Leslie Massey
Unemployment rates are a key indicator of a country's economic health, and they can be influenced by various factors such as economic downturns, labour force participation, and demographic changes. Australia, like any other country, closely monitors its unemployment rates to gain insights into the health of its labour market and overall economy. As of June 2025, the employment-to-population ratio in Australia remained at 64.2%. However, unemployment rates vary across different age groups, with the 15-24 age group consistently experiencing the highest unemployment rate at 7.4% in May 2023. Understanding unemployment rates and the factors influencing them is crucial for policymakers and economists to develop effective strategies to support Australia's labour market and overall economic stability.
| Characteristics | Values |
|---|---|
| Date | October 2023 |
| Total number of unemployed Australians | 1,542,000 |
| Percentage of the workforce that is unemployed | 9.9% |
| Total number of under-employed Australians | 1,577,000 or 1,580,000 |
| Percentage of the workforce that is under-employed | 10.2% |
| Total number of unemployed and under-employed Australians | 3,119,000 or 3,120,000 |
| Percentage of the workforce that is unemployed or under-employed | 20.1% |
| Definition of unemployed | Looking for work, regardless of when |
| Definition of under-employed | Employed part-time or freelancers looking for more work |
| Definition of employed | In a paid job for one hour or more in a week |
| Definition of working-age population | Australian residents aged 15 years and over (with some exceptions) |
| Working-age population | 20.0 million |
| Labour force | 13.3 million |
| Participation rate | 66.5% |
| Types of unemployment | Cyclical, structural, and frictional |
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What You'll Learn
Unemployment rate calculation methods
The unemployment rate is a measure of the percentage of the labour force that is unemployed. There are various methods used to calculate the unemployment rate, each with its own specific definition of unemployment. Here are some common methods:
The Labour Force Method
The labour force method defines the labour force as the sum of the employed and the unemployed. The unemployed, in this case, refer to those who are out of work and actively looking for a job. The unemployment rate is then calculated by dividing the number of unemployed people by the total number in the labour force and multiplying by 100. For example, if there are 151.4 million employed people and 7.7 million unemployed people in a population, the unemployment rate would be ((7.7/ (7.7 + 151.4)) * 100) = 4.9%.
The Labour Force Participation Rate Method
The labour force participation rate method considers the percentage of the population that is either working or actively seeking work. This method includes those who are unemployed but not currently looking for a job, as well as those who are employed but not actively looking for other work. The formula for calculating this rate is (Labour Force / Civilian Non-institutional Population) * 100. The civilian non-institutional population refers to people who are 16 years or older and not in the military, correctional facilities, or certain other institutions.
The Current Population Survey (CPS) Method
The CPS method is used by the U.S. Bureau of Labor Statistics and involves a monthly survey of a representative sample of households across the country. The survey has been conducted since 1940 and covers various demographic factors such as state, industry, urban/rural areas, gender, age, and race. Unemployment rates are then calculated based on the survey responses, with specific formulas for different categories of unemployment. For example, U-3, which is the official unemployment rate, is calculated as (Total Unemployed / Labor Force) * 100.
The Occupational and Industry-Specific Method
This method focuses on the experienced unemployed, which refers to those who have held jobs in the past. The unemployment rate is calculated as (Experienced Unemployed / (Employed + Experienced Unemployed)) * 100. This method separately reports unemployed individuals with no prior work experience and those whose last job was in the military.
The Australian Labour Force Survey Method
In Australia, the Australian Bureau of Statistics collects data on employment and unemployment through the Labour Force Survey. This survey is conducted monthly and collects information on various topics, including hours worked, regions, job search status, job duration, casual employment, industry, and occupation. The survey data is used to estimate the unemployment rate, with historical data available quarterly prior to 1978 and monthly thereafter.
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Unemployment types
According to the Australian Bureau of Statistics (ABS), the unemployment rate in Australia as of June 2025 was 64.2%. This rate is calculated as a measure of employment relative to the size of the population. The unemployment rate is influenced by changes in the number of unemployed people and the size of the labour force.
Now, let's delve into the various types of unemployment that contribute to this overall rate:
Cyclical Unemployment
Cyclical unemployment is closely tied to the economic cycle or business cycle. It occurs during periods of economic downturn when the demand for goods and services declines, causing a reduction in production and subsequent layoffs. For instance, during the COVID-19 pandemic in 2020, Australia's cyclical unemployment rate spiked to 7.4% as businesses closed and economic activity slowed. Those experiencing cyclical unemployment are more likely to find employment during periods of high economic growth or boom.
Structural Unemployment
Structural unemployment arises from a structural shift in the economy, often due to technological advancements or changes in the industrial landscape. It occurs when there is a mismatch between the skills workers possess and the skills employers require. For example, the decline of Australia's automotive manufacturing industry and the shift away from an agricultural society have led to structural unemployment. Those affected by structural unemployment may struggle to find jobs that match their skill sets.
Frictional Unemployment
Frictional unemployment is typically short-term unemployment that occurs when individuals switch between jobs or enter the workforce for the first time. It is not a significant concern for economists as it reflects a confident labour market where employees are willing to move between jobs. Frictional unemployment includes recent graduates seeking their first job and workers voluntarily changing jobs.
Seasonal Unemployment
Seasonal unemployment is prevalent in industries that rely on specific seasons or times of the year. For instance, agricultural workers may face unemployment outside the harvesting season, while retail workers might experience higher unemployment after holiday seasons like Christmas. Employment in these sectors is dependent on seasonal fluctuations in demand.
Underemployment
Underemployment refers to individuals working part-time or in jobs that do not fully utilise their skills and education. They may desire more working hours or feel that their qualifications are not being adequately utilised. Underemployment rates can differ from unemployment rates, and they are not directly correlated. For example, in April 2023, Australia's underemployment rate was 6.2%, while the unemployment rate was 3.7%.
Long-term Unemployment
Long-term unemployment refers to individuals who have been unemployed for an extended period, typically 52 weeks or more. This prolonged unemployment can lead to skill erosion, decreased employability, and increased vulnerability to structural changes in the economy.
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Labour force participation rate
The labour force participation rate is a measure of the proportion of the working-age population that is either employed or unemployed. In Australia, the working-age population includes residents aged 15 and over, with some exceptions, such as permanent defence force members.
The labour force participation rate is calculated as the labour force as a percentage of the working-age population. The labour force includes people who are either employed or unemployed. Employed individuals are defined as those in paid work for at least one hour per week, while unemployed individuals are those actively looking for work or waiting to start a new job within the last four weeks.
In June 2025, the employment-to-population ratio in Australia remained at 64.2%. While this ratio provides a measure of employment relative to the population, it does not distinguish between employed and unemployed individuals within the labour force.
The Australian Bureau of Statistics (ABS) collects labour market data through its monthly Labour Force Survey, which helps to track labour force participation rates and unemployment rates over time.
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Unemployment by age group
The employment-to-population ratio in Australia remained at 64.2% as of June 2025. This ratio provides a measure of employment relative to the size of the population.
People aged 15-24 are more likely to be engaged on a casual or part-time basis than other age groups. 53% of employed people in this age group work part-time, compared to 22-30% of other age groups. The 15-24 age group consistently had the highest unemployment rate (7.4% as of May 2023) and underemployment rate (14% as of May 2023) compared to other age groups. This age group also experienced the steepest fall in employment rates at the onset of the COVID-19 pandemic, a fall of 10 percentage points, reaching the lowest rate on record. However, they were also the first age group to return to pre-pandemic levels and had the largest percentage point increase in employment rates between March 2020 and June 2023.
In May 2022, 1 in 4 (24%) people aged 15-74 were not engaged in education, employment, or training (NEET). All age groups saw declines in the proportion of those classified as NEET between 2013 and 2022. However, between 2019 and 2020, there was a large increase in the proportion of people classified as NEET across most age groups (24% to 28% for those aged 15-74). This increase was in line with the decline in employment measures in response to the COVID-19 pandemic. By May 2022, the proportion of each age group (between ages 15 and 74) that was NEET was between 2.5 and 4.8 percentage points lower than in May 2019.
Over the last 40 years, the employment rate for females aged 15-64 has been generally rising, while the male employment rate has been slowly falling. Between February 1978 and January 2020, the female employment rate increased from 46% to 71%, the highest rate recorded since the current labour force data series began in 1978.
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Unemployment and the economy
Unemployment is a critical economic indicator, reflecting the health of a country's economy and labour market. It is the percentage of people in the labour force who are jobless and seeking employment. In Australia, the Australian Bureau of Statistics (ABS) undertakes this crucial task of measuring unemployment by conducting monthly surveys, known as the Labour Force Survey. The ABS defines unemployed individuals as those who are not employed but have actively sought work in the past four weeks and are available for work. Alternatively, they may have been waiting to commence a new job within the same timeframe.
The unemployment rate is calculated by dividing the number of unemployed individuals by the total labour force, which includes both employed and unemployed persons. This rate is influenced by the size of the labour force and can fluctuate due to economic cycles and structural factors. For instance, during economic downturns, businesses may lay off workers or hire fewer people, leading to an increase in unemployment. Conversely, when the economy strengthens, demand for labour may increase, resulting in more people finding employment.
As of June 2025, Australia's employment-to-population ratio stood at 64.2%. While this ratio does not represent the unemployment rate directly, it provides a measure of employment relative to the overall population. The unemployment rate in Australia has been reported to be 3.8%, although the specific date of this figure is unclear.
Unemployment rates vary across different demographic groups. For instance, in Australia, the 15-24 age group consistently exhibits the highest unemployment rate compared to other age groups. In May 2023, their unemployment rate was 7.4%, while the 55-64 age group had an employment rate of 68%.
The labour force participation rate is another crucial metric, representing the proportion of the working-age population (15-64 years) that is either employed or unemployed. This rate can be influenced by various factors, such as population ageing and incentives to work, which are often tied to the business cycle. For example, when businesses are actively hiring and offering higher wages, more people are incentivised to seek employment, increasing the labour force participation rate.
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Frequently asked questions
The unemployment rate in Australia as of June 2025 is 64.2%.
The unemployment rate in Australia as of October 2023 was 9.9%.
The unemployment rate is the percentage of people in the labour force who are unemployed. The labour force includes people who are either employed or unemployed.
The unemployment rate is affected by changes in the size of the labour force and the number of unemployed people. Cyclical, structural, and frictional factors influence unemployment rates. For example, during an economic downturn, there is a lack of available jobs, resulting in higher unemployment.
