Nev Power’s COVID-19 Commission must rely on the more sensitive and accurate Roy Morgan unemployment measure rather than the Government’s seasonally adjusted ABS estimate

 – by Gary Morgan, Michele Levine and Julian McCrann

The new Federal Government mandated National COVID-19 Coordination Commission headed by Nev Power is designed to mitigate the fallout from the COVID-19 pandemic and ensure employment opportunities are available for these workers now, and for workers when normality returns.

However, the Committee will be operating without a clear understanding of the current employment status of many Australians unless they rely on real-time unemployment data NOT seasonally adjusted ABS data.

The significantly lower ABS unemployment estimate is almost self-defining as it relies on people being available for work every day in the ‘reference’ week, e g.:

• anyone minding children or a sick person is not by definition available for work, or
• anyone who did one hour of work (paid or not) in the reference week is not defined as unemployed, and

People working at home in a family business and not being paid will be classified by the ABS as employed – obviously wrong!

The graph below covering the last 20 years shows how much more variable or sensitive the Roy Morgan true unemployment measurement is compared to the ABS.

Source: Roy Morgan Single Source January 2000 – February 2020. Average monthly interviews 4,000.

In September 2008 – just before the Global Financial Crisis, the difference between the ABS Unemployment (4.3%) and Roy Morgan (4.9%) was only 0.6%. The Mining Employment ‘Boom’ from 2008-2010 kept these estimates relatively close for two years until October 2010 when the ABS measured unemployment at 5.4% and Roy Morgan unemployment at 6.4%  – then separated by 1%.

However, after the end of the Boom, Roy Morgan unemployment increased significantly while the ABS unemployment estimate was stable.

Since January 2011 – so over the last decade – Roy Morgan unemployment has averaged being 4% points higher than ABS unemployment.

The Roy Morgan estimate is NOT seasonally adjusted so variance each month is between 0% and 1.5%; while the ABS shows little change month-by-month as it is seasonally adjusted.

Day-by-day Australian businesses are using the 'force majeure clause' in the Fair Work Act to stand down thousands of workers. For this reason Roy Morgan is today measuring change in a persons' work status

Unfortunately the true unemployment is still 'masked' because Governments are employing and paying $millions to the public sector employees - some are very busy but a lot have little to do.

The new ABS monthly under-employment figure introduced in late 2018 more accurately measures under-employment and there is little difference between Roy Morgan under-employment and ABS under-employment. The Roy Morgan figure is on average 0.5% higher than the ABS figure – a much smaller difference which indicates that ABS & Roy Morgan under-employment are generally tracking the same pool of under-employed workers. The problem is with the unemployment measure.

Source: Roy Morgan Single Source January 2000 – February 2020. Average monthly interviews 4,000.

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