High underemployment threatens to impede economic recovery

Underemployment, rather than unemployment, accounts for most of the weakness in wages growth, suggests EY Oceania's chief economist Jo Masters

High underemployment threatens to impede economic recovery
High underemployment threatens to impede economic recovery

EY Oceania's chief economist Jo Masters has suggested that high underemployment was likely to hinder Australia's economic recovery. 

Her analysis shows that underemployment, rather than unemployment, accounts for most of the weakness in wages growth.

"There's a pretty big risk that we see that in the next year or so," EY Oceania's chief economist Jo Masters told the ABC.

EY analysis given exclusively to the ABC indicates much of the recovery in jobs has been in part-time roles, which are up 24,000 on pre-COVID levels, compared to 112,000 fewer full-time jobs.

"While an increase in part-time roles is expected during periods of economic uncertainty — as businesses hesitate to hire full-timers — the numbers also reflect a much bigger trend at play that was already well underway prior to the pandemic, and that's the growing casualised workforce," the EY analysis advised, adding since the 1990s more firms looked to adjust hours worked down rather than let workers go.

Masters suggested an official 4.5 percent unemployment rate along with an underutilisation rate (combining unemployed with the underemployed) under 12 per cent would put upwards pressure on wages.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

Tags: 
EY COVID recovery Australian economic recovery Jo Masters

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