August 23 2016
Sydney Morning Herald
Part-time jobs boom: flexibility for business but underemployment for workers
We're often told our economy is more "flexible", which sounds like a good thing, right?
However, such flexibility often comes at a cost to workers, and a clear example of this is the recent boom in part-time jobs, as growth in full-time employment hits a plateau.
Underemployment has increased most in sectors such as hospitality and retail.
In the past year, the economy created almost 220,000 jobs, but 190,000 of these, the vast majority, were part time. Full-time employment grew by just under 30,000, or 0.4 per cent, in the year to July.
The trend is particularly stark among men. The number of men in full-time jobs actually fell slightly during the year, while part-time jobs growth jumped almost 95,000, or 8 per cent.
Plenty of people make the choice to work part time, of course. Even so, the dominance of part-time work looks more like a sign of an economy that isn't generating enough work – and this problem is likely to hang around for the forseeable future.
Part-time work, defined as employment of less than 35 hours a week, has risen from about 15 per cent of all jobs in the 1980s to about a third today.
Much of that increase occurred because more women have entered paid work, and chosen to work part time.
jobs market graph
The ageing population may also mean there are more workers approaching retirement who are choosing to work part time as a way of building up their savings for a few more years.
But there are good reasons to think the recent dominance of part-time work is not simply a choice that people are making.
For one, the share of people who have a job but would like more hours – known as "underemployment" – is near a historic high at 8.5 per cent, compared with 6 per cent before the global financial crisis. The vast majority of these underemployed workers have part-time jobs.
ANZ economist Kieran Davies says this high underemployment is a sign of a labour market that is softer than you'd think by looking at the unemployment rate, which in the past two years has fallen from 6.2 per cent to 5.7 per cent, equalling a three-year low.
"It suggests there's more spare capacity in the labour market than the unemployment rate would suggest," Davies says.
Why is the economy failing to produce enough work for so many people?
Like so many trends in our economy, this one can probably be traced back to the resources boom.
In the past few years, jobs in mining construction have been replaced by jobs in industries such as tourism, hospitality and household services, which have a high share of part-time employees.
Davies points out that underemployment has increased most in hospitality, recreation and retail sales – key areas that have been growing in the services economy.
The fact this underemployment is being driven by a change in the industry composition of the jobs market suggests it might be a "structural" or deep-seated change, rather than something that is temporary.
The rise in part-time work may also reflect the much-hyped "flexibility" in our economy, including the greater use of short-term contracts by employers.
The Reserve Bank recently said more businesses were looking to hire staff on temporary contracts, or in casual or part-time positions, as a way of keeping their costs down.
Economists argue this kind of "flexibility" benefits the country overall, pointing out that service industries have been vital in picking up the slack after a plunge in mining investment. But try telling that to the hundreds of thousands of people who would like more hours of work but can't get it.
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