A year ago the Australian Bureau of Statistics reported that in July 2010 there were just under 587,000 unemployed. Yesterday came the news that in July 2011 there were 576,000 officially looking for jobs. The economic recovery has stalled with the ABS figures actually showing an increase in unemployment over the last month of 0.2 percentage points to 5.1%.
Clearly the Reserve Bank should forget all about a further rise in official interest rates. There has been little change in the long-term unemployment rate either. The ABS’s trend estimate of the long-term unemployment rate generally rose from 21.8% in July 2001 to 23.3% in March 2002, before generally falling to 13.0% in February 2009. Than the trend has risen to 19.6% in May 2011 before falling to 19.4% in July 2011.
With employment growth barely sufficient to cope with an increasing population of working age, it is a strange time for governments to continue with their obsession with bringing budgets back into surplus. Today it is the turn of New South Wales which, The Daily Telegraph assures us, is about to slash thousands of public service jobs …
If the federal government keeps insisting on returning its budget to surplus in 2012-13 despite declining growth prospects then presumably they will be next to follow the lead and add to the dole queues.
And still there are economists preaching the need for restraint less the bond vigilantes strike and impose a terrible price for the government not solving the budget deficit problem.