Why Qld’s unemployment rate is highest in nation despite better jobs recovery during pandemic than rest of Australia

When I spoke with Scott Emerson on his 4BC Drive program on Monday (see my Monday QEW post), he asked me how it was that Queensland could possibly have a higher unemployment rate than Victoria given the harsh restrictions they had down there last year (see chart below). It certainly is a good question.

Today, the ABS released the December Labour Force Survey data, and they show Queensland as having the highest unemployment rate in the nation at 7.5% (compared with a national average of 6.6%), even though Queensland has had a much better than average jobs recovery (see chart below).

There are several reasons why Queensland’s unemployment rate is higher than Victoria’s and the other states’ unemployment rates, which I’ll quantify the relative contributions of in a future post, once I’ve had a bit more time to crunch the numbers. Briefly, the reasons are:

  • Queensland’s strong recovery (and over-shooting) in the workforce participation rate, which is now 1.2 percentage points higher than it was in March, compared with a 0.3 percentage point increase nationwide (see chart below and also the Queensland Treasury briefing),
  • Queensland having gone into the COVID-recession with a higher unemployment rate than the rest of Australia (5.6% compared with a national average of 5.2% in March) – largely related to an under-performing economy in recent years, and
  • Queensland’s population (civilian 15+) growing at a faster rate than the national average (0.8% since March compared with 0.4% nationally), possibly related to interstate migration and also to proportionately higher numbers of temporary migrants in other states returning to their home countries.

In summary, even though Queensland has the highest unemployment rate in the nation, that doesn’t mean we have the worst performing economy. Our higher unemployment rate is due to several factors, two of which (higher participation and higher population growth) reflect positively on the state economy. As I’ve noted on this blog several times in the past, the Queensland economy has coped with the COVID shock better than most. Check out my posts:

Qld has highest unemployment rate, but we’ve actually coped with COVID-shock better than most states

Mining & Ag have partly shielded several Qld regions from COVID shock

For more commentary on the December ABS Labour Force data, check out Pete Faulkner’s post Labour Force data comes in largely as expected…Queensland does well.

Finally, note the figures used in this post are ABS seasonally adjusted estimates and the usual warning about month-to-month volatility due to sampling error applies.

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com

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1 Response to Why Qld’s unemployment rate is highest in nation despite better jobs recovery during pandemic than rest of Australia

  1. Scooter says:

    Looking at the FT/PT and M/F composition, the participation rate could also reflect an added worker effect rather than an encouraged worker effect – I’d say in COVID times, that’s more likely to be a dominant explanation. And with insolvency protections, JobKeeper, rent and mortgage deferrals, etc. all fading away, that will get worse – not better. The unemployment rate is the worst in the country. Can’t sugar coat that.

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