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Published 20 June 2012 21:58, Updated 20 June 2012 22:01
The unemployment scene is grim in many developed economies, as we all know. The first chart is a reminder.
Only seven of the 20 largest economies have “full” (5 per cent or less) employment, but Roy Morgan Research disputes Australia’s inclusion in this group, pointing to an 8.3 per cent level in April this year and a figure more than double that if under-employment is included.
Many people believe unemployment is probably under reported and that many of the 28 per cent part-timers are under-employed (partly offset by full-timers wanting less work). If such methodology was applied to the other nations on the list, it would be terrifying news for most of them, especially Spain (24 per cent unemployment), Iran, Poland and the euro area (11 per cent). Spain and Greece (not on the above list) would have unemployment and under-employment closer to 40 per cent, if the Morgan methodology was applied. Yikes.
It probably will take into the next decade to restore most of the nations to full employment and some of them even longer. The euro group has a particularly difficult task, having been in trouble with their economies and unemployment even before the 2008 global financial crisis, as a result of too much socialism and the European Union bureaucracy.
A measure of socialism has proved civilising to developed nations in the post-World War II years but taken to excess is cancerous, as Greece and several other members are finding out.
It is worth repeating the reason why 5 per cent unemployment is described as full employment; not that most of the above nations will experience that for a long time. At the 5 per cent level, there is usually only a hard-core of about 1.5 of that 5 desperate for a job (and likely to find one within a year or less), with the other 3.5 of the 5 not really ready to accept a job just now even if offered, or waiting for the “right” job. So, 5 per cent or less unemployment helps make a happy society and vibrant economy; and Australia has managed that level for about 60 per cent of the past 150 years.
Oddly, the second table showing the ranking of the same nations by expected economic growth in 2012 highlights that several nations are doing well despite having high unemployment.
They include India (7 per cent expected growth in gross domestic product versus almost 10 per cent unemployment). The same apparent disconnect is true of Iran, Turkey and Brazil but to a lesser degree.
By comparison, Australia is still the place to call home, notwithstanding the federal political circus that keeps distracting us and adding to the GFC fringe cool breeze that seems capable of spooking our businesses and sharemarket.