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4102.0 - Australian Social Trends, 2000  
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Contents >> Work >> Under-utilised Labour: Long-term unemployment

Under-utilised Labour: Long-term unemployment

During the 1990s a quarter to a third of the people unemployed had been unemployed for 12 months or more, with fluctuations relating to the business cycle.

Unemployment
Unemployed people are those aged 15 years or older who were not employed during the Labour Force Survey reference week, but were available for work, and were actively looking for work.

Long-term unemployed people are those who have been unemployed for at least one year.

The (long-term) unemployment rate is the number of (long-term) unemployed in any group expressed as a percentage of the labour force in that same group.

The incidence of long-term unemployment is the proportion of unemployed persons who are long-term unemployed.


Some people experience great difficulties in getting a job and remain unemployed for long periods of time. In August 1999, there were 191,600 people (2.0% of Australia's labour force) who had been unemployed for 12 months or more. Of these, 113,300 (59%) had been unemployed for two years or more. These numbers were even higher following the 1990-91 recession. The number of persons unemployed for 12 months or more reached a high of 366,000 in March 1993.


The risk of poverty is obviously greater for the long-term unemployed than for those with jobs or those unemployed for short periods of time. Associated concerns include the well-being of family members of people experiencing long-term unemployment, and the taxpayer burden carried by the wider community. There is also some evidence that the probability of welfare dependence in adulthood is increased for children who grow up with parents receiving income support.1

Difficulty in finding work is associated with high levels of competition for a limited number of opportunities. It has also been associated with other factors such as the loss of confidence and motivation for finding work, the lack of recent work experience or appropriate skills, or with other personal characteristics such as poor health status.2,3 Some people unemployed for long periods of time may also have greater difficulty than persons unemployed for short periods because of negative perceptions of some employers.3

Job seekers who have been unemployed long term and/or who satisfy certain criteria are eligible to receive direct and indirect assistance known as Intensive Assistance from employment service providers known as Job Network members. This assistance includes job search training, vocational training, work experience, literacy training and employer incentives such as wage subsidies.4 Furthermore, for placing in employment long-term unemployed people who qualify for Intensive Assistance, Job Network members receive more than ten times the minimum job matching fee received for placing other job seekers.5

International comparison
Like Australia, the rate and incidence of long-term unemployment in many industrialised nations increased during the 1990s. In both 1990 and 1997, Australia's rate and incidence of long-term unemployment were lower than those observed in various European countries, including Italy, France and the United Kingdom. However, other countries including Canada, New Zealand, the USA and Japan had lower rates of long-term unemployment. Differences between countries are likely to be partly attributable to the generosity of their unemployment benefit schemes and to fluctuation in their business cycles.6

Comparability is also affected by differences in statistical measures such as survey definitions and enumeration month(s), and by questionnaire design and wording.6

SELECTED OECD COUNTRIES

Rate of long-term unemployment
Incidence of long-term unemployment


1990
1997
1990
1997
Country
%
%
%
%

Australia
1.5
2.6
21.6
30.8
Canada
0.4
1.1
5.7
12.5
France
3.2
4.8
38.0
41.2
Greece
3.5
5.3
49.8
55.7
Italy
6.7
8.1
69.8
66.3
Japan
0.4
0.7
19.1
21.8
NZ
1.4
1.2
20.9
19.5
Sweden
0.1
2.3
4.7
29.6
UK
2.4
2.7
34.4
38.6
USA
0.3
0.4
5.5
8.7

Source: ILO Key Indicators of the Labour Market 1999.



RATES OF UNEMPLOYMENT AND LONG-TERM UNEMPLOYMENT FROM 1973 TO 1999

RATES OF UNEMPLOYMENT AND LONG-TERM UNEMPLOYMENT FROM 1973 TO 1999 - GRAPH

    Source: Unpublished data, Labour Force Survey.


    Recession and recovery
    The likelihood of being unemployed for 12 months or more is associated with the general level of unemployment and generally fluctuates along with the peaks and troughs of business cycles. There have been two major peaks in rates of long-term unemployment over the past three decades. These occurred in 1984 (at 3.2%), soon after the 1982-83 recession, and in 1993 (at a higher peak of 4.2%) after the 1990-91 recession. The rate since 1993 has moved downwards, falling to 2.0% in August 1999, but remains above the trough observed between the last two recessions (1.3% in August 1989) and well above that observed in the early 1970s (less than 0.2%). Taking the long-term view, the trends show that the rate of long-term unemployment has generally been stepping upwards with each recession.


    RATES OF UNEMPLOYMENT AND LONG-TERM UNEMPLOYMENT FROM 1973 TO 1999

    RATES OF UNEMPLOYMENT AND LONG-TERM UNEMPLOYMENT FROM 1973 TO 1999 - GRAPH

      Source: Unpublished data, Labour Force Survey.


      Rise in incidence of long-term unemployment

      The incidence of long-term unemployment describes the likelihood (among unemployed people) of remaining unemployed for 12 months or more. Like the long-term unemployment rate it has also tended to rise to higher levels through successive recessions. Over the last decade the incidence of long-term unemployment rose from 22% in 1990 through a peak of 37% during 1993 (after the 1990-91 recession) and has since fluctuated to stand at 29% in August 1999.

      The general trend since 1973 has been an increase in the chance that a period of unemployment would last for at least a year.

      It is interesting to observe that the highest incidence of long-term unemployment has generally occurred after, rather than during, recession. This is because many of those who become unemployed as a result of recession either find work or become long-term unemployed when economic growth resumes. Also contributing to the post-recession peak incidence of long-term unemployment are people who were already unemployed long-term when unemployment began rising, and who did not find work in the subsequent recovery.

      Shift from young to old
      In August 1989, 54% of long-term unemployed were under 35 years of age and 33% were under 25. By August 1999, long-term unemployed youth (aged 15-24 years) had decreased to 25% of all people unemployed long-term. Over the same ten-year period, the proportion of long-term unemployed who were aged 35 years or older increased from 46% to 55%. In particular, women aged between 35 and 54 years comprised a substantially larger proportion of all people unemployed long-term in August 1999 (18%) than they had done ten years earlier (11%). This change may reflect an increased tendency for women who had left the labour force for family reasons to seek to regain employment, coupled with increased difficulty in securing such employment. However, the distributional shift in the long-term unemployed population from younger to older people, and from men to women, is likely to have been strongly influenced by the changes to the age and sex composition of the broader labour force population which occurred over the same period.

      The true extent of the decade-wide change in the age and sex profile of people experiencing a long period of unemployment may be understated by focussing solely on those unemployed for 12 months or more. Older jobseekers may give up looking for work, and in doing so leave the labour force. While no longer contributing to the pool of long-term unemployed people, they may still be marginally attached to the labour force (see Australian Social Trends 1999, Men and women wanting work). In September 1998, 44% of the 111,000 discouraged jobseekers were aged 55 years or older. As discouraged jobseekers they may continue to experience many of the adverse effects of long-term unemployment despite having withdrawn from the labour force.

      AGE/SEX DISTRIBUTION OF LONG-TERM UNEMPLOYED IN 1989 AND 1999

      August 1989
      August 1999


      Males
      Females
      Persons
      Males
      Females
      Persons
      Age group(years)
      %(a)
      %(a)
      %(a)
      %(a)
      %(a)
      %(a)

      15-19
      7.3
      8.0
      15.3
      5.0
      5.6
      10.6
      20-24
      10.8
      7.2
      17.9
      9.8
      4.1
      13.9
      25-34
      14.9
      5.6
      20.5
      14.2
      6.8
      21.0
      35-44
      12.5
      6.1
      18.6
      12.4
      10.2
      22.6
      45-54
      9.9
      4.4
      14.3
      12.6
      7.7
      20.3
      55 and over
      12.1
      *1.3
      13.4
      9.7
      *2.0
      11.7
      Total
      67.4
      32.6
      100.0
      63.7
      36.3
      100.0
      '000
      '000
      '000
      '000
      '000
      '000
      Total long-term unemployed
      72.9
      35.2
      108.0
      122.0
      69.6
      191.6

      (a) As a percent of all long-term unemployed.

      Source: Unpublished data, Labour Force Survey.


      Age/sex groups at greatest risk

      In August 1999, teenage women and men in their early 20s and late 50s had higher rates of long-term unemployment than men and women of other age groups. These age and sex groups at greatest risk of long-term unemployment in August 1999 were similar to those most at risk in August 1989.

      Set against the general pattern of higher rates of long-term unemployment in 1999 than in 1989 were men aged 60 years or older whose rate of long-term unemployment did not significantly change between August 1989 (2.8%) and August 1999 (2.4%). Changes in rates of receipt of income support payments are likely to have contributed to this relative stability in the rate of long-term unemployment among men in this age group. In March 1994 Mature Age Allowance was introduced for long-term unemployed persons aged between 60 and Age Pension qualifying age (65 years for men).7

      Among women the smallest percentage point increase over this period was for women aged 20-24 years and greatest among those aged 35-44 years. Growth in the availability of part-time, casual and service industry employment during the 1990s may have favoured the employment prospects of women in their early 20s relative to the prospects of other job seekers over the past decade. However the differences may also be due, in part, to a greater rate of 35-44 year old women without dependent children looking for work as a result of changes in income support for dependent spouses of unemployed men. Prior to September 1994 married unemployment payment recipients (usually men) received an allowance comprising a basic payment and an additional allowance of the same amount for a dependent spouse.8 In September 1994 the allowance for dependent spouses became Partner Allowance and was paid to the dependent spouse in their own right.9 In July 1995 Partner Allowance was restricted to dependent spouses, who were born on or before 1 July 1955, without dependent children.7 Most of those with dependent children became eligible for Parenting Allowance. Thus, to obtain unemployment benefits, all other dependent spouses had to look for work or undertake training.

      LONG-TERM UNEMPLOYMENT RATES IN AUGUST 1989 AND AUGUST 1999
      LONG-TERM UNEMPLOYMENT RATES  OF MEN IN AUGUST 1989 AND AUGUST 1999  - GRAPH
      LONG-TERM UNEMPLOYMENT RATES OF WOMEN IN AUGUST 1989 AND AUGUST 1999 - GRAPH
      Source: Unpublished data, Labour Force Survey.


      Geographic variation

      Regions with high levels of unemployment also tend to be those in which the rate and incidence of long-term unemployment are highest. In 1998-99, Tasmania and South Australia had long-term unemployment rates of 4.4% and 3.5% respectively, and incidences of long-term unemployment of 42% and 38% respectively. They were also the States with the highest rates of unemployment (see Australian Social Trends 2000, Work: State summary table).

      In August 1999, those regions with limited existing employment prospects relative to high levels of population growth (such as the Richmond-Tweed/Mid-North Coast region of NSW) and regions that have traditionally had employment concentrated in heavy industry or manufacturing (such as Newcastle) featured prominently among those experiencing high levels of long-term unemployment.

      REGIONS(a) WITH HIGH RATES OF LONG-TERM UNEMPLOYMENT IN AUGUST 1999

      Long-term unemployed

      Number
      Rate
      State or Territory
      '000
      %

      Richmond-Tweed and Mid-North CoastNSW
      10.4
      5.3
      Wide Bay-BurnettQld
      5.1
      5.2
      Newcastle(b)NSW
      10.3
      4.8
      Western AdelaideSA
      4.8
      4.7
      Barwon-Western DistrictVic.
      7.0
      4.6
      Outer Western Melbourne Vic.
      12.4
      4.5
      Mersey-Lyell(b)Tas.
      2.0
      4.2
      Southern and Eastern South Australia SA
      4.1
      3.6
      Northern AdelaideSA
      5.7
      3.4
      Greater Hobart(c)Tas.
      2.9
      3.3

      (a) Regions are Statistical Regions or groups of Statistical Regions as defined by the Australian Standard Geographic Classification except (b) which are Statistical Region Sectors and (c) which is a Statistical Division.

      Source: Unpublished data, Labour Force Survey.


      Disability and joblessness

      A person's health status can be a factor in determining whether they are able to obtain and retain a job. It may also be that long-term unemployment can cause a person's health to deteriorate. Certainly there is evidence from the 1998 Survey of Disability, Ageing and Carers, that the rate of long-term unemployment is higher among people with a disability and those with a long-term health condition than among people who do not have such health conditions.

      The 1998 Survey of Disability, Ageing and Carers found that the long-term unemployment rate for people who did not have a long-term health condition was 2.4%. Among people with a long-term health condition the rate was higher at 3.6%, while among people with a disability it was higher still at 5.2%.


      Endnotes

      1 Pech, J. and McCoull, F. 1998, ‘Transgenerational poverty and income support dependence in Australia: work in progress’, Social Security Journal, vol. 1998/2, pp. 167-182.

      2 Junankar, P.N. and Kapuscinski, C.A. 1991, The incidence of long term unemployment in Australia: Report to the National Board of Employment, Education and Training, Discussion paper no. 249, Centre for Economic Policy Research, Australian National University, Canberra.

      3 Chapman, B. 1993, ‘Long term unemployment: The case for policy reform’, Social Security Journal, June 1994, pp. 19-37.

      4 Department of Employment, Workplace Relations and Small Business, Intensive Assistance <URL:http://www.jobnetwork.gov.au/ jnet/services/ia.htm/>, (Accessed 14 June 2000).

      5 Department of Employment, Workplace Relations and Small Business 2000, General Information and Service Requirements for the Employment Services Request for Tender 2000 - Fee for Service, Department of Employment, Workplace Relations and Small Business, Canberra.

      6 International Labour Organisation 1999, Key Indicators of the Labour Market 1999, International Labour Office, Geneva.

      7 Department of Social Security 1996, Information Handbook: A Guide to Payments and Services, Department of Social Security, Canberra.

      8 Department of Social Security 1993, Meeting the Challenge: Labour Market Trends and the Income Support System, Policy Discussion Paper No. 3, AGPS, Canberra.

      9 Department of Social Security 1994, Information Handbook: A Guide to Payments and Services, Department of Social Security, Adelaide.



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