?ID=778

So it appears that if one is employed for just one day, one would therefore be considered "employed" and by definition, no longer unemployed.

To boost employment i.e. reduce unemployment, one could therefore give every single person of working age, paid employment of just one day!

Which brings me to the next point.

In today's work environment due to the availability of information technology capabilities and, changes in legislation, many are no longer in full time employment unlike during our grandparents' era. In those days, one either works full time or remain unemployed. There was little part time or casual employment roles (with exceptions of course). This is where underemployment comes in.

We now have a relatively large work force who are underemployed i.e. able to work more than the hours they are currently in employment e.g. working 2 day weeks, or 20 hours week etc. Some choose the shorter works but many are only able to secure employment for this shorter period compared to the 40 hours standard work week most of us know of. Governments may for example decide to pass a law prohibiting work beyond say 25 hours work week, and presto, we have full employment immediately.

I'm sure that when the legislation was pass to allow for casual and part time employment, the intention was to allow workers with other commitments e.g. child caring responsibility, the possibility of seeking flexible hours around their personal or family duties. The unintended consequences however, companies now seek to just hire workers to "fit-in-time" their work routine and pay them those few hours of employment. It is also extremely difficult for people to seek other employment to fill up those few hours of their non-working time, if they are underemployment, due to to travel time and/ or other commitments which may not fit the work schedules of both parties, employer and employee.

I am worried about the consequences of all this for the future generation and the way moving forward appears to be self-employed contractors who are hired purely for their services on a need to basis. This however comes at a higher rate of wages per hour but with less hours in place, an overall lower fixed costs.