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Henry Thornton - Economics: A discussion of economic, social and political issues What`s wrong with Australia`s monthly unemployment figures? Date 19/07/2006
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'Real' unemployment activist Marcus L'Estrange outlines in detail the problems with the ABS official unemployment figures - an issue he considers so dire he calls it "Australia's Watergate"
By Marcus L`Estrange Email / Print

‘The Age’ editorial, 23/1/01, “Get the jobless rate right noted: “fudged figures are no basis for sound policy”.

Sir Humphrey Appleby of ‘Yes Minister’ fame would say:

“The language of government: Restructure the base from which the statistics are derived without drawing public attention to the fact’. Translation: Fiddle the figures.”

Author Phillip Knightly in his article “Goodbye to Great Britain” in “The Australian”, 2/4/1994, commenting on United Kingdom unemployment figures noted:

“Today, no-one is really certain of how many people are unemployed in Britain.  If you believe the British Government, then the figure is 2,787,600 (1994). But many experts accuse the government of underestimating unemployment or, worse, of fiddling the figures. It is certainly true that since 1979 there have been 29 changes by the Thatcher Government to the way in which British unemployment figures are calculated, most of which have had the effect of reducing the number – “the biggest conjuring trick since Houdini” says British Labour.

Over the last two decades, Britain has become healthier and sicker, closer to full employment and yet ever more inactive, according to the 'New Statesman', 10/1/05. In 1981 there were 570,000 men and women of working age who claimed long term sickness-related benefit, now called Incapacity Benefit -IB. In October 2005 it is 2.7 million or 2.12 million if you exclude some IB recipients working part time ('The Guardian', 13/10/05). This dwarfs the claimed unemployment number of 1.42 million (Oct 2005) and 875,500 dole recipients (Oct 2005). The figures might make sense if we were all becoming unhealthier, but judging by most measures, we are all healthier than we have ever been.

According to a survey by Britain's Disability Rights Commission, 1.1 million people who claim IB, want to return to work. However, as one recipient, Bob Johnson noted: "People go on the sick and they end up on IB and they're stuck there 'cos there's no jobs". ('New Statesman - 10/1/05).

Christina Beatty and Professor Steve Fothergill of the Centre for Regional Economic and Social Research at Sheffield Hallam University investigations suggest 1.2 million IB claimants would be in work if the UK economy were as strong in former industrial areas as it is in the Home Counties. The history of IB is not just about market forces. During the 1980's, the old Department of Employment was happy for people to claim sickness benefit instead of unemployment benefit. It issued quotas to Job-Centre managers to keep unemployment down. The National Audit Office spotted this political chicanery, but too late. By 1995, there were more than 1.8 million long-term IB claimants. (Source: New Statesman, 10/1/05). Finally on the UK scene there are some 8.8 million workers who work part time with most wanting to work many more hours. My letter in 'The Guardian' (London), elaborates.

'Blunkett's branding of benefit claimants'

Thursday October 13, 2005, 'The Guardian', London

The Work and Pensions minister, David Blunkett, has missed the point by claiming that because the number of incapacity benefit (IB) recipients has risen to 2.7 million "something very strange has happened to our society" (Turn off TV and work, Blunkett tells claimants, 10/10/05). There is nothing strange at all - during the 1980s, the old Department of Employment was happy for people to claim sickness benefit instead of unemployment benefit. It issued quotas to Job Centre managers to keep unemployment down. The National Audit Office spotted this political chicanery, but too late. By 1995 there were more than 1.8 million long-term IB claimants.

Blunkett may well want to reduce the number of IB recipients, but what is the point? There are not enough jobs and all he would do is to swell the number of people on the dole. Then the dole recipient figures would make a mockery (not hard) of the laughable monthly unemployment figures, which is really 15% of the workforce, not the claimed 5%; about the same as in Germany or France, which for some reason Britain scoffs at.

Marcus L'Estrange, London

When it comes to various welfare payments, across the channel Germany seems to have gone the other way. According to the 'International Herald Tribune', 3/2/05 and Associated Press, 1/3/05, 360,000 welfare recipients were removed from the welfare to unemployment rolls from 1/1/05 thus pushing the 'unemployment figure to 5.2 million or 12.6%. The highest since World War 2.

German Labour Minister Wolfgang Clement stated that a new jobless benefits system took effect 1/1/05. Aimed at encouraging the unemployed to take jobs and cutting long-term jobless benefits, it required many social welfare recipients to register as jobless for the first time. This meant that most of February's rise was due to the government decision to "no longer hide unemployment but to tackle it directly", according to Clement.

Balancing this seemingly slight move towards honesty in Germany one must factor in millions of Germans in state funded make work and temporary training programs (1.4 million - Dec 2004) and those who have given up (early retirees) and the real tally
exceeds 22% (Newsweek: 14/2/05) or much the same as in Australia where many universities faculties have become holding bays for the unemployed.

In Sweden it is claimed (Vietnam News, 28/6/05) that the unemployment rate is 5.2%, half of France and Germany's official rate. However the official unemployment figures tell less than half the story. Critics of Sweden's 'official' figures point to people on early retirement, in job schemes and on sick leave, which brings the total to between 10% - 20%. Additionally in Sweden the pension age is 61, in a lot of European countries it is 55.

National definitions of unemployment do differ from the recommended ILO international standard definition. The national definitions used vary from one country to another as regards inter alia age limits, reference periods, criteria for seeking work / not seeking work, treatment of persons temporarily laid off and of persons seeking work for the first time. This, plus the tricks all governments get up to in cooking their monthly unemployment figures, makes comparisons between countries well nigh impossible and a fruitless exercise.

In fact the real unemployment figures in both Germany and Australia and almost all countries are the highest since 'The Great Depression' of the 1930's. Additionally Germany seems to be sending even more manufacturing jobs abroad to East Europe and Asia than other EU countries simply because their manufacturing sector is the biggest in the EU. Even Germans who want high quality but cheap dentistry are going to nearby Polish dentists in Poland.

Paul Krugman, writing in 'The International Herald Tribune',19/7/05, notes a significant decline in US labour force participation, not growth in jobs, being a key reason why measured US unemployment figures not being much higher than it was in early 2001. 'There are at least 1.6 million and perhaps 5.1 million people who aren't counted as unemployed but would take jobs if they were available'.

The above and a host of other dodgy tricks in defining unemployment by nearly all countries make the comparison of unemployment rates between countries an impossible task. Another example is that Australia counts as being employed all those who work for an hour or more in the survey week. Countries such as Singapore, Germany and a host of others start at 15 hours before you are regarded as being employed!

Ironically the Department of Employment and Workplace Relations regards Aboriginals who work 15 hours per week plus on a Community Development Employment Program (an Indigenous variation of work-for-the- dole) are regarded by DEWR as 'employed'.

As Australia uses much the same definition of monthly unemployment as the U.K. I believe exactly the same process (dodgy unemployment figures) is occurring in Australia. Labour Market Schemes / Work for the Dole / White Paper’s which are based on false unemployment figures, are by their very nature, doomed to failure. Also if Government’s continue deceiving the Australian people about the extent of the problem, we will never, as a nation, face up to issue of mass unemployment.

Dr Peter Brain, a senior economist with the Australian National Institute of Economic and Industry Research said ('Herald – Sun', Melbourne, 26/8/01) that successive governments had “corrupted” ABS statistics and “Government changes in policy since the late 1980’s had corrupted the ABS unemployment statistics”.

The Commonwealth Statistician, Mr. Trewin, is quoted in 'The Age', Melbourne, 22/1/2001, as saying that the official measure of unemployment does not reflect the true jobless rate and added his weight to criticism of the existing definition by some politicians (e.g. Cheryl Kernot, then ALP Shadow Employment Minister) and academics, who all have said it severely understated the true jobless rate and hid increasing underemployment’.

The reality is that if the monthly figures claim that 500,000 or 5% are unemployed, that doesn't mean that they are unemployed, as they, you or I, understand the word.

No. It means that 500,000 people, (or whatever the nonsensical monthly 'Labour Force Australia' figures claims), match the International Labour Organisation’s (political) monthly definition of unemployment. The monthly figures and the local version of the ILO definition of monthly unemployment have nothing to do with economic or actuarial reality.

Commonwealth Parliamentary Library researcher Tony Kryger claims (The Age, 23/1/01) “that ILO labour force definitions are biased toward counting a person as employed rather than unemployed”.

Then Community Services Minister Larry Anthony let the cat out of the bag when he said in “The Age”, 28/10/2000: “Breaching obligations”, that there were 1.45 million on unemployment benefits. To this figure we must add 300,000 unemployed partners who obtain the dole via their partner (usually male) and the 400,000 unemployed who cannot claim the dole because of the assets and means test: (Sydney Morning Herald, 7/3/1998).

All up 2 million plus and note we have 5-6 different dole payments. The dole recipient figures alone make a mockery of the monthly or ABS 'Labour Force Australia’s' figures.

Very few commentators appear to be aware of the ABS annual survey of unemployment: “Person’s not in the labour force”, which quite clearly shows that there are at least two million unemployed. Most commentators have missed the point that the ABS carries out this survey because they have no faith in ‘their’ monthly survey: 'Labour Force Australia', which results from a political definition of unemployment /employment and which they have been forced to carry out.

'Sydney Morning Herald' journalist Tom Ballard (25/2/99) noted:

“A million more jobless revealed”: “The true state of Australia’s jobs market was exposed yesterday with the release of figures showing 1.7 million want work but can’t find it - almost a million more than the numbers officially recognized as unemployed”.
Senator Amanda Vanstone, when she was the National Employment Minister in 1996, noted that: “The National Institute of Labour Studies commissioned by DEETYA
found that “the level of disguised unemployment had risen to historic highs under Labor, pushing the true jobless rate to between 15% - 22%”.

The late Ian Henderson, economics editor, 'The Australian', 9/4/1998 noted:

“The Jobs crisis is now so acute that 2.5 million people are unable to find work. Yes, that figure is three times the usually cited number. No, it is not an exaggeration. And, just as certainly, policy makers have so far to acknowledge the full extent of the almost decade-long crisis. Only one - third of the total-around 800,000- show up in the monthly
unemployment statistics”.

Conservative economic commentator Des Moore had this to say on the real unemployment figures:
Mr. Des Moore, in commenting on the last AIRC national wage case said in 'The Australian', 13/6/05:
"This approach (on wages) pushes the unemployed and the under-utilized to one side in preference to those already in employment. Yet Australian Bureau of Statistics data shows there are more than one million unemployed or under-utilized and another 800,000 who say they would like work if available. About two million mostly unskilled would like jobs but have had little chance of getting them under the commission's regime". He again repeated these figures in 'The Business Age', 28/6/06.

What’s wrong with the Australian monthly unemployment figures?

Commonwealth Employment Service (CES) figures when it closed and privatised in 1996, had two million unemployed registered, were once used as a reliable indication of unemployment. That is, of course, until they became embarrassingly high.  They were jettisoned in the mid-1980s by Labor in favour of Australian Bureau of Statistics (ABS) monthly figures from the ABS survey 'Labour Force' which, because of the questions asked by ABS survey staff, effectively do not include the hidden, the discouraged job seekers and additionally rule out large numbers of others unemployed.  They also do not include the 600,000 plus Australians forced to work fewer hours than they would like.
This is illustrated by the ABS monthly survey questions.

(1) If you have worked one hour for pay, profit, commission or payment in kind, during the survey / reference week, you are not counted as being unemployed.  You are counted as being employed.  You could be on the dole, work one hour as a casual, but not be counted as being unemployed.  You could also work for one hour or more with or without pay in a family business (i.e. unpaid family business) or on a farm, and still not be counted as unemployed.

“The person who works an hour a week has the same status in the employment statistics as one who works 40!” ('The Bulletin', November 18, 1997).
If you are unemployed and have not:

(a) registered with Centrelink as a job seeker,
(b) contacted an employment agency;
(c) contacted prospective employers;
(d) answered a newspaper advertisement for a job;
(e) checked Centrelink touch screens
(f) checked factory notice boards;
(g) advertised or tendering for work;
(h) contacted friends or relatives;

You would not be regarded as having ‘actually’ or ‘actively’ looked for work. 

This raises the question of how or whom one is supposed to apply for almost non-existent jobs. Officially (ABS) there are about 1550,000 vacancies (July 2006) or about one job for about every 20 unemployed, nationwide at present. The ratio varies of course according to your employment skill level.

(2) If you are not able to start work within the four weeks (i.e. being sick or lacking childcare, for example) after the survey, you are not counted as being unemployed.

(3) If you have been stood down without pay because of bad weather or plant breakdown, on leave without pay for less than four weeks, on strike or locked out, on workers’ compensation and expecting to be returning to their work, these categories of people are not counted as being unemployed.

(4) You must be ready to start work within a week of the survey. If not, you are not counted.
The official monthly unemployment ABS figures exclude all those (1.2 plus million) who do not meet the absurd “push polling” type definitions (1- 4, and others) as outlined above.

Let’s look at how the 2 million plus unemployed are made up: 2005 figures. All figures rounded.

‘Official unemployed’: 500,000. Then the following Australians are excluded from the monthly figures: September 2005 ABS figures

64,400: actively looking for work but not available to start work in the survey week.
65,000: discouraged workers
169,000: who wanted to work but lacked child care.
100,000: short term (less than one month) health     problems.
176,000: on short - term courses.
44,000: thought they had a job to go to.
64,000: other family reasons.
155,000: other reasons*. (2005 figures)

Plus 400,000 who work 1-14 hours, with or without pay.
Total:  1.2million (rounded). 160,000 vacancies

Secondly there are 1.75 million unemployed Australians on one of the 5 - 6 different dole or unemployment benefits. This alone makes a mockery of the monthly figure. Additionally and for example every dole recipient who found a job or has given up the search since March 1996, has been matched by an extra person moving on the disability support pension or the single parenting payment. The latter two are not tallied as unemployed because they are not technically looking for work. However they are jobless and from July 1 2006 many will now have to look for some work and / or go onto the lower welfare payment - Newstart. That alone will make the Newstart payments balloon and alone will make the monthly unemployment figure even more ridiculous than now. A prospect I didn't think was possible.

Economics commentator Terry McCrann once observed: “So that, for want of a better term, the ‘jobless problem’ actually directly hits a staggering 2.5 million Australians (official jobless – 800,000, hidden unemployment 1.2 million, 578,300 underemployed)—leading on to claims that the official jobless numbers are some sort of gigantic cover-up,” (The Australian, July 6, 1996).
The monthly figures are obtained from interviewing 80,000 people in 29,000 households, hotels/motels each month.  The monthly figures do not, repeat not, come from any so-called Centrelink (formerly the Department of Social Security or Commonwealth Employment Service) ‘lists’. Note: Centrelink has at least 1.75 million Australians on the five – seven different dole benefits.

Additionally another 400,000 people are estimated to be unemployed without benefits ('Sydney Morning Herald', March 7, 1998).

The 5-7 different dole payments are:
• Newstart Allowance
• Mature Age Allowance
• Parenting Payment (part) - 230,000 as of 1/5/05
• Widow Allowance
• Youth Allowance (part)
• Community Development Employment Program    (Aboriginals working for the dole) 37,000 (2006)
• Special Benefit 
• (*) Disability Support Pension (DSP - part

The above dole figures include some lone - parent recipients. Those who have children over 8 years old in some cases or over 6 years, in other cases. Over the 1990’s their numbers increased by over 50% from 134,000 to 370,000. The number of Disability Pension recipients increased by 90% during the 1990’s. (Source: 'IPA Review', July 2000).

(*) I am not aware of a wave of debilitating epidemics during the mid 90’s but I am advised that when the Coalition came to power in 1996 large numbers of Newstart and Mature Age Benefit recipients were transferred to the DSP in order to reduce the dole recipient figures. See my point on this re the UK on page 1. 

All up we have in 2005 1.75 million or a 60,000 increase (non-age) in welfare dependants since 1996 (1.69 million).

Then Labor Family Services spokesman Wayne Swan and now Shadow Treasurer claimed that the difference between disability and unemployment payments is only
$4 a day (maybe nothing to Comrade Swan who will become a millionaire via the Parliamentary Superannuation Scheme) but a lot to a battler), and the notion that recipients of a disability pension are there for economic reasons is simple vilification.

“The growth in the disability pension has been from mature – age women. They are people like nurses, whose bodies have worn out. It is far from being the
stereo typical lazy boozed – up male workers” ('The Australian', 14/4/04).

Still inexplicably, the media do not match up the welfare rolls with the claimed monthly unemployment figures. Journalists blindly accept the figures given out by the Employment Minister whom s/he says are unemployed, as the only ones that are unemployed just as journalists of old willingly accepted the then press release that the earth was flat.

For example every dole recipient who found a job or has given up the search since March 1996, has been matched by an extra person moving on the disability support pension or the single parenting payment. The latter two are not tallied as unemployed because they are not technically looking for work. However they are jobless and from July 1 2006 many will now have to look for some work. That will make the Newstart payments balloon and alone will make the monthly unemployment figure even more ridiculous than now. A prospect I didn't think was possible.

I am well aware that the ABS uses concepts and definitions recommended by the International Labor Organisation (ILO), one of the specialised agencies of the United Nations.  My point is that these ILO concepts and definitions of unemployment are, in essence, designed for political purposes and to provide governments (here and overseas) with the most flattering figure. They have nothing to do with reality.

In this connection, it is important to appreciate that the ILO concepts and definitions are not formulated by:

a) the statisticians on the staff of the ILO — the international civil servants;
b) nor by the statisticians on the staff of other international agencies such as the United Nations Secretariat, the WTO, the OECD et al—also international civil servants;
c) nor by independent expert professional statisticians such as academics, actuaries and

In fact, the ILO concepts and definitions emanate from a group of statisticians, convened by the ILO, about every seven years, which comprises national civil servants nominated by their respective governments (not by the ILO).

In the case of Australia, for instance, its representatives on this ILO group has been the
Australian Statistician for the time being — an Australian public servant.  While the fact that this ILO group is composed of national civil servants does not mean that they are not expert statisticians, it does mean that they are not independent, in that they are, of course, beholden to their respective governments which can direct or influence them as they see fit.

All governments are anxious, for obvious reasons, to reveal publicly the lowest rate of unemployment that is possible — not least of all for domestic consumption.  In short, the governments involved in the ILO group, have a vested political interest in using concepts and definitions, especially when issued under the prestigious imprimatur of the ILO, that disclose as low a rate of unemployment as possible, and the national civil servants of the ILO group all have riding instructions or at least guidelines, from their respective governments, to achieve this end.

Hence, ILO concepts and definitions of unemployment are inherently flawed as they reflect the political motivations of governments in directing or influencing their respective national civil servants into jointly formulating them.

Sir Humphrey Appleby of 'Yes Minister' fame admirably sums it up well when he noted in his diary:

“The language of government: Restructure the base from which the statistics are derived from without drawing public attention to the fact”.

Translation: "Fiddle the figures”. Sir Humphrey Appleby, 1989.

That’s why the ABS (and the ILO itself) does a second, annual (with different questions) and far more honest survey, “Persons not in the Labour Force”, which produces a real unemployment figure of at least two million.

Until the public is fully aware of the real unemployment figures, only band aid solutions (e.g. Labor’s Working Nation / Liberal’s Work for the Dole (slave labour wages) will be applied, preventing a real debate about the big changes we need. In my time in the CES (over a 25 year period) I have seen billions of dollars go down the drain on training people for non-existent jobs, subsidising (often dodgy) employers and creating massive bureaucracies on the backs of the unemployed. An empire Sir Humphrey Appleby and Labor's 'New Class', feasted on. Under the 1983-1996 Labor Government the old Department of Employment, Education and Training was primarily a job creation scheme for its own middle to senior management and Labor’s ‘New Class’.

All this was in the name of covering up the real unemployment figures and to create the illusion of activity and concern.

Prime Minister John Howard has shown to be a shrewd judge of populist opinions re working for the dole. He has attacked the underclass in order to gain the votes of the working class battlers and his mutual obligation policy is a cheap populist approach to a very serious problem, He and ' Job Snobs' Minister Abbott have ignited a campaign of blaming the victims of the current economic order and this brand of mutual obligation is a very convenient way of diverting attention from the current economic order’s failure to solve unemployment. 

Some $35 billion of Commonwealth money is distributed to Australia’s various regions on the basis of ABS figures.  One can only wonder how much unemployment money or pork barreling is misdirected on the basis of dodgy figures.

As ‘The Age’ editorial, 23/1/01, “Get the jobless rate right noted: “fudged figures are no basis for sound policy”.

I can also recall John Howard, then Shadow Minister for Industrial Relations, saying to me at an AM Breakfast (Melbourne) in 1993:

‘Marcus, I know the real unemployment figure is 20% but I cannot afford to be honest. If I was honest people would become depressed and spend less thus creating even more unemployment’. I tried to explain the economic and social cost of unemployment ($25 bill - $50 bill p.a.) but he was dragged away by a minder.

Labor’s 1998 National Conference and Premier Beattie’s 2000 pledge to get the unemployment figure down to 5% from its ‘official’ level of 6% - 8%, sometime next century (originally by the year 2000 in Beazley’s case) was clearly and knowingly a false promise because the real figure is currently 20% or two million plus.

I recall trying to explain to Kim Beazley at a 1994 Fabian Society dinner in Melbourne what was wrong with the monthly unemployment figures, but his eyes just glazed over. Like the handling of the Collins Class submarines paperwork I guess my submission was a bit too hard for him to handle.

If you are dishonest about the magnitude of the problem, you cannot be honest about the solution.

Now that the Commonwealth Statistician Mr. Dennis Trewin, has blown the whistle on the extremely dodgy monthly unemployment figures both Howard and Beazley must be honest with the Australian public. Then and only then will be able to move to a situation where all Australians have some work to do rather than some doing all the work.

Finally the media have no other choice but to stop publishing the monthly Labour Force  figures and only publish the ABS survey: ”Person’s not in the labour force” figures which shows that at least two million Australian want to work.

“There are lies, damn lies and statistics, the monthly employment number is not only misleading, it because real harm and asked why the ABS produced this old cobblers”.  Mr. Steve Crabb, Former ALP (Labor Unity) Victorian Employment Minister, “The Herald Sun”, 20/12/1995. He should have asked his Federal colleagues.

Unemployment is a serious social problem in this country. It will never be adequately addressed while governments continue to fudge the figures and pretend there is not a pressing problem in our midst.

Only REAL unemployment figures will result in a REAL solution to our current state of mass unemployment. If you feed junk figures into your economic model you will get junk employment, education, training, immigration, general economic policies out.

Marcus L’Estrange is a freelance writer, a Victorian High School teacher, a former CES worker and author of many published articles on unemployment in general and in particular:” What then is to be done” which is available from Marcus.

Other short papers are available on request from marcusle99@yahoo.co.uk are:

• (2) "What is to be done: A Plan To Reintroduce Full Employment in Australia" by            Marcus L’Estrange
• (3) “Working harder isn’t working” by Marcus L’Estrange
• (4) “What are the barriers to achieving full employment and can we rely on the Coalition or ALP politicians? By Marcus L’Estrange
• (5) A summary of press statements
• (6) Australia's Labour Force, chart by Marcus L’Estrange
• (7) “Educational Left”: how it failed schools, by Marcus L’Estrange
• (8)  Minister Abbot’s reply of 15/11/02, to an earlier submission.
• (9)  Unemployment: why nothing will be done, News Weekly, 3/10/1998
• (10) Background Information on Marcus L’Estrange 


Subject: unemployment.
Posted by: Henry Thornton
Date: 7/19/2006
Congratulations to Marcus for this excellent article with superb research.

Can I suggest that a way forward is to build another Australia north of the Tropic of Capricorn? We seemed to have reached the apogee of development in the current Australia.

Why doesn't Darwin set out to get 4 million people like Sydney? The Kimberleys are just sitting there...rich and empty, with plenty of water in Lake Argyle.

Don't get government to do it...just get government to let capitalism do it...worked in America.

With so many unemployed why cannot business get workers? They are not making it up...they genuinely cannot get workers.

Why Marcus?

Sir Wellington Boot.
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