Unemployment, telling it like it is – one place at a time

Where did unemployment increase the most?

One of the most profound impacts of the COVID-19 restrictions and lockdowns has been the loss of jobs across the economy.

This has manifested itself in higher unemployment numbers and rates.

Data released by the ABS through the monthly labour force survey is a leading economic indicator, but it doesn’t provide the fine-grained spatial aspects to look at differences across regions.

This blog uses JobSeeker and Youth Allowance data from the Department of Social Services (DSS) to look at spatial patterns of unemployment.

JobSeeker and Youth Allowance data

DSS releases data on recipients of their various benefits on a regular basis.

It is an administrative collection and data is available for a wide range of demographic variables, but the spatial data is of interest here.

This blog considers the LGA data, which is released quarterly.

In an effort to minimise the economic fallout from the pandemic, the Australian government introduced various stimulus measures such as JobKeeper (paid to businesses), and temporarily increasing the JobSeeker payment.

JobSeeker (previously known as Newstart and colloquially as the “dole”) is paid to eligible persons to provide income support while they seek employment.

Youth Allowance (YA) is for persons aged 16-21 years and has two aspects – one is paid to full-time students, and the other for those seeking employment.

This blog is concerned with the number of JobSeeker and YA (non-student) recipients (JobSeeker/YA) in the March and June quarters of 2020.

It’s important to note that the number of JobSeeker/YA recipients is not the basis for calculating the unemployment rate.

Rather, unemployment is derived from the data collected through the monthly labour force survey conducted by the ABS.

JobSeeker is paid on the basis of eligibility criteria, which rules some people out.

Conversely, some JobSeeker recipients can work a limited number of hours per week and still be eligible for assistance.

It’s a complex scheme and although it doesn’t match the official unemployment rate, it still provides an indication of the number of people looking for work as well as levels of social disadvantage.

How many people receive JobSeeker and Youth Allowance?

In the March 2020 quarter there were 886,210 recipients of JobSeeker/YA in Australia.

By the June 2020 quarter this had increased to 1.61 million recipients, an increase of 82%.

Of course, it was in the June 2020 quarter that the full impacts of the COVID-19 pandemic and associated restrictions, such as lockdowns and travel bans, were realised.

Although it’s possible that some of the increase may relate to changing eligibility criteria and rationalisation of other benefit types, this increase still occurred at a time when there was a major shock to the economy.

The increase in the number of JobSeeker/YA varied widely between the states and territories.

In the ACT and Victoria, the number of recipients doubled, whereas in the Northern Territory the increase was just 32%.

The graph below compares the number of JobSeeker/YA recipients and the number of unemployed persons as measured by the ABS Labour Force Survey over the two years from June 2018.

The divergence in the numbers after March 2020 is striking.

This is likely to reflect the definitions of “unemployed” in the ABS Labour Force Survey and how the survey adjusted to the changing labour market situation when lockdowns were imposed.

For example, people on receiving JobKeeper payments from their employer were considered to be employed, even though they weren’t actually “working” because their place of employment wasn’t operating.

There were also large numbers of people who weren’t eligible for JobKeeper but may have been eligible for JobSeeker.

Spatial patterns of unemployment in Victoria

As mentioned above, in 2020 the number of JobSeeker/YA recipients in Victoria almost doubled between the March and June quarters.

The impacts of this were felt differently across the state, as the map below shows.

This measures the percentage increase in the number of recipients by LGA over this time period.

The increase in JobSeeker/YA impacted on LGAs in the Melbourne metropolitan area far greater than in regional Victoria.

The largest increases in the number of JobSeeker/YA were in the eastern suburbs.

This was headed by Boroondara (240%), Stonnington (220%) and Bayside (199%).

In other words, the number of recipients more than trebled in these LGAs.

In Boroondara, there were 1,510 recipients of JobSeeker/YA in March 2020, and this increased to 5,130 in June 2020.

Although eligibility factors and the industry structure of resident workers come into play, it is notable that these LGAs have below average unemployment rates.

As a result economic shocks, in conjunction with the employment structure, may have a relatively larger impact on unemployment numbers.

Surf Coast Shire also recorded a very large increase in the number of JobSeeker/YA recipients (201%), by far the largest in regional Victoria.

This LGA also has below average unemployment, but the tourism sector is an important economic driver.

The Great Ocean Road is a great attractor of international tourists and the closure of the international border would have had a detrimental impact on the local economy.

LGAs in western Victoria recorded the lowest increases in JobSeeker/YA, most notably Buloke (31.5%), Yarriambiack (33.6%) and Pyrenees (34.4%).

Even though these are the lowest increases, they are still around one-third or more.

Notably, all these LGAs have a higher proportion of workers employed in agriculture.

At the time, this sector was shielded from the worst of the restrictions associated with COVID-19.

These LGAs have small economies and the local impacts are likely to be significant as the range of other employment opportunities is limited compared to metropolitan areas.

The lowest increase in JobSeeker/YA numbers in metropolitan Melbourne was recorded in Brimbank (80%).

Although this was the lowest increase, it is by no means trivial as an 80% increase in effect means the number of JobSeeker/YA recipients almost doubled.

This LGA typically records higher than average unemployment, so it’s possible that the additional unemployment that resulted from COVID-19 restrictions did not impact residents to the same extent that it did in the eastern suburbs.

Summary

COVID-19 restrictions and lockdowns had a profound impact on the economy, resulting in a large increase in the number of unemployed persons.

This was evidenced by increases in the number of JobSeeker/YA recipients and the number of unemployed persons as measured via the ABS Labour Force Survey.

The number of JobSeeker/YA recipients almost doubled in Victoria between the March and June 2020 quarters.

The highest increases were recorded in Melbourne’s eastern suburbs and Surf Coast Shire.

Overall, LGAs in regional Victoria recorded lower increases, particularly in western Victoria.

The scale of the increases is likely to reflect industry structures and eligibility for JobSeeker/YA payments.

from Property UpdateProperty Update https://propertyupdate.com.au/unemployment-telling-it-like-it-is-one-place-at-a-time/