Unemployment data differs from region to region

Friday 25 November, 2016

Unemployment in Queensland reveals considerable variation from city to country.

The detailed labour force figures, released by the Australian Bureau of Statistics (ABS) last week, have further highlighted some of the mechanisms that are producing shifts in the official headline unemployment figures for the Sunshine State.

In particular, the regional labour force data, along with other releases, indicates ongoing divergence in the performance of South-East Queensland, relative to regional areas, where weak growth and falling sentiment is impacting optimism surround future economic performance.

Across South-East Queensland, the unemployment rate fell by 0.1 points in October to 5.5 per cent, with a number of areas having headline statistics that would suggest full and stable employment including the Sunshine Coast (4.7 per cent), Brisbane (5.0 per cent), and the Gold Coast (5.5 per cent).

Outside of the South-East corner however, weak economic conditions are keeping unemployment at elevated levels. Regional unemployment remained steady at 7.5 per cent in October, with Townsville (10.6 per cent), Wide Bay (9.4 per cent) and Cairns (8.1 per cent), all highlighting the significant labour market challenges that exist across many areas of Queensland.

As highlighted in the chart below, there has been a sustained divergence in unemployment between South-East and Regional Queensland across the past two years, which suggests that deterioration in labour market conditions have been largely isolated to areas outside of the South-East.

reg1Source: ABS, CCIQ

The divergence in unemployment between South-East Queensland and Regional Queensland is indicative of an economy that is transitioning form a period of unprecedented investment in mining, and the uncertainty that this shift is generating in certain parts of the state.

Given the rise in unemployment in Regional Queensland, it is worth investigating whether there has been an associated fall in participation levels, as job growth stalls and the pool of people looking for work increases.

As indicated below, participation has declined across South-East Queensland, but the fall has been particularly severe in regional Queensland, falling by 5.8 per cent since the most recent peak in the labour force participation rate in February 2009.

reg2Source: ABS, CCIQ

The divergence between the participation rates of South-East and Regional Queensland from late 2013, highlights that deterioration in labour market conditions have been particularly challenge across the past three years.

It also suggests that a higher proportion of people could be withdrawing from active engagement in the labour force across regional Queensland, as sluggish employment opportunities persist, and job seekers become discouraged.

As indicated in an earlier blog post however, it is possible that an increase in the proportion of workers aged fifty-five (55) and over, which have lower participation rates, are unequally distributed across Queensland, with a higher representation in regional areas driving down participation.

Analysis of demographic statistics provides evidence that the proportion of people aged fifty-five (55) and over is increasing at a faster rate in regional Queensland, relative to the South-East Corner. Indeed, in the five years between 2010 and 2015, the proportion of people in this age category increased by 1.7 per cent in South East Queensland, while a rise of 2.9 per cent was recorded in regional Queensland.

reg3Source: ABS, CCIQ

While this suggests that structural changes in the working age population in regional Queensland are likely having an effect the rate of participation, it is suggested that an ageing population only partially explains the observed variations in regional participation rates.

Essentially, weak jobs growth in regional areas are also driving down participation, with long term unemployed becoming discouraged and withdrawing themselves from active participation the labour force.

Further, given that falling participation has been particularly evident in the youth (15-24) age group, it is also likely that this demographic has had greater exposure to limited employment opportunities relative to other categories.

This is confirmed, to a certain extent, by the observed divergence in youth unemployment in Regional Queensland, relative to the South-East corner, with some areas recording alarming unemployment levels.

reg4

Source: ABS, CCIQ

Specifically, Cairns (27.4 per cent) and Townsville (23.8 per cent) have severe challenges surrounding employment opportunities for young people, which risk having tenuous engagement with the workforce if they are not engaged during these critical early years of workforce participation. 

While ongoing investigations are needed to further develop the specific details underpinning labour force matters in Queensland, analysis clearly highlights that regional employment opportunity needs to remain a key focus.

Indeed, a combination of local economies that are transitioning from mining investment, reduced employment opportunities for young people, as well as an ageing population, producing particularly challenging labour force conditions for several regional communities.

CCIQ will continue to monitor labour force releases in the coming months to ensure a better understanding of the forces that are influencing the Queensland labour market is achieved.

Post your comment

Comments

No one has commented on this page yet.

RSS feed for comments on this page | RSS feed for all comments