Besa Deda, the Chief Economist at St.George, talks about the unemployment numbers, and why despite a fall in the rate, the only jobs created were part-time positions
Unemployment falls but the only jobs created are part-time.
Ross Greenwood: Welcome back to Money News right around Australia. Well, the unemployment number came out today and guess what? It was down. 5.7% is the seasonally adjusted unemployment number but that’s tells the full story. Remember, we’ve spoken a lot about wages and what could happen in terms of the seasonally adjusted numbers, the employment was up 37,400 and also the unemployment down by 19,000 at that time.
Let’s go to Besa Deda who was the chief economist at St.George Bank. Besa, always great you have you on the program, explain.
Besa Deda: Thank you Ross.
Ross Greenwood: what these numbers mean?
Besa: Well, it’s sort of that, the economy is coming out of its soft patch that was evident in 2016, because we’ve had very strong jobs growth in April and in fact in the last two months, we’ve had the biggest back-to-back games in 17 months. Now, the dollar does jump around a little bit, and so the last months is what the in exaggeration of the underlying trend. But the real trend is still life would had be one over moderate jobs growth, just positive at the labour market.
Ross Greenwood: Okay. Explain to me the underemployment because the underemployment is absolutely key in these numbers. Does it really give a hint on that?
Besa: Well, underemployment is those people that would like to work full hours. For example, those people they are in part-time work that was like to be working more hours, that considered to be underemployment and suddenly, underemployment is suggesting that there is a bit of flex in the labour market.
So, whilst these are positive numbers that we’ve seen on the jobs data, is still a case that there is some slack that exist.
Ross Greenwood: Okay. You and I spoke about this last week, because we know that the budget, the return to surplus in 2021 is predicated upon big wages growth, especially in the out-year 2021 to up to 3.75%. I spoke to the treasure about this, they says it will come as a result of infrastructure project and other parts picking up in the economy.
But many people including even Standard & Poor’s have pointed to those numbers and said, “Unless you start to get more demand and that slackness that you talk about taken out of the employment market, there’s very little likelihood that there is going to be significant wages growth that the government needs to pick the economy up and to certainly pick the budget out and in the surplus.”
Besa: Well, wages growth will cast at underpinned budget bottom-line. Certainly ask what’s heroic. And we got enough data on wages during the Waycross and it was confirmed to be at a record low passed 1.9% per annum. Now, I’ve got to buy a new pair of glasses and I think I should buy the treasurer a pair as well. So he can take off this rose-colored glasses because it is very difficult to see that wages growth will return to 3.75% per annum in the outer year forecast which the government has in place.
Ross Greenwood: Tell you what, really good to have you on the program as always. Besa Deda, Chief Economist at St. George Bank, she thinks that the treasurer, needs new glasses because he’s got the rose-colored ones on right now when it comes to those employment and wage growth numbers. Besa, always great to have you on Money News.
Besa: Thank you Ross.