When I started in economics and investments, the unemployment rate was a reliable economic indicator. The percentage of the labour force who worked part-time was small. Most ppl had full-time jobs. The definition of employment is one hour of work per week. When most ppl worked full-time that was a workable (though odd) definition. But that's all changed. A person might work only an hour a week but would like to work 10 hours or 20. And those ppl are called 'underemployed'.
The Parliamentary website has a clear explanation.
The Australian Bureau of Statistics (ABS) identifies two distinct groups as underemployed:
- part-time workers who wanted to work more hours and could start additional hours either in the reference week or in the subsequent four weeks; and
- full-time workers who worked part-time hours in the reference week for economic reasons (such as being stood down or insufficient work being available). It is assumed these people wanted to work full-time and would have done so, had the work been available.
The underemployment rate has been steadily increasing over time, as the gig economy increases the size of the precariat. Note that all these charts end before the covid crash.
The underutilisation rate is the sum of the unemployed and the underemployed, expressed as a proportion of the labour force. It's scarcely surprising that with so many in the labour force 'underutilised' that wage increases are negligible.
This chart from Greg Jericho in The Guardian shows the inverse relationship between the underemployment rate and wage inflation. The data in this chart end in 2018.
Given that the share of GDP going to profits is at a record high, and the share going to wages at a record low, it's obvious that we need to run the economy 'hotter', and it's equally obvious that monetary policy is not achieving this. Monetarism is a central plank of neo-liberalism. Time to dump this failed policy prescription.
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