The unemployment rate is often used as a summary comparative measure and captures the attention of the media more often than other labour market indicators. However, it is a narrow concept of underutilisation and ignores many other sources of labour wastage. In this paper, we discuss the limitations of the unemployment rate in this respect and compute a range of measures for Australia which are designed to provide better indication of labour slack. We present two hours-based measures of labour underutilisation for Australia, which quantify the degree of underutilisation and underemployment among the unemployed, the hidden unemployed, and the part-time workers who desire more hours of work. We conclude that the official unemployment significantly understates the degree of underutilisation in Australia. Finally, we examine the presence of cyclical non-linearities in several indicators of underutilisation. We conclude that the asymmetries present impact more significantly on the most disadvantaged in the labour market.
4th Path to Full Employment and 9th National Conference on Unemployment. The Path to Full Employment: Proceedings, Refereed Papers, 4-6 December, 2002, The University of Newcastle, Australia (Callaghan, NSW 4-6 December, 2002) p. 37-53