Is the Australian labour market today in worse shape than it was during the Great Depression? There were about half a million unemployed people in 1932, at the height of the Depression, but around 730 000 unemployed in January this year. The second number is certainly larger than the first number, so does that mean we’re in sub-Depression territory? Of course it doesn’t. The population is about 4 times larger than it was back then and the labour force is about 4.7 times bigger, so comparing the number of unemployed people today and in 1932 doesn’t really tell you much about the relative health of today’s labour market. There’s a reason why people look at the unemployment rate rather than the number of unemployed people when they want to make comparisons over time.

That brings me to the report in today’s Oz about the Disability Support Pension (DSP) and Kevin Andrews’ plan to push for a “radical welfare restructure that diverts people with mental illnesses from becoming permanent DSP recipients”. The report contains some new figures on the number of people on disability support:

The latest figures show there were 832,024 DSP recipients in December… eclipsing the previous record of 831,908 in December 2011.

This tells us that were 116 more DSP recipients in December last year than there were in December 2011. One hundred and sixteen people. Over the same two-year period, the Australian population (aged 15-64) rose by 431 000 people. Put the numbers together, and you find that the proportion of people aged 15-64 who were on DSP was 5.4% in December 2013, down from 5.5% two years earlier. I, for one, think that decline in the proportion of the working-age population receiving DSP is more informative and meaningful than the slight increase in the number of people receiving the payment, just as I think comparing the 20% unemployment rate of 1932 with today’s 6% tells you more than comparing the number of unemployed people in the two periods.

The proportion of the working-age population on DSP has risen only by a little over the past decade or so. When you take into account population ageing, it’s been more or less steady, remaining below its 2002 level in 2012. The latest Intergenerational Report projects that we’ll spend around 0.1% of GDP more on DSP in 2049-50 than we did in 2009-10.

There is no crisis of sustainability in our disability support system.

Thanks to Tom Westland for the title of this post.

Advertisements