Grim jobless reality of Covid recession 2.0

AFUNNY thing happened on the way deep into our Covid Recession Version 2.0: unemployment actually fell. That is, according to the Roy Morgan official jobs and jobless numbers. They showed the jobless number dropped 60,000 to 1.36m in August – when both Victoria and NSW were under lockdown for the entire month.

That surprisingly good news was actually bad and indeed depressing news. The only reason the jobless numbers dropped by 60k was that even more, much more, people actually gave up entirely looking for work, with 217k leaving the workforce and so not being counted as jobless.

Even so the – very real – August jobless rate was still 9.5 per cent. Add on the 1.18m Australians who had jobs but were underemployed, and a stunning – depressing – 17.7 per cent of the workforce was jobless or underemployed.

Yes, this was well down on the peak figure of 27.4 per cent of March last year, in the first month of the government-mandated national lockdown. And thank goodness for that small mercy. But it was still way higher than pre-Covid.

We have to wait until next week for the ABS numbers for August, and then they will only be for the first two weeks of August – the early days of the NSW and Victorian lockdowns.

Right now the ABS website has the ridiculously low figure of 4.6 per cent unemployment, obviously for the first two weeks of pre-lockdowns July.

But as Morgan CEO Michelle Levine points out, that figure does not include 388k people who were “working” zero hours either for economic reasons or for non-economic reasons, like being stood down.

Quite how you can “work” zero hours is something that only someone in a Canberra ivory tower can explain. Indeed, it might reflect the typical Canberra lived experience.

It also directly contradicts the most basic definition of employment the ABS has: you are defined as having a job if you work a single hour in the survey week.

The obverse of this is that if you work less than a single hour – and I would have thought that zero was less than one hour – you are not employed.

Whatever, as Levine points out, if you add these 388k – let’s call them “zeroes” – then even the ABS jobless number for July was really 7.4 per cent, much closer to the real Morgan number of 9.5 per cent.

And that’s just at the first two weeks of July, as we headed into the lockdowns and all the destruction they imposed, and which have already gone for nearly a month more and probably have a good month to go at least.

The NSW and Victorian economies will shrink by around 6-7 per cent this September quarter because of the lockdowns. The damage and destruction is already locked in.

The national economy will shrink by at least 3 per cent, and possibly 4 per cent, with the rest of Australia around zero growth , with WA – thanks to iron ore – still growing a bit.

As I’ve been explaining this is a recession; and a very bad recession in NSW and Victoria.

So I’m pleased to see former ANZ Bank chief economist Saul Eslake joining me in calling it so, in the Fin Review.

Like me Eslake ridiculed the “two successive negative quarters” recession definition, describing it as “lazy, silly and misleading”. That’s being too generous; it’s just stupid and utterly wrong.

Apart from stupidity, commentators can’t get their minds around this unique situation where politicians can – and are – ordering the economy into recession and then ordering it out.

We had the politician mandated Covid Recession 1.0 in the June quarter last year. We are living through Covid Recession 2.0 in this September quarter.

Does it go through the December quarter as well? Ask the premiers.